Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82639
Authors: 
Kuhn, Michael
Nuscheler, Robert
Year of Publication: 
2013
Series/Report no.: 
ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy 02/2013
Abstract: 
We consider a setting of dual practice, where a physician offers free public treatment and, if allowed, a private treatment for which patients have to pay out of pocket. Private treatment is superior in terms of health outcomes but more costly and time intensive. For the latter reason it generates waiting costs. As patients differ in their propensity to benefit from private treatment and in their costs of waiting for treatment, we study the physician's incentives to supply private care and to allocate waiting time to public and private sectors and contrast it with the first-best allocation. The physician shifts waiting costs to public patients in order to increase the willingness-topay for private treatment. While this waiting time allocation turns out to be socially optimal, the resulting positive network effect leads to an over-provision of private care if and only if waiting costs are sufficiently high. A second-best allocation arises when the health authority selects physician reimbursement in the public segment but has no control over private provision. Depending on the welfare weight the health authority attaches to physician profits a ban of dual practice may improve on the second-best allocation. Due to patient heterogeneity, such a ban would affect patients differently.
Subjects: 
dual practice
health outcomes
health care financing
provider contract
waiting times
JEL: 
I11
I18
H51
L33
L51
Document Type: 
Working Paper

Files in This Item:
File
Size
598.96 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.