The impact of medical complications on optimal hospital payment
Résumé
Abstract This paper studies the optimal payment policy offered by a regulator to a partially altruistic hospital when the latter privately observes the severity of illness of patients and chooses a hidden quality that influences the probability of medical complications occurring. We analyze how the level of altruism of the hospital affects the conditions under which the payment, for a given diagnosis‐related group, should be refined according to the severity of illness and the occurrence of complications.