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Supplier-induced demand for newborn treatment: Evidence from Japan

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  • Shigeoka, Hitoshi
  • Fushimi, Kiyohide

Abstract

We estimate the degree of supplier-induced demand for newborn treatment by exploiting changes in reimbursement arising from the introduction of the partial prospective payment system (PPS) in Japan. Under the partial PPS, neonatal intensive care unit (NICU) utilization became relatively more profitable than other procedures, since it was excluded from prospective payments. We find that hospitals have responded to PPS adoption by increasing NICU utilization and by more frequently manipulating infants’ reported birth weights which in large part determine their maximum allowable stay in the NICU. This induced demand substantially increases the reimbursements received by hospitals.

Suggested Citation

  • Shigeoka, Hitoshi & Fushimi, Kiyohide, 2014. "Supplier-induced demand for newborn treatment: Evidence from Japan," Journal of Health Economics, Elsevier, vol. 35(C), pages 162-178.
  • Handle: RePEc:eee:jhecon:v:35:y:2014:i:c:p:162-178
    DOI: 10.1016/j.jhealeco.2014.03.003
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    Cited by:

    1. Margit Sommersguter-Reichmann & Adolf Stepan, 2017. "Hospital physician payment mechanisms in Austria: do they provide gateways to institutional corruption?," Health Economics Review, Springer, vol. 7(1), pages 1-13, December.
    2. Reif, Simon & Wichert, Sebastian & Wuppermann, Amelie, 2018. "Is it good to be too light? Birth weight thresholds in hospital reimbursement systems," Journal of Health Economics, Elsevier, vol. 59(C), pages 1-25.
    3. Hennig-Schmidt, Heike & Jürges, Hendrik & Wiesen, Daniel, 2018. "Dishonesty in healthcare practice: A behavioral experiment on upcoding in neonatology," HERO On line Working Paper Series 2018:3, Oslo University, Health Economics Research Programme.
    4. Jürges, Hendrik & Köberlein, Juliane, 2013. "First do no harm. Then do not cheat: DRG upcoding in German neonatology," MEA discussion paper series 201307, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    5. Jürges, Hendrik & Köberlein, Juliane, 2015. "What explains DRG upcoding in neonatology? The roles of financial incentives and infant health," Journal of Health Economics, Elsevier, vol. 43(C), pages 13-26.
    6. Salm, Martin & Wübker, Ansgar, 2015. "Do Hospitals Respond to Increasing Prices by Supplying Fewer Services?," IZA Discussion Papers 9229, Institute for the Study of Labor (IZA).
    7. Hendrik Jürges & Juliane Köberlein, 2013. "First Do No Harm. Then Do Not Cheat: DRG Upcoding in German Neonatology," CESifo Working Paper Series 4341, CESifo Group Munich.
    8. Haruko Noguchi, 2015. "How does the Price Regulation Policy Impact on Patient–Nurse Ratios and the Length of Hospital Stays in Japanese Hospitals?," Asian Economic Policy Review, Japan Center for Economic Research, vol. 10(2), pages 301-323, July.
    9. repec:mea:meawpa:13272 is not listed on IDEAS
    10. Breining, Sanni & Daysal, N. Meltem & Simonsen, Marianne & Trandafir, Mircea, 2015. "Spillover Effects of Early-Life Medical Interventions," IZA Discussion Papers 9086, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Supplier-induced demand; Neonatal intensive care unit; Prospective payment system; Birth weight manipulation; Hospital gaming;

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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