Profit distribution and managers’ behavior in vertical integrated medical delivery systems - An experimental economics study

Background：Fragmentation of medical care has become one of the main reasons for the inefficiency of medical delivery systems. Vertical integration of medical delivery systems (VIMDS) is a reform direction in the world. Managers’ behavior toward profit distribution is an important factor that influences them to pursue the goal of VIMDS. We conducted a controlled economics experiment to explore decision-making by managers of medical institutions in respect of profits and what influences the distribution mechanism in VIMDS. Methods：Undergraduate and postgraduate Students majoring in health management, and administrative staffs from hospitals were recruited to make choices in the role of directors of institutions. Z-Tree software was used to design the experimental program. 96 subjects participated in the experiment. We gathered 479 valid contracts. Results: 66.39% of the subjects choose flexible contracts. The median of the bidding distribution rate to community health service centers of all auctions was 18.50%. The final distribution rate is about 3 percentage points higher than the bidding distribution rate. The median of the 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: The hospital managers have a preference for flexible contracts because of uncertainty in the medical system. Community health service center director may be perfunctory as shading in the integration. Flexible contract and sharing rate beyond participants’ expectation motivate managers to make more cooperative behaviors.