The impact of regional competition on the health care industry

We investigate factors that determine firm markups by employing data on prices and quantities of various medical procedures at major hospitals in the United States. We focus on the impact of hospital quality, rival competition and the number of medical procedures upon the health care demand. Our analysis covers health-care markets across the United States with the market definition based upon the hospital referral regions. Our findings highlight potential implications of the relationship between hospital markups and market structure.     

Quality and Welfare in a Mixed Duopoly with Regulated Prices: The Case of a Public and a Private Hospital

Abstract. Hospital markets are often characterized by price regulation and the existence of different ownership types. Using a Hotelling framework, this paper analyses the effect of heterogeneous objectives of hospitals on quality differentiation, profits and overall welfare in a price‐regulated duopoly with exogenous symmetric locations. In contrast to other studies on mixed duopolies, this paper shows that, in this framework, privatization of the public hospital may increase overall welfare. This holds if the public hospital is similar to the private hospital or less efficient and competition is low. The main driving force is the single‐regulated price which induces under‐provision (over‐provision) of quality of the more (less) efficient hospital compared with the first best. However, if the public hospital is sufficiently more efficient and competition is fierce, a mixed duopoly outperforms both a private and a public duopoly due to an equilibrium price below (above) the price of the private (public) duopoly. This medium price discourages over‐provision of quality of the less efficient hospital and – together with the non‐profit objective – encourages an increase in quality of the more efficient public hospital.     

Hospital competition,spillovers and provision of uncompensated care

Using data for California from 2005 until 2010, we investigate to what extent market competition and the presence of non-profits in the area may play a role in equilibrium uncompensated care (UC) levels, allowing those effects to differ according to the hospital’s ownership type. Previous studies have not explored the potential spillover effects from non-profit hospitals into the hospital decision of UC provision. We find evidence that regions with more non-profits experienced larger increases in UC levels, and even more in less concentrated markets. Our results also indicate that UC provision by for-profit hospitals decreases the larger the presence of non-profits in the region, and this effect is magnified when competition is more intense. We, therefore, find no positive spillover effects of non-profits into the hospital decision of UC provision, which may help us to understand the recent trends in UC levels.     

A directional distance function approach for identifying the input/output status of medical residents

Previous empirical studies examining the impact medical residents have on hospital productivity have made a priori assumptions about whether medical residents are inputs (labour providing patient care) or outputs (students receiving mandatory training under the supervision of an attending physician) when specifying their estimating equations. We shed light on the role medical residents play in hospital production by using a data-driven parametric approach based on the directional technology distance function. Our primary goal is to assess the extent to which one of the two roles of medical residents empirically dominates the other and to see whether the role varies across different types of hospital. Using the American Hospital Association data from 1994 to 2010, we find that residents are inputs in all rural and public non-teaching hospitals, but they are outputs in urban-area not-for-profit teaching hospitals. We also demonstrate that the status of residents is related to the case-mix index and can vary with hospital size.     

医院财务管理问题及对策分析

随着医院卫生体制改革的不断深入,医疗市场的竞争也日趋激烈。飞速变化的医疗市场,使每家医院都更加注重自身的快速发展,更多的医院都希望通过加强财务管理来促进自身的快速发展,以前的财务管理模式已经发生转变。随着社会主义市场经济的建立和完善,医院经济活动和经济关系正在发生着根本的变化。     

Efficiency and the quality of management and care: evidence from Japanese public hospitals

We study how the quality of hospital management and medical care both affect efficiency in Japanese local public hospitals. The efficiency is estimated by a stochastic frontier analysis (SFA) and is regressed against the quality scores in hospital accreditation by the Japan Council for Quality Health Care (JCQHC). We find that rule-based hospital management relates to high efficiency, while the suitable management of beds and supplies relates to low efficiency.     

Price Discrimination in Public Healthcare

Could a public healthcare system use price discrimination—paying medical service providers different fees, depending on the service provider's quality—lead to improvements in social welfare? We show that differentiating medical fees by quality increases social welfare relative to uniform pricing (i.e. quality‐invariant fee schedules) whenever hospitals and doctors have private information about their own ability. We also show that by moving from uniform to differentiated medical fees, the public healthcare system can effectively incentivise good doctors and hospitals (i.e. low‐cost‐types) to provide even higher levels of quality than they would under complete information. In the socially optimal quality‐differentiated medical fee system, low‐cost‐type medical‐service providers enjoy a rent due to their informational advantage. Informational rent is socially beneficial because it gives service providers a strong incentive to invest in the extra training required to deliver high‐quality services at low cost, providing yet another efficiency gain from quality‐differentiated medical fees.     

