Two-tier charging strategies in public hospitals: implications for intra-hospital resource allocation and equity of access to hospital services.
Two-tier charging, the practice of offering separate qualities of service at different prices, is a growing practice in public hospitals internationally. This paper models two-tier charging as a Stackelberg game in which the Ministry of Health leads by setting prices and a representative hospital follows by setting quality levels to maximise surplus in response. Whether or not two-tier charging will secure cross-subsidy from superior to basic service users depends on the own and cross-quality effects of the demand functions for the two services. Under a range of assumptions, the policy will evoke cross-subsidy from basic to superior services.
McPake
Barbara
B
Queen Margaret University College, Edinburgh, Edinburgh, UK. bmcpake@qmuc.ac.uk
Hanson
Kara
K
Adam
Christopher
C
D005249:Fees and Charges / Q000639:trends*; D006297:Health Services Accessibility; D006779:Hospitals, Public; D040841:Resource Allocation; D013222:State Medicine; D006113:United Kingdom