On the Implementation of Medical Programs in Health Care Systems: Game-Theoretic Frameworks.

Abstract

Finding the cost-effective medical programs, guidelines, and policies have been the major focus of studies in health care resource allocation. There are, however, many medical programs and guidelines that have proven to be cost-effective and to be improving the social welfare but have not been properly implemented in the society. Successful implementation of a medical program relies on different factors such as, the health purchasers' willingness to reimburse for the program, the health providers' willingness to offer the program, and the population's willingness to consume the underlying medical program.

This dissertation consists of three papers each attempts to discuss one or several aspects of medical implementation in a health care system. In the first paper, we develop a game-theoretic framework for estimating a health purchaser's willingness-to-pay (WTP) for health, which is defined as the amount of money the health purchaser (e.g., a health maximizing public agency or a profit maximizing health insurer) is willing to spend for an additional unit of health. We discuss how the WTP for health can be employed to determine the medical guidelines, and to price the new medical technologies, such that the health purchaser finds them worthwhile to implement. The framework further introduces a measure for WTP for expansion, defined as the amount of money the health purchaser is willing to pay for one percent of increase in the consumption level of an intervention. This measure can be employed to find how much to invest in expanding a medical technology through opening new facilities, advertising, educating the population, etc. Applying our framework to Colorectal Cancer screening tests, we estimate the WTP for health to be $9,950 per quality-adjusted life years, and the WTP for expanding Colonoscopy to be $45.40 per person per percent increase, for the 2005 U.S. population.

The second paper discusses “coordinating contracts†' in a preventive health care system consisting of two noncooperative parties: a health purchaser (e.g., a health insurer) and a health provider (e.g., a hospital). A principal-agent model is proposed to capture the interaction between the two parties. In this model, the health provider determines the type of patients who need to undergo a preventive medical intervention, and get reimbursed by the health purchaser based on the number of patients for whom the intervention is administered. We determine the contracts that coordinate the health purchaser-health provider relationship; i.e., the contracts that allow each entity to optimize its own objective function while maximizing the population's welfare. We characterize the coordinating contracts for two settings: we show that under certain conditions (1) when the number of customers for the medical intervention is verifiable, there exist a gate-keeping contract and a set of concave contracts that coordinate the system; and (2) when the number of customers is not verifiable, contracts of bounded linear and bounded nonlinear forms can coordinate the system.

The notion of coordinating contracts is extended in the third paper to health systems with limited capacity in providing the underlying medical intervention. In the new setting, the health provider should allocate (or built) the medical capacity before observing the demand for the medical intervention. We show that (1) when the number of customers for the medical intervention is verifiable, a piece-wise linear contact can coordinate the system; and (2) when the number of customers is not verifiable, a menu of incentive-feasible piece-wise linear contacts can coordinate the system. We characterize the coordinating contracts under each setting.