Competition between HMO and PPO: A Two-Sided Market Approach

We set-up a two-sided market framework to model competition between a Prefered Provider Organization (PPO) and a Health Maintenance Organization (HMO). Both health plans compete to attract policyholderson one side and providers on the other side. The PPO, which is characterized by a higher diversity...

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Autores Principales: Bardey, David, Rochet, Jean Charles
Formato: Documento de trabajo (Working Paper)
Lenguaje:Inglés (English)
Publicado: Universidad del Rosario 2009
Materias:
Acceso en línea:http://repository.urosario.edu.co/handle/10336/11001
id ir-10336-11001
recordtype dspace
spelling ir-10336-110012019-09-19T12:37:01Z Competition between HMO and PPO: A Two-Sided Market Approach Bardey, David Rochet, Jean Charles Two-sided Markets Managed Care Competition Network Effects Adverse Selection De gobiernos federales & estatales de Estados Unidos Efectividad organizacional::Modelos Planificación estratégica::Modelos Administración de servicios de salud We set-up a two-sided market framework to model competition between a Prefered Provider Organization (PPO) and a Health Maintenance Organization (HMO). Both health plans compete to attract policyholderson one side and providers on the other side. The PPO, which is characterized by a higher diversity of providers, attracts riskier policyholders. Our two-sided framework allows to examine the consequences of this risk segmentation on the providers’ side, especially in terms of remuneration. The outcome of competition mainly depends on two effects: a demand effect, influenced by the value put by policyholders on providers access and an adverse selection effect, captured by the characteristics of the health risk distribution. If the adverse selection effect is too strong, the HMO gets a higher profit in equilibrium. On the contrary, if the demand effect dominates, the PPO profit is higher in spite of the unfavorable risk segmentation. We believe that our model, by highlighting the two-sided market structure of the health plans’ competition, provides new insights to understand the increase in the PPOs’ market share observed during the last decade in the US. 2009-01 2015-10-11T16:03:47Z info:eu-repo/semantics/workingPaper info:eu-repo/semantics/acceptedVersion http://repository.urosario.edu.co/handle/10336/11001 eng info:eu-repo/semantics/openAccess application/pdf Universidad del Rosario Facultad de Economía instname:Universidad del Rosario reponame:Repositorio Institucional EdocUR instname:Universidad del Rosario
institution EdocUR - Universidad del Rosario
collection DSpace
language Inglés (English)
topic Two-sided Markets
Managed Care Competition
Network Effects
Adverse Selection
De gobiernos federales & estatales de Estados Unidos
Efectividad organizacional::Modelos
Planificación estratégica::Modelos
Administración de servicios de salud
spellingShingle Two-sided Markets
Managed Care Competition
Network Effects
Adverse Selection
De gobiernos federales & estatales de Estados Unidos
Efectividad organizacional::Modelos
Planificación estratégica::Modelos
Administración de servicios de salud
Bardey, David
Rochet, Jean Charles
Competition between HMO and PPO: A Two-Sided Market Approach
description We set-up a two-sided market framework to model competition between a Prefered Provider Organization (PPO) and a Health Maintenance Organization (HMO). Both health plans compete to attract policyholderson one side and providers on the other side. The PPO, which is characterized by a higher diversity of providers, attracts riskier policyholders. Our two-sided framework allows to examine the consequences of this risk segmentation on the providers’ side, especially in terms of remuneration. The outcome of competition mainly depends on two effects: a demand effect, influenced by the value put by policyholders on providers access and an adverse selection effect, captured by the characteristics of the health risk distribution. If the adverse selection effect is too strong, the HMO gets a higher profit in equilibrium. On the contrary, if the demand effect dominates, the PPO profit is higher in spite of the unfavorable risk segmentation. We believe that our model, by highlighting the two-sided market structure of the health plans’ competition, provides new insights to understand the increase in the PPOs’ market share observed during the last decade in the US.
format Documento de trabajo (Working Paper)
author Bardey, David
Rochet, Jean Charles
author_facet Bardey, David
Rochet, Jean Charles
author_sort Bardey, David
title Competition between HMO and PPO: A Two-Sided Market Approach
title_short Competition between HMO and PPO: A Two-Sided Market Approach
title_full Competition between HMO and PPO: A Two-Sided Market Approach
title_fullStr Competition between HMO and PPO: A Two-Sided Market Approach
title_full_unstemmed Competition between HMO and PPO: A Two-Sided Market Approach
title_sort competition between hmo and ppo: a two-sided market approach
publisher Universidad del Rosario
publishDate 2009
url http://repository.urosario.edu.co/handle/10336/11001
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score 11,489418