Liver transplantation is often a life-saving treatment for patients who are suffering from various diseases of the liver; however, its use is limited by the shortage of deceased-donor livers. In the United States, the two most common indications for liver transplantation are endstage liver disease (ESLD) and hepatocellular carcinoma (HCC), which is a type of liver cancer. The US liver allocation policy prioritizes ESLD candidates on the liver transplant waiting list based on their laboratory model for end-stage liver disease (MELD) scores.

This paper examines the impact of two reimbursement schemes on patient welfare, readmission rate, and waiting time in a three tiered public healthcare system comprising (a) a public funder who decides on the reimbursement rate to maximize patient welfare, (b) a public healthcare provider (HCP) who decides on the service rate (which affects readmission rate and operating cost), and (c) a pool of (waiting time sensitive) patients who decide whether or not to seek elective treatments.