AN ECONOMIC THEORY OF THE FOURTH HURDLE
Version of Record online: 30 APR 2012
Copyright © 2012 John Wiley & Sons, Ltd.
Volume 22, Issue 5, pages 600–610, May 2013
How to Cite
Rogowski, W. (2013), AN ECONOMIC THEORY OF THE FOURTH HURDLE. Health Econ., 22: 600–610. doi: 10.1002/hec.2830
- Issue online: 4 APR 2013
- Version of Record online: 30 APR 2012
- Manuscript Accepted: 2 APR 2012
- Manuscript Revised: 2 MAR 2012
- Manuscript Received: 13 OCT 2011
- healthcare reimbursement;
- healthcare coverage;
- fourth hurdle;
- value of information;
- new institutional economics
Third party payers' decision processes for financing health technologies (‘fourth hurdle’ processes) are subject to intensive descriptive empirical investigation. This paper addresses the need for a theoretical foundation of this research and develops a theoretical framework for analysing fourth hurdle processes from an economics perspective.
On the basis of a decision-analytic framework and the theory of agents, fourth hurdle processes are described as sets of institutions to maximize the value derived from finite healthcare resources. Benefits are assumed to arise from the value of better information about and better implementation of the most cost-effective choice. Implementation is improved by decreased information asymmetries and better alignment of incentives. This decreases the effects of ex ante and ex post moral hazard on service provision. Potential indicators of high benefit include high costs associated with wrong decisions and large population sizes affected by the decision.
The framework may serve as a basis both for further theoretical work, for example, on the appropriate degree of participation as well as further empirical work, for example, on comparative assessments of fourth hurdle processes. It needs to be complemented by frameworks for analysing fourth hurdle institutions developed by other disciplines such as bioethics or law. Copyright © 2012 John Wiley & Sons, Ltd.