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This paper introduces a theory of network incentives in managed health care. Participation in the plan's network confers an economic benefit 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...
Managed care organizations control costs through restrictions on patient access to specialized services, oversight of treatment protocols, and financial incentives for providers. We investigate possible effects of such practices on the care patients receive by studying frequencies of in‐hospital...
If an illness is not contractible, then even partially insured consumers demand treatment for it when the benefit is less than the cost, a condition known as moral hazard. Traditional health insurance, which controls moral hazard with copayments (demand management), can result in either a...
One of the mechanisms that are implemented in the cost containment movement in the health care sectors in western countries is the definition, by the third‐party payer, of a set of preferred providers. The insured patients have different access rules to such providers when ill. The rules specify...
This paper asserts that brand pharmaceutical firms (those mostly involved in the invention and production of new drugs) engage in a set of complementary activities that are different from those of generic pharmaceutical firms (those that primarily make off‐patent medicines). Complementarities of...
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