Insurance and monopoly power in a mixed private/public hospital system, CHERE Discussion Paper No 55

Consumers, when ill, often have the choice of being treated for free in a public hospital or at a positive price in a private hospital. To compensate for the positive price, private hospitals offer a higher quality treatment. Private hospitals and doctors also have a degree of monopoly power in their pricing. In this setting, it is shown that the presence of insurance does not affect the number of consumers treated in the private hospital, rather the private hospital and the doctor respond to the presence of insurance by increasing the prices they charge and the quality of the private hospital experience.Physician payments

The drug bargaining game: Pharmaceutical regulation in Australia, CHERE Discussion Paper No 51

Many countries, including Australia, regulate the price consumers pay for pharmaceuticals. In this paper, the Australian Pharmaceutical Benefits Scheme (PBS) is modelled as a multi-stage game played between the regulator and pharmaceutical firms. Conditions are derived under which vertically differentiated firms are regulated and a number of issues are discussed. These include efficiency, regulated firm profitability, leakage, and price discrimination. An extension examines the introduction of new drugs and concludes that if all the benefits of a new drug are to be realised, then existing agreements and transfers (per-unit subsidies) need to be renegotiated.Pharmaceuticals, Australia

Specialist payment schemes and patient selection in private and public hospitals, CHERE Discussion Paper No 54

It has been observed that specialist physicians who work in private hospitals are usually paid by fee-for-service while specialist physicians who work in public hospitals are usually paid by salary. This paper provides an explanation for this observation. Essentially, fee-for-service aligns the interests of income preferring specialist with profit maximizing private hospitals and results in private hospitals treating a high proportion of short stay patients. On the other hand, salary aligns the interests of fairness preferring specialists with welfare maximizing public hospital and results in public hospitals treating all patients irrespective of their length of stay.Physician payments

Medical Malpractice and Physician Liability Under a Negligence Rule

A model of costly medical malpractice claims, based on Bayes Rule, is developed to examine the effects of physicians being liable for actual damage under a negligence rule. This model is consistent with empirical evidence concerning the pattern of claims. It is shown that compensating actual damage does not provide physicians with appropriate incentives to spend the second best optimal amount of time with patients or to treat the second best optimal number of patients. As a result, too much medical malpractice occurs relative to the second best social optimum.Medical Malpractice; Liability

Physiology of renal glucose handling via SGLT1, SGLT2 and GLUT2.

The concentration of glucose in plasma is held within narrow limits (4-10 mmol/l), primarily to ensure fuel supply to the brain. Kidneys play a role in glucose homeostasis in the body by ensuring that glucose is not lost in the urine. Three membrane proteins are responsible for glucose reabsorption from the glomerular filtrate in the proximal tubule: sodium-glucose cotransporters SGLT1 and SGLT2, in the apical membrane, and GLUT2, a uniporter in the basolateral membrane. 'Knockout' of these transporters in mice and men results in the excretion of filtered glucose in the urine. In humans, intravenous injection of the plant glucoside phlorizin also results in excretion of the full filtered glucose load. This outcome and the finding that, in an animal model, phlorizin reversed the symptoms of diabetes, has stimulated the development and successful introduction of SGLT2 inhibitors, gliflozins, in the treatment of type 2 diabetes mellitus. Here we summarise the current state of our knowledge about the physiology of renal glucose handling and provide background to the development of SGLT2 inhibitors for type 2 diabetes treatment