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An Analysis of the Supplier-Induced Demand in the Hospital sector : Switching Regime Estimates for Belgium

Author

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  • Bughin, Jacques

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

This paper attempts to provide some new evidence of the so called 'supplier-induced demand effect' in the hospital sector. By means of an endogenous regime switching model, the maximum likelihood estimates for Belgium are consistent with the idea that hospitals in excess-capacity actually increase the average length of stay of their patients, above what should have been if one considers only the 'patients' case-mix' of the hospitals. The model also includes the possibility of spatial spillovers which should appear as a consequence of this disequilibrium regimes. Those spillovers not only provide a better explanation of the patients dispersion among hospitals. They also decrease the 'supplier-induced demand' effect generated by hospitals by reducing the original extent of the excess-supplied situation. The model seems robust with regard to some consistency tests we have carried out. ; e.g., it is shown that hospital sectors in predominant excess-demand (resp., excess-supply) are generally those where the net emigration balance is positive, (resp., negative).

Suggested Citation

  • Bughin, Jacques, 1991. "An Analysis of the Supplier-Induced Demand in the Hospital sector : Switching Regime Estimates for Belgium," LIDAM Discussion Papers IRES 1991006, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:1991006
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