Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/281123 
Year of Publication: 
2023
Series/Report no.: 
Working Paper No. 016.2023
Publisher: 
Fondazione Eni Enrico Mattei (FEEM), Milano
Abstract: 
This paper aims to characterise a dynamic, incentive-compatible contract for the provision of health services, allowing for both moral hazard and adverse selection. Patients' severity changes over time following a stochastic process and is private information of the provider. We characterise the optimal dynamic contract and show that it is made up of two components: a timeinvariant payment, which depends on the structural characteristics of the provider, and a timevarying component, which is affected by both patient and hospital characteristics. To illustrate the characteristics of the dynamic contract and compare it with a more standard static contract, we provide a numerical exercise calibrated with data from hip replacement hospitalisations in Italy.
Subjects: 
hospital payments
dynamic mechanism design
DRG
two-part tariffs
adverse selection
moral hazard
JEL: 
H42
I18
D82
Document Type: 
Working Paper

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