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Multiple pricing for personal assistance services

Andersson, Tommy LU ; Ellegård, Lina Maria LU ; Enache, Andreea ; Erlanson, Albin and Thami, Prakriti LU (2024) In Economic Modelling 141.
Abstract
Third-party payers often reimburse health care providers based on prospectively set prices. Although a key motivation of prospective payment is to contain costs, this paper shows that this aspect crucially depends on the design of the pricing scheme due to the well-known incentives of patient selection (or “dumping”). This paper provides a general theoretical framework where heterogeneous users are served by either private for-profit or public providers, each paid an hourly compensation by a third-party payer. The private, but not the public providers may select patients. It is demonstrated that this realistic feature of the model implies that total costs depends on the number of prices. The features of the model is illustrated using the... (More)
Third-party payers often reimburse health care providers based on prospectively set prices. Although a key motivation of prospective payment is to contain costs, this paper shows that this aspect crucially depends on the design of the pricing scheme due to the well-known incentives of patient selection (or “dumping”). This paper provides a general theoretical framework where heterogeneous users are served by either private for-profit or public providers, each paid an hourly compensation by a third-party payer. The private, but not the public providers may select patients. It is demonstrated that this realistic feature of the model implies that total costs depends on the number of prices. The features of the model is illustrated using the Swedish system of personal assistance services as a motivating example. Numerical results show that marginal adjustments to the current uniform pricing scheme would lead to substantial savings. (Less)
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author
; ; ; and
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
C61, D47, D78, I11, OR in health services, Personal assistance, Public and private providers, Multiple pricing, Welfare, Dumping
in
Economic Modelling
volume
141
article number
106916
publisher
Elsevier
external identifiers
  • scopus:85207023009
ISSN
0264-9993
DOI
10.1016/j.econmod.2024.106916
language
English
LU publication?
yes
id
def2f211-0a01-4523-9573-0ee19b36f51a
date added to LUP
2024-10-25 14:24:51
date last changed
2025-04-29 22:09:52
@article{def2f211-0a01-4523-9573-0ee19b36f51a,
  abstract     = {{Third-party payers often reimburse health care providers based on prospectively set prices. Although a key motivation of prospective payment is to contain costs, this paper shows that this aspect crucially depends on the design of the pricing scheme due to the well-known incentives of patient selection (or “dumping”). This paper provides a general theoretical framework where heterogeneous users are served by either private for-profit or public providers, each paid an hourly compensation by a third-party payer. The private, but not the public providers may select patients. It is demonstrated that this realistic feature of the model implies that total costs depends on the number of prices. The features of the model is illustrated using the Swedish system of personal assistance services as a motivating example. Numerical results show that marginal adjustments to the current uniform pricing scheme would lead to substantial savings.}},
  author       = {{Andersson, Tommy and Ellegård, Lina Maria and Enache, Andreea and Erlanson, Albin and Thami, Prakriti}},
  issn         = {{0264-9993}},
  keywords     = {{C61; D47; D78; I11; OR in health services; Personal assistance; Public and private providers; Multiple pricing; Welfare; Dumping}},
  language     = {{eng}},
  publisher    = {{Elsevier}},
  series       = {{Economic Modelling}},
  title        = {{Multiple pricing for personal assistance services}},
  url          = {{http://dx.doi.org/10.1016/j.econmod.2024.106916}},
  doi          = {{10.1016/j.econmod.2024.106916}},
  volume       = {{141}},
  year         = {{2024}},
}