MODELING INTERNAL DECISION MAKING PROCESS: AN EXPLANATION OF CONFLICTING EMPIRICAL RESULTS ON BEHAVIOR OF NON‐PROFIT AND FOR‐PROFIT HOSPITALS

This article develops multiobjective models of hospital decision making that incorporate the internal decision process in both a for‐profit and a non‐profit hospital (NPH). Predicted output and quality for an NPH differ from those for a for‐profit hospital under some conditions but converge under others. Convergence may be the result of a complex internal decision structure with decision control primarily by physicians, similar objectives across different organizational forms, or differing constraints. The mechanisms underlying these outcomes provide explanations for conflicting results in empirical studies of non‐profit and for‐profit hospitals and provide a different rationale for convergence than non‐profit response to competition from for‐profit hospitals. Understanding the source of convergence is important for policies directed toward the tax treatment of NPHs.(JEL D21, D23, I11, L3, L21)     

Let's keep residents out of community hospitals

Attracted by the prestige and higher insurance reimbursements that a university affiliation is likely to bring, community hospital boards have been encouraging the growth of residency programs within community hospitals. The author (who remains anonymous) states that besides increasing the cost of health care, this has compromised the quality of patient care and medical education by requiring physicians who are not trained as educators to asssume responsibility for the educational needs of residents. In hospitals having short residency rotations, the problems are compounded because teaching programs require residents to perform a certain number of procedures in a given period of time. This requirement forces some residents to perform procedures before they obtain the kind of exposure and practice that would otherwise take place. The author believes university hospitals shold train residents for board certification and community hospitals shold concentrate on serving the communities. Conversely, rotating residents through community hospitals exposes them to common medical problems and routine procedures and techniques.     

Hospital nursing costs, billing, and reimbursement

Nursing intensity, estimated direct nursing costs, and daily billing were compared for 12 adult medical or surgical units at an academic medical center from January 1 to May 31, 2005 (22,649 patient days). Two main findings, nursing intensity and direct nursing costs, were highly variable within and across each of the study nursing units (mean 429 dollars, SD 160 dollars); direct costs of nursing care were significantly higher for private room rates compared to intermediate room per diem charges billed at a higher rate (441 dollars vs. 426 dollars, F 37.77, p < 0.001). The results demonstrate that the direct costs of nursing care are not aligned with current billing practices at this university hospital. The use of fixed room and board charges to account for nursing care in U.S. hospitals may be obsolete and an alternative nurse-centric costing, billing, and reimbursement model is proposed.     

Competition and waiting times in hospital markets

This paper studies the impact of hospital competition on waiting times. We use a Salop-type model, with hospitals that differ in (geographical) location and, potentially, waiting time, and two types of patients: high-benefit patients who choose between neighbouring hospitals (competitive segment), and low-benefit patients who decide whether or not to demand treatment from the closest hospital (monopoly segment). Compared with a benchmark case of monopoly, we find that hospital competition leads to longer waiting times in equilibrium if the competitive segment is sufficiently large. Given a policy regime of hospital competition, the effect of increased competition depends on the parameter of measurement: Lower travelling costs increase waiting times, higher hospital density reduces waiting times, while the effect of a larger competitive segment is ambiguous. We also show that, if the competitive segment is large, hospital competition is socially preferable to monopoly only if the (regulated) treatment price is sufficiently high.     

患者满意度调查对医院管理的作用

目的通过住院患者对医护人员服务态度、医疗护理质量、住院环境、是否存在滥收费现象及心理指导的满意度调查,研究患者满意度调查对医院管理的作用。方法对2009年1～2月与11～12月接受满意度调查的住院患者进行回顾性分析。结果患者满意度调查开展前后,实验组医护人员操作、医护人员服务态度、病区环境、是否存在滥收费及心理指导等方面内容评分均高于对照组,两组比较差异有统计学意义(P<0.05);且实验组投诉率较低。结论患者满意度调查可以提高患者对医院的满意度,降低投诉率,及时发现工作中存在的问题。医院应注意提高医护人员的操作及服务态度,杜绝滥收费现象,并定期对患者进行心理指导,加强患者对医院的信任,利于医院的管理。     

Hospital Mergers with Regulated Prices

We study the effects of a hospital merger in a spatial competition framework where semi‐altruistic hospitals choose quality and cost‐containment effort. Whereas a merger always leads to higher average cost efficiency, the effect on quality provision depends on the strategic nature of quality competition, which in turn depends on the degree of altruism and the effectiveness of cost‐containment effort. If qualities are strategic complements, then a merger leads to lower quality for all hospitals. If qualities are strategic substitutes, then a merger leads to higher quality for at least one hospital, and might also yield higher average quality provision and increased patient utility.     

A Leak in the Lifeboat: The effect of Medicaid managed care on the vitality of safety-net hospitals

States are increasingly adopting Medicaid managed care in efforts to address budgetary concerns. The intent is that by releasing Medicaid oversight to private organizations, competition will drive down healthcare expenditures so that savings may be passed to the state. Yet there are concerns that this competitive solution to cost savings might compromise safety-net hospitals. Managed care organizations cut costs by restricting the providers that enrollees are allowed to see. If movement in Medicaid patients disrupts safety-net hospitals’ casemix, this could affect their ability to cross-subsidize care. This study estimates the impact of Medicaid managed care on safety-net hospitals by exploiting a Florida pilot program that required Medicaid recipients in five counties to enroll in managed care. The results suggest this mandate led to a small reduction in safety-net hospitals’ average ratio of payment-to-cost. There is also some evidence that the effect on safety-net hospitals was disproportionate. This disproportionality was such that hospitals nearest the margin were pushed the furthest towards the edge.     

