Resumen de Ownership, incentives and hospitals

Xavier Fageda Sanjuan, Eva Fiz

• This article analyzes hospital privatization by comparing costs and quality between different ownership forms. We put the attention on the distinction between public hospitals and private hospitals with public funding. Using information about Spanish hospitals in the period 1997-2007, we have found that private hospitals provide services at a lower cost at expenses of lower quality. The way that Heath Authorities finance publicly funded hospitals may be responsible for the differences in incentives between public and private centers. Cost reimbursement contracts are used to finance public hospitals while prospective payment is used to finance private hospitals. We argue that the trade-off between costs and quality could be minimized by designing financing contracts with fixed and variable components.