The Financing of Public Hospitals in Senegal: Taking into Account the Asymmetry of Information

The objective of our study was to analyze the information asymmetry that exists between the state and public hospitals in Senegal. The use of a theoretical model to highlight hospital regulation has led to a number of important results. Indeed, the optimal solution consists in introducing a distortion in the cost reduction effort required to achieve an arbitrage between productive efficiency and the extraction of the hospital’s rent. The use of a menu of non-linear contracts for hospital funding is consistent with a cost reimbursement policy (such as the overall envelope policy) while a menu of linear contracts is modelled on the fixed-price pricing system (for example, by pathology or activity).