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Physician dual practice is a widespread phenomenon which has implications for the equity, efficiency and quality of health care provision. Central to the analysis of physician dual practice is the trade-off between its benefits and costs, as well as the convenience of regulating it to undermine its adverse consequences. In this paper we study and analyze different governmental responses to this activity. We find that internationally, there are wide variations in how governments tackle this issue. While some governments fully prohibit this practice, others regulate or restrict dual job holding with different intensities and regulatory instruments. The measures implemented include limiting the income physicians can earn through dual job holding, offering work benefits to physicians in exchange for their working exclusively in the public sector, raising public salaries, and allowing physicians to perform private practice at public facilities.
We present the pros and cons of each of these alternatives and show how the health care market and institutional arrangements are crucial for the design and implementation of each of these strategies. The paper also identifies the need for empirical evidence on the effect of different government strategies on dual practice.

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“On a Policy of Transferring Public Patients to Private Practice”

We consider an economy where public hospitals are capacity-constrained, and we analyse the willingness of health authorities to reach agreements with private hospitals to have some of their patients treated there. When physicians are dual suppliers, we show that a problem of cream-skimming arises and reduces the incentives of the health authority to undertake such a policy. We argue that the more dispersed are the severities of the patients, the greater the reduction in the incentives will be. We also show that, despite the patient selection problem, when the policy is implemented it is often the case that health authorities decide a more intensive transfer of patients to private practice.

Keywords: public-private health services, physician's incentives, patient selection, waiting-lists.

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“Optimal Sharing of Surgical Costs in the Presence of Queues”

We deal with a cost-allocation problem arising from sharing a medical service in the presence of queues. We use a standard queuing theory model in a context of several medical procedures, a certain demand for treatment and a maximum average waiting-time guaranteed by the government. We show that the sharing of an operating-theatre to treat patients of different medical disciplines leads to a cost reduction. We then compute an optimal fee per procedure for the use of the operating theatre, based on the Shapley value. Afterwards, considering the recovery time, we characterize the conditions under which the co-operation among treatments has a positive impact on the post-operative costs. Finally, a numerical example, constructed on the basis of real data, is provided to highlight the main features of our model.

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“Should Physicians’ Dual Practice Be Limited? An Incentive Approach”

We develop a principal-agent model to analyze how the behavior of a physician in the public sector is affected by his activities in the private sector. We show that the physician will have incentives to over-provide medical services when he uses his public activity as a way of increasing his prestige as a private doctor. The health authority only benefits from the physician’s dual practice when it is interested in ensuring a very accurate treatment for the patient. Our analysis provides a theoretical framework in which some actual policies implemented to regulate physicians’ dual practice can be addressed. In particular, we focus on the possibility that the health authority offers exclusive contracts to physicians and on the implications of limiting physicians' private earnings.

Keywords: public-private health services, physician’s incentives, moral hazard, exclusive contracts.

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“Gatekeeping versus Direct Access when Patient Information Matters“

We develop a principal-agent model in which the health authority acts as a principal for both a patient and a general practitioner (GP). The goal of the paper is to weigh the merits of gatekeeping versus non-gatekeeping approaches to health care when patient self-health information and patient pressure on GPs to provide referrals for specialized care are considered. We find that, when GPs incentives matter, a non-gatekeeping system is preferable only when (i) patient pressure to refer is sufficiently high and (ii) the quality of the patient's self-health information is neither highly inaccurate (in which case the patient's self-referral will very inefficient) nor highly accurate (in which case the GP's agency problem will be very costly).

Keywords: General Practice, Incentives, Patient self-health information, Patient pressure, Referrals.

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"Political Budget Cycles and Fiscal Decentralization"

(Working Paper ECON 06.13, Universidad Pablo de Olavide & Warwick Economic Research Papers, nº 742).

In this paper, we study a model à la Rogoff (1990) where politicians distort fiscal policy to signal their competency, but where fiscal policy can be centralized or decentralized. Our main focus is on how the equilibrium probability that fiscal policy is distorted in any region (the political budget cycle, PBC) differs across fiscal regimes. With centralization, there are generally two effects that change the incentive for pooling behavior and thus the probability of a PBC. One is the possibility of selective distortion: the incumbent can be re-elected with the support of just a majority of regions. The other is a cost distribution effect, which is present unless the random cost of producing the public goods is perfectly correlated across regions. Both these effects work in the same direction, with the general result that overall, the PBC probability is larger under centralization (decentralization) when the rents to office are low (high). Voter welfare under the two regimes is also compared: voters tend to be better off when the PBC probability is lower, so voters may either gain or lose from centralization. Our results are robust to a number of changes in the specification of the model.

