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This paper examines selection and matching incentives of performance-based contracting (PBC) in a model of patient heterogeneity, provider horizontal differentiation and asymmetric information. Treatment effectiveness is affected by the match between a patient's illness severity and a provider's treatment intensity. Before PBC, a provider's revenue is(More)
This paper considers a public provider's strategic use of rationing in a market served by both public and private providers. Such a 'mixed' market structure is common in many industries such as health care, telecommunication, postal service, and public utilities. The technology in the private sector exhibits increasing returns: each firm can expend 'effort'(More)
This paper introduces a theory of network incentives in managed health care. Participation in the plan’s network confers an economic beneŽt on providers; in exchange, the plan expects compliance with its protocols. The network sets a target for the number of outpatient visits in an episode of care. A provider failing to satisfy the target may be penalized(More)
BACKGROUND In the health care market managed care has become the latest innovation for the delivery of services. For efficient implementation, the managed care organization relies on accurate information. So clinicians are often asked to report on patients before referrals are approved, treatments authorized, or insurance claims processed. What are(More)
We model physicians as health care professionals who care about their services and monetary rewards. These preferences are heterogeneous. Different physicians trade off the monetary and service motives differently, and therefore respond differently to incentive schemes. Our model is set up for the Norwegian health care system. First, each private practice(More)