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Hospital Competition under Regulated Prices: Application to Urban Health Sector Reforms in China

  • Karen Eggleston

    ()

  • Winnie Yip

We develop a model of public-private hospital competition under regulated prices, recognizing that hospitals are multi-service firms and that equilibria depend on the interactions of patients, hospital administrators, and physicians. We then use data from China to calibrate a simulation model of the impact of China's recent payment and organizational reforms on cost, quality and access. Both the analytic and simulation results show how providing implicit insurance through distorted prices leads to over/under use of services by profitability, which in turn fuels cost escalation and reduces access for those who cannot afford to self-pay for care. Simulations reveal the benefits of mixed payment and expanded insurance cover for mitigating these distortions.

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Article provided by Springer in its journal International Journal of Health Care Finance and Economics.

Volume (Year): 4 (2004)
Issue (Month): 4 (December)
Pages: 343-368

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Handle: RePEc:kap:ijhcfe:v:4:y:2004:i:4:p:343-368
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=106603

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  1. Liu, Yuanli, 2002. "Reforming China's urban health insurance system," Health Policy, Elsevier, vol. 60(2), pages 133-150, May.
  2. Liu, Yuanli & Hsiao, William C. & Eggleston, Karen, 1999. "Equity in health and health care: the Chinese experience," Social Science & Medicine, Elsevier, vol. 49(10), pages 1349-1356, November.
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  12. Banerjee, A.V., 1997. "A Theory of Misgovernance," Working papers 97-4, Massachusetts Institute of Technology (MIT), Department of Economics.
  13. Hsiao, William C. L., 1995. "The Chinese health care system: Lessons for other nations," Social Science & Medicine, Elsevier, vol. 41(8), pages 1047-1055, October.
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  15. Henderson, Gail & Shuigao, Jin & Akin, John & Zhiming, Li & Jianmin, Wang & Haijiang, Ma & Yunan, He & Xiping, Zhang & Ying, Chang & Keyou, Ge, 1995. "Distribution of medical insurance in China," Social Science & Medicine, Elsevier, vol. 41(8), pages 1119-1130, October.
  16. Sloan, Frank A., 2000. "Not-for-profit ownership and hospital behavior," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 21, pages 1141-1174 Elsevier.
  17. Joseph P. Newhouse, 2004. "Pricing the Priceless: A Health Care Conundrum," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262640589, June.
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