Sticking Points: Common-Agency Problems and Contracting in the U.S. Healthcare System / Brigham Frandsen, Michael Powell, James B. Rebitzer.

Format:

Book

Author/Creator:

Frandsen, Brigham.

Contributor:

National Bureau of Economic Research.

Powell, Michael.

Rebitzer, James B.

Series:

Working Paper Series (National Bureau of Economic Research) no. w23177.

NBER working paper series no. w23177

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Sticking Points

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2017.

Summary:

We propose a "common-agency" model for explaining inefficient contracting in the U.S. healthcare system. In our setting, common-agency problems arise when multiple payers seek to motivate a shared provider to invest in improved care coordination. Our approach differs from other common-agency models in that we analyze "sticking points," that is, equilibria in which payers coordinate around Pareto-dominated contracts that do not offer providers incentives to implement efficient investments. These sticking points offer a straightforward explanation for three long observed but hard to explain features of the U.S. healthcare system: the ubiquity of fee-for-service contracting arrangements outside of Medicare; problematic care coordination; and the historic reliance on small, single specialty practices rather than larger multi-specialty group practices to deliver care. The common-agency model also provides insights on the effects of policies, such as Accountable Care Organizations, that aim to promote more efficient forms of contracting between payers and providers.

Notes:

Print version record

February 2017.