Profit distribution and managers’ behaviour in vertical integrated medical delivery systems – an experimental economics study

Abstract

Abstract Background The vertical integration of medical delivery systems (VIMDSs) is a reform direction both in China and worldwide. We conducted a controlled economic experiment to explore decision-making by managers of medical institutions with respect to profits and what influences the distribution mechanism in VIMDSs. Methods Students and hospital staff were recruited to make choices regarding the role of directors of institutions. z-Tree software was used to design the experimental program. Ninety-six subjects participated in the experiment. We gathered 479 valid contracts. Results Of the subjects, 66.39% chose flexible contracts. The median of the bidding distribution rate to community health service centres of all auctions was 18.50%. The final distribution rate was approximately 3 percentage points higher than the bidding distribution rate. The median effort level was 9.00. There was a significant correlation between the improvement rate and the choice of effort level (P<0.05) in flexible contracts. Conclusions Hospital managers have a preference for flexible contracts because of uncertainty in the medical system. A community health service centre director may behave perfunctorily by engaging in shading in the integration. Flexible contracts and sharing rates beyond the participants’ expectations motivate managers to engage in more cooperative behaviours.

Keywords

• Medical delivery system
• Vertical integration
• Profit distribution
• Manager behaviour
• Experimental economics