This study focuses on the competition between a private hospital and a public hospital under two reimbursement policies, Fee-for-Service (FFS) and Bundled Payment (BP). We first theoretically analyze the optimal decisions of two hospitals and the social planner, and then conduct a comparative study of patient utility, hospital payoffs and social welfare under the two reimbursement policies. The results show that BP can alleviate the waste of medical resources to a certain extent, but BP is not always better than FFS in terms of the social planner. Specifically, when the patient's out-of-pocket ratio and hospital treatment costs are high, the social planner should choose FFS. Besides, we find that the altruism of the public hospital can contribute to the overall quality of healthcare services. These findings provide useful implications for policy makers to determine the appropriate healthcare payment scheme and for hospitals to make the optimal operation decisions.


Paper Number 1670; Track Healthcare; Short Paper



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