Work

Contracting unverifiable quality in healthcare: the importance of political stability for relational contracts

Year: 2026

Type: article

Abstract: We consider an infinitely repeated game between a public purchaser of a health service and a semi-altruistic hospital when some quality dimensions of the service are non-contractible. We discuss how a Pay-for-Performance Relational Contract (P4P-RC) can induce the hospital to deliver positive unverifiable quality. We find that the optimal conditions for both price and quantities of the P4P-RC converge to the first-best the higher the stability of the interaction between the purchaser and the hospital. Using measures of political stability in Italy as a proxy for a stable interaction, we empirically test the relationship between proxies of healthcare service quality and political stability from 1996 to 2020. We find evidence that unverifiable quality increases with the political stability of the regional governments. JEL codes : H57, L41, C73

Source: Public Choice

DOI: 10.1007/s11127-026-01390-w

Authors: Marco Buso, Berardino Cesi, Silvia Coretti, Gilberto Turati

Institutions: University of Padua, Presidenza Del Consiglio Dei Ministri, Sapienza University of Rome, Università Cattolica del Sacro Cuore

Language: English

Topic: Healthcare Policy and Management

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: hybrid

Estimated APC paid: $3,090