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How to Regulate Heterogeneous Hospitals?

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  • Brigitte Dormont
  • Carine Milcent

Abstract

Ways to regulate French public hospitals? The purpose of this paper is to study hospital costs in the event of introduction of a Prospective Payment System in France. We use a nested three dimensional database (stays-hospitals-years) in order to identify hospital unobservable heterogeneity and a transitory moral hazard component of cost variability. Econometric estimate are performed on a sample of 7,314 stays for acute myocardial infarction observed in 36 French public hospitals over the period 1994 to 1997. Transitory moral hazard is far from negligible : its estimated standard error is about 50 % of the standard error we estimate for cost variability due to permanent unobervable heterogeneity between hospitals. Simulations show that a cost reduction of about 16 % can be expected from implmentation of a payment system which allows for permanent unobserved heterogeneity and eliminates only transitory moral hazard.
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(This abstract was borrowed from another version of this item.)
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Suggested Citation

  • Brigitte Dormont & Carine Milcent, 2005. "How to Regulate Heterogeneous Hospitals?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(3), pages 591-621, September.
    • Handle: RePEc:bla:jemstr:v:14:y:2005:i:3:p:591-621
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    References listed on IDEAS

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    1. Pope, Gregory C., 1990. "Using hospital-specific costs to improve the fairness of prospective reimbursement," Journal of Health Economics, Elsevier, vol. 9(3), pages 237-251, November.
    2. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, March.
    3. Guillem López-Casasnovas & Marc Saez, 1999. "The impact of teaching status on average costs in Spanish hospitals," Health Economics, John Wiley & Sons, Ltd., vol. 8(7), pages 641-651.
    4. Joseph P. Newhouse, 1996. "Reimbursing Health Plans and Health Providers: Efficiency in Production versus Selection," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1236-1263, September.
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    Cited by:

    1. repec:dau:papers:123456789/12066 is not listed on IDEAS
    2. Dormont, Brigitte & Milcent, Carine, 2012. "Ownership and Hospital Productivity," CEPREMAP Working Papers (Docweb) 1205, CEPREMAP.
    3. Daidone, Silvio & Street, Andrew, 2013. "How much should be paid for specialised treatment?," Social Science & Medicine, Elsevier, vol. 84(C), pages 110-118.
    4. repec:bla:jpbect:v:19:y:2017:i:3:p:732-738 is not listed on IDEAS
    5. Philippe Choné & Stéphane Gauthier, 2017. "Optimal rationing within a heterogeneous population," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(3), pages 732-738, June.
    6. Carine Milcent & Brigitte Dormont, 2017. "Ownership and Hospital Productivity
      [Productivité et l’efficacité des hôpitaux publics et privés]      ," PSE Working Papers hal-01521269, HAL.
    7. repec:dau:papers:123456789/5430 is not listed on IDEAS

    More about this item

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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