Scandinavian Working Papers in Economics

DaCHE discussion papers,
University of Southern Denmark, Dache - Danish Centre for Health Economics

No 2014:4: Creaming and Dumping: Who on Whom?

Karolina Socha-Dietrich () and Peter Zweifel ()
Additional contact information
Karolina Socha-Dietrich: COHERE, Department of Business and Economics, Postal: University of Southern Denmark, Campusvej 55, DK-5230 Odense M
Peter Zweifel: Department of Economics, Postal: University of Zürich

Abstract: In several countries, public healthcare providers purchase services from private providers to shorten waiting times. Some private providers in turn combine public service with practice in their own facilities. According to the existing literature, they are viewed as cream-skimming profitable (low-severity) public patients to the benefit of private practice, causing cost of treatment in the public sector to increase. This is particularly problematic when public provider payment is prospective. However, two facts seem to be neglected. First, cream skimming involves effort and thus does not occur in all circumstances. Second, public providers might have an incentive to select patients too, resulting in dumping of the least profitable (high-severity) patients on the private sector. This paper derives the conditions under which both creaming and dumping are predicted to occur.

Keywords: Creaming; Dumping; Waiting lists; Public Service; Dual Practice

JEL-codes: I11; I18

21 pages, March 1, 2014

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