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Global Budgets and Excess Demand for Hospital Care

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Author Info
Roger Feldman (University of Minnesota, Minneapolis, MN, USA)
Felix Lobo (Universidad Carlos III, Madrid, Spain)
Abstract

Excess demand is a pervasive feature of health care systems that use global budgets to pay for hospital care, regardless of the amount of money spent by those systems. This paper presents a theory that explains this feature of global budgets. The theory emphasizes that hospital administrators control the allocation of their budget, and that they choose quantity and resource intensity to maximize their own utility. The equilibrium quantity of care provided may be less than quantity demanded by consumers, leading to excess demand for admissions. An increase in the hospital's budget may even be associated with an increase in excess demand. © 1997 by John Wiley & Sons, Ltd.

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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 6 (1997)
Issue (Month): 2 ()
Pages: 187-196
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Handle: RePEc:wly:hlthec:v:6:y:1997:i:2:p:187-196

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Kjeld Møller Pedersen & Terkel Christiansen & Mickael Bech, 2005. "The Danish health care system: evolution - not revolution - in a decentralized system," Health Economics, John Wiley & Sons, Ltd., vol. 14(S1), pages S41-S57. [Downloadable!]
  2. A. Spithoven, 2009. "Why U.S. health care expenditure and ranking on health care indicators are so different from Canada’s," International Journal of Health Care Finance and Economics, Springer, vol. 9(1), pages 1-24, March. [Downloadable!] (restricted)
  3. Jon Magnussen, Lee Rivers Mobley, 1999. "The Impact of Market Environment on Excess Capacity and the Cost of an Empty Hospital Bed," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 6(3), pages 383-398, November. [Downloadable!] (restricted)
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