Title: Optimal medical investment and insurance system: revenues, costs and benefits

Authors: Chunyuan Chen, Zih-Yan Lin, Ya-Chiao Hsieh

Addresses: Department of Business Administration, National Changhua University of Education, No. 2, Shi-Da Road, Changhua, Taiwan 50074, ROC. ' Department of Business Administration, National Changhua University of Education, No. 2, Shi-Da Road, Changhua, Taiwan 50074, ROC. ' Department of Business Administration, National Changhua University of Education, No. 2, Shi-Da Road, Changhua, Taiwan 50074, ROC

Abstract: This paper analyses the optimal choice of medical investment and design of health insurance system in an interactive medical context with the utility maximising patient, the net-revenue-maximising physician and the insurer pursuing the patient|s benefits and a balance between revenues and costs. The feasibility of cost reduction or benefit improving is addressed. With positive payments to the physician, cost reduction or benefit improving is obtainable through a reduction in the social loss by restraining over-investment in medical capital goods. A fully prospective payment system would be a cost-minimising payment system but not definitely a benefit-improving system.

Keywords: benefits; costs; insurers; medical investment; health insurance; patients; physicians; revenue management.

DOI: 10.1504/IJRM.2008.018176

International Journal of Revenue Management, 2008 Vol.2 No.1, pp.23 - 41

Published online: 06 May 2008 *

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