Quality Provision in Two-Sided Markets: the Case of Managed Care
نویسنده
چکیده
I develop a two-sided market model to study the role played by indirect externalities in shaping the pricing and quality decisions of managed care organizations. I find that managed care quality, access to physicians, and physician reimbursements decrease when the cost of providing quality or the population health risk increases. These decreases are more pronounced when the externality exerted by doctors on patients is larger, when policyholders care more about quality, and when the supply of physicians is more elastic. The results may help to understand the increasing public dissatisfaction with managed care. They underscore the importance of implementing and monitoring the achievement of quality standards in the face of ongoing increases in health risks associated with an aging population. JEL classification: I110; L110
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