Hospital Choices, Hospital Prices and Financial Incentives to Physicians
AbstractWe estimate a choice function which rationalizes hospital referrals for privately-insured birth episodes in California. The function varies across insurers and is additively separable in: a hospital price paid by the insurer, the distance traveled, and plan and severity-specific hospital fixed effects (capturing various dimensions of hospital quality). We use an inequality estimator that allows for errors in price and detailed hospital-severity interactions and obtain markedly different results than those from a logit. The inequality estimator indicates that insurers with more capitated physicians are more responsive to hospital prices. Capitated plans are willing to send patients further to utilize similar-quality lower-priced hospitals; but the trade-off between quality and costs does not vary with capitation rates.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19333.
Date of creation: Aug 2013
Date of revision:
Publication status: published as Kate Ho, Ariel Pakes. "Hospital Choices, Hospital Prices and Financial Incentives to Physicians," in Amitabh Chandra, David M. Cutler, Robert S. Huckman, and Elizabeth Martinez, organizers, "Hospital Organization and Productivity" Health Affairs (2014)
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Find related papers by JEL classification:
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-09-28 (All new papers)
- NEP-DCM-2013-09-28 (Discrete Choice Models)
- NEP-HEA-2013-09-28 (Health Economics)
- NEP-REG-2013-09-28 (Regulation)
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