Does more competition increase business-level innovation? Evidence from domestically focused firms in emerging economies

This paper explores the relationship between the level of competition and innovation output for domestically focused businesses in emerging economies in Central and Eastern Europe and Central Asia. It uses survey data from 5054 businesses from the fifth Business Environment and Enterprise Performance Survey. A multivariate probit estimation of the likelihood of different innovation types finds that higher levels of competition are associated with greater likelihood of innovation, but this rises at a decreasing rate as competitor numbers grow. Also, firms operating in economies where competition policy is more effectively enforced are more likely to innovate. However, there is a point where ‘too much’ competition leads to less innovation – suggesting a tipping point effect. This suggests that policies to maximise competition, as measured by number of competitors, may not be optimal for promoting innovation in emerging economies. This requires a need for more nuanced competition policy approaches. The paper also finds that businesses relying on local markets are significantly less likely to introduce innovations than businesses trading domestically outside their local area, but increased competition in local markets increases the likelihood of businesses introducing product innovation. This points to a local rivalry effect.     

Impact of hospitalist care on hospital malpractice premiums using California hospital data

This study assessed the impact of hospitalist care on hospital malpractice premiums. The retrospective cohort study used hospital financial data from the California Office of Statewide Health Planning and Development and the annual hospital survey conducted by the American Hospital Association. The sample included 1000 California hospitals from 2006 to 2010. The effect of hospitalist care on hospital malpractice premiums was evaluated using generalized estimation equation models with log link normal distribution after controlling for hospital and market characteristics, patient utilization and staffing patterns. In multivariable analyses, hospitals with more full-time hospitalists per average daily census were associated with lower malpractice insurance premiums. For example, a one-hospitalist increase per 100 daily censuses resulted in a 5.1% reduction in malpractice insurance premiums. Hospitalist care was associated with a reduction in malpractice insurance expenses. The data reveal that hospitalist care is more efficient and effective in patient treatment and preventing complications. The improved efficiency may reduce malpractice insurance expenses.     

Dynamic factor demands for US cigarette manufacturing under rational expectations

Portugal was the first country with a national health system to incorporate diagnosis related group (DRG) case-mix adjustment in formulating hospital budgets on a nation-wide basis. Most of the case-mix payment-outcomes literature comes from the USA where the quality of data is superior to that of many other countries. The purpose of this article is to assess the initial impact of case-mix financing on the quality of inpatient care in Portuguese hospitals using a methodology that may be appropriate for health care systems whose information is not as complete as that of the USA. Estimating a count data model at the hospital level with inpatient mortality as a quality indicator, the authors find no evidence that case-mix based payment has had adverse consequences on inpatient mortality for the most frequent non-obstetric DRG during the three year time period under study.     

Efficiency of hospitals in Germany: a DEA-bootstrap approach

Various attempts to assess the performance of German hospitals have generated a wide range of estimates regarding their efficiency. These attempts were based on different, often rather small data sets consisting of heterogeneous hospitals; the techniques applied range from simple benchmarking approaches to studies which employ Data Envelopment Analysis (DEA). Some studies report ‘dramatic differences in efficiency’ and propose savings potentials of 50%; others find an average efficiency in excess of 95% and characterize almost 75% of their observations as fully efficient. This study presents results for two datasets representative of two segments of the German hospital system. These segments comprise all hospitals that have one internal medicine and one surgery department; the hospitals are located in the old federal states of Germany. None of the hospitals provides tertiary care. DEA can be applied because all hospitals offer a comparable quality and range of services. The results were estimated with a DEA-bootstrapping procedure and suggest an average bias–corrected efficiency of around 80%.     

COMPETITIVE POTENTIAL OF HOSPITALS AND THEIR NEIGHBORS

Despite many proposals to encourage health-care competition, some underlying assumptions about providers—both physicians and hospitals—have not been examined. This paper attempts to measure the potential for hospital competition by asking a very simple question: What proportion of United States hospitals have neighboring hospitals within reasonable commuting distance? Distances between short-term general hospitals can be calculated by using geographic coordinates for their addresses. According to data from 48 states and 6,520 hospitals, 47 percent of hospitals have no neighbors within 5 miles, and 77 percent have fewer than five neighbors within 5 miles. At a 15-mile radius, the numbers drop to 23 percent and 62 percent, respectively. These results imply that the potential for competitive hospital markets might not exist in large portions of the country. National strategies are likely to be most effective in the few dense hospital markets located primarily in the Northeast and Pacific states.     

Hospital Competition and Quality with Regulated Prices*

We analyse the effect of competition on quality in hospital markets with regulated prices, considering the effect of both introducing competition (monopoly versus competition) and increasing competition through either lower transportation costs (increased substitutability) or a higher number of hospitals. With semi‐altruistic providers and a fairly general cost structure, we show that the relationship between competition and quality is generally ambiguous. In contrast to the received body of theoretical literature, this is consistent with, and potentially explains, the mixed empirical evidence.