A theoretical approach to dual practice regulations in the health sector

Financial support from Ministerio de Ciencia y Tecnología (ECO2008-04321 and ECO2009- 07616), Generalitat de Catalunya (2009SGR-169) and Junta de Andalucía (SEJ-02936 and SEJ-04992) is gratefully acknowledged.Internationally, there is wide cross-country heterogeneity in government responses to dual practice in the health sector. This paper provides a uniform theoretical framework to analyze and compare some of the most common regulations. We focus on three interventions: banning dual practice, offering rewarding contracts to public physicians, and limiting dual practice (including both limits to private earnings of dual providers and limits to involvement in private activities). An ancillary objective of the paper is to investigate whether regulations that are optimal for developed countries are adequate for developing countries as well. Our results offer theoretical support for the desirability of different regulations in different economic environments