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Related Experiment Videos

Supply-side cost sharing when patients and doctors collude.

Rhema Vaithianathan1

  • 1Department of Economics, University of Auckland, PBN 92019, Auckland, New Zealand. r.vaithianathan@auckland.ac.nz

Journal of Health Economics
|August 30, 2003
PubMed
Summary

Healthcare purchasers can implement cost-effective care through supply-side cost sharing, even with asymmetric information and collusion between doctors and patients. Policies influencing patient information and willingness to pay affect collusion strategies.

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Area of Science:

  • Health Economics
  • Healthcare Policy
  • Information Economics

Background:

  • Healthcare purchasers aim for cost-effective quality, while doctors and patients prioritize maximal quality.
  • Asymmetric information and potential collusion between doctors and patients complicate cost-effective care implementation.

Purpose of the Study:

  • To analyze purchaser strategies for implementing supply-side cost sharing.
  • To examine how asymmetric information and collusion influence healthcare cost-effectiveness.

Main Methods:

  • Theoretical modeling of principal-agent problems in healthcare.
  • Analysis of collusion-proof and collusion-inducing mechanisms.
  • Examination of policy implications related to information and willingness to pay.

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Main Results:

  • Both collusion-proof and collusion-inducing schemes can achieve cost-effective care.
  • Increased patient information or willingness to pay raises the cost of collusion-proof mechanisms.
  • Allowing collusion may be preferable when patients are well-informed or have high willingness to pay.

Conclusions:

  • Healthcare purchasers can design mechanisms to achieve cost-effective care despite information asymmetries.
  • Policy levers such as patient information and advertising significantly impact the feasibility and desirability of collusion.
  • Understanding these dynamics is crucial for designing effective healthcare market regulations.