Keywords: Political Agency Models, decentralization, incentives, selection, fiscal distortion.

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"Who do Physicians Work for? An Analysis of Dual Practice in the Health Sector"

This paper presents a thorough analysis of the issue of dual job holding among physicians. As the causes and implications of this phenomenon may well depend on the specific form of dual practice under consideration, we first introduce a typology of dual practice in the health sector based on the public versus private nature of the activity and the work regime involved. Our primary focus is on public on private practice, since it is more prevalent and poses greater adverse welfare effects than do other forms. We commence our analysis with a review of the theoretical and empirical economic literature on public on private dual job holding among physicians in developing and developed countries and analyze its underlying motives and economic effects. We find that economic motives are not the only reason why physicians engage in dual practice. Other non-pecuniary factors such as job complementarities, and institutional, professional, structural and personal variables play a relevant role and, hence, should also be taken into account when regulating dual practice. Furthermore, while dual providers may be tempted to skimp on time and effort in their main job, to induce demand for their private services, or to misuse public resources, the legalization of dual practice may also contribute to recruit and retain physicians with less strain on the budget and improve access to health services, especially in developing countries. Finally, the paper highlights the lack of evidence regarding the extent and effects of this phenomenon. Given its implications for the equity, efficiency and quality of health care provision, dual practice among physicians warrants more attention from researchers and policy makers alike.

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"Strategic Quality Competition and the Porter Hypothesis"

In this paper we provide a theoretical foundation for Porter hypothesis in a context of quality competition. We use a duopoly model of vertical product differentiation where firms simultaneously choose the environmental quality of the good they produce (which can be either high or low) and, afterwards, engage in price competition. In this simple setting, we show that a Nash equilibrium of the game with low quality could be Pareto dominated by another strategy profile in which both firms produce the high environmental quality good. We then show how, in this case, the introduction of a penalty to any firm that produces the low environmental quality can result in an increase in both firms' profits. The impact of the policy on consumers depends on the effect of a quality shift on the cost structure of firms.

Keywords: environmental quality, vertical differentiation, prisoner's dilemma, environmental regulation, Porter hypothesis.

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"Trials,Tricks and Transparency: How Disclosure Rules Affect Clinical Knowledge?"

Scandals of selective reporting of clinical trial results by pharmaceutical firms have underlined the need for more transparency in clinical trials. We provide a theoretical framework which reproduces incentives for selective reporting and yields three key implications concerning regulation. First, a compulsory clinical trial registry complemented through a voluntary clinical trial results database can implement full transparency (the existence of all trials as well as their results is known). Second, full transparency comes at a price. It has a deterrence effect on the incentives to conduct clinical trials, as it reduces the firms' gains from trials. Third, in principle, a voluntary clinical trial results database without a compulsory registry is a superior regulatory tool; but we provide some qualified support for additional compulsory registries when medical decision-makers cannot anticipate correctly the drug companies' decisions whether to conduct trials.

Keywords: Pharmaceutical firms, strategic information transmission, incentives, clinical trials, registries, results databases, scientific knowledge.

“Policy and Regulatory Responses to Dual Practice in the Health Sector”

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“On a Policy of Transferring Public Patients to Private Practice”

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“Optimal Sharing of Surgical Costs in the Presence of Queues”

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“Should Physicians’ Dual Practice Be Limited? An Incentive Approach”

pdf ___back

“Gatekeeping versus Direct Access when Patient Information Matters“

pdf___back

"Political Budget Cycles and Fiscal Decentralization"

pdf avaliable at RePEc ___back

"Who do Physicians Work for? An Analysis of Dual Practice in the Health Sector"

pdf of the WP version avaliable at RePEc ___back

"Strategic Quality Competition and the Porter Hypothesis"

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"Trials,Tricks and Transparency: How Disclosure Rules Affect Clinical Knowledge?"

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