Incentives and production of mental health services

Yaffa Machnes

Research output: Contribution to journalArticlepeer-review

2 Scopus citations


Nonprofit mental hospitals were reimbursed using two different systems: per diem and capitation. We estimate the production function of hospitals under these two reimbursement systems and show empirically that the per diem system caused negative marginal product of inputs that provided mainly maintenance. This waste of resources was remedied under capitation.

Original languageEnglish
Pages (from-to)459-466
Number of pages8
JournalEuropean Journal of Political Economy
Issue number3
StatePublished - Nov 1996

Bibliographical note

Funding Information:
I thank the refereesf or very importantr emarksand the Schnitzer Foundation for Research on the Israeli Economy and Society for support.


  • Mental hospitals
  • Reimbursement systems


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