Previous attendance of the Industrial Organization course is recommended
Market Regulation and Health Care gives students the economic intuition to analyse strategic decisions and policy recommendations in markets characterized by the significant intervention of public authorities. How markets can go wrong and how to regulate them when they do are the subject of this course. Part of the course is dedicated to the understanding of market imperfections and regulation in health care markets. The healthcare sector is a complex and challenging environment that is undergoing significant and rapid change. The course lectures will provide an overview of the healthcare sector using insights from economics and strategic management. It will cover a broad range of the healthcare value chain from health-related behaviours, healthcare financing and reimbursement systems, organisational structures and care delivery systems, technological product research and development, market access and adoption. Market Regulation and Health Care contributes to the learning objectives of the economics and management area of the degree course. At the end of the course, students will understand the main market malfunctions, will be able to analyse the behaviour and interaction of firms, and to apply some regulatory mechanisms. More specifically, students will learn important issues facing decision makers in the health care sector, and will understand how economics and strategic management and economic concepts and analytical tools can be used to analyse these problems and propose possible solutions.
The course will introduce students to important issues in the regulation of markets and across the health care sector from the perspectives of the key stakeholders. It will discuss and appraise some current topics and explain the features of the health care sector that make it different from other private and public sector settings
Introduction to market regulation (economic, social regulation and theories);
Efficiency and competitive markets
(SHE ch. 1-2, VHV ch. 1, FGS ch. 18);
Market imperfections and failures (entry/exit barriers, monopoly, differentiated products, externalities, imperfect information and transaction costs, equity);
The production, cost and technology of healthcare
(SHE ch. 3 (3.1, 3.2), ch. 5 (5.3), VHV ch. 4, FGS ch. 6 and 18);
Market structure and non-competitive strategies;
Public goods, non profit firms and hospital behavior
(VHV ch. 5-6, FGS ch. 13, 14, 20);
Demand and supply of health insurance;
Market failures in health insurance (moral hazard, adverse selection and solutions)
(SHE ch. 24 (24.2), FGS ch. 8, 10);
Cost-benefit analysis, valuing nonmarket goods and human life
(VHV ch. 2, SHE ch. 19 (19.1, 19.2), 20 (20.1, 20.2, 20.4), FGS ch. 4);
Government intervention and the regulation of health care markets;
Public enterprises and public provision of health care
(SHE ch. 10, 12 (12.2), VHV ch. 14, FGS ch. 19);
Specific topics supported by relevant case studies of strategic relevance to the health sector (Harward Business School case studies material);
Pricing principles: peak-load pricing, Ramsey pricing and nonuniform pricing
(VHV ch. 12, SHE ch 11 (11.1-11.3));
Regulation in the presence of competition: access pricing
(SHE 11 (11.4), 12 (12.6));
Regulatory mechanisms in health care
(FGS ch. 20);
Rate-of-return and price-cap regulation;
Pricing in health care: payments of physicians and hospitals (SHE ch. 12 (12.3-12.5), VHV ch. 12, FGS ch. 20);
Market innovation, patents and the pharmaceutical industry
(VHV ch. 24, SHE ch. 7 (7.1-7.5), FGS ch. 17).
The course will provide lecture notes and use material from several text books as well as published articles from journals and policy reports. Case studies and essential reading material will be made available on the e-learning platform.
The main texbooks and chapters are:
Regulation of markets and firms:
SHE: R. Sherman, Market Regulation, Pearson Addison Wesley, 2008.
(Chapters 1-3, 5-7, 10-12, 19-20)
VHV: Viscusi, W. Kip, John M. Vernon, and Joseph E. Harrington. Economics of Regulation and Antitrust. 3rd ed. Cambridge, MA, MIT Press, 2005.
(Chapters 1-2, 4,-12, 14, 19-20, 24)
Regulation of health care markets and providers:
FGS: S. Folland, A. Goodman and M. Stano, The Economics of Health and Health Care, 8th ed., Routledge, 2017.
(Chapters 4, 6, 8, 10, 13, 17, 18, 19, 20, 24)
Other textbooks of Health Economics:
Phelps CE. Health Economics (3rd or 4th Editions). Boston: Addison Wesley, 2003, 2009 (note 2012 edition available in March).
Getzen TE. Health Economics and Financing (4th Edition): Hoboken: John Wiley & Sons 2010. " Feldstein PJ. Health Care Economics (6th or 7th Edition): New York: Thomson Delmar Learning: 2005.
Other textbooks of Healthcare Management:
*Swayne LE, Duncan WJ, Ginter PM. Strategic Management of Health Care Organisations. Chichester: John Wiley & Sons, 2008.
Burns L, Bradley E, Weiner B. Shortell and Kaluzny's Healthcare Management: Organization Design and Behavior. New York: Delmar, 2006.
Porter Michael E., and Elizabeth O. Teisberg. Redefining Health Care: Creating Value-Based Competition on Results. Boston: Harvard Business School Press, 2006.
The course will consist of a mixture of lectures on specific topics, mainly theoretical, supported by relevant case studies of strategic relevance to the health sector, and practical exercises with opportunities for students' active participation and discussion. Practical exercise sessions are organized weekly for attending students to complement theoretical lectures and facilitate their study. Lectures are based on three textbooks (SHE, VHV and FGS). Additional material is provided during the course. Students are expected to go through the relevant readings indicated for each class. Supporting slides including the structure and the basic concepts of each lecture and the text of exercise tutorials are available on the course website.
The course will be practical with group analysis of actual case studies from organizations operating across the health sector. Case studies with instructions, group allocations, and supporting literature will circulate during classes. Students should read all the cases and each group should prepare their analysis and presentation within the following weeks.
The evaluation of students is composed of the grade for the final written exam lasting 1h30' at the end of the semester, a grade for an assignment (presentation and discussion of case studies by groups of attending students), and class participation. The assignment accounts for 30% of the final grade, while class participation accounts for 10%. The final written exam is made of multiple structured problems including theoretical questions, practical numerical exercises, graphical illustrations and critical discussion. An oral examination is not envisaged.
Not-attending students must prepare the final written exam using the chapters from the main textbooks indicated in the bibliography, and the case study and exercises material available on the course website. The individual assignment for not-attending students accounts for 30% of the final grade. The written project should be handed in before the final exam session.