IDEAS home Printed from https://ideas.repec.org/a/kap/ijhcfe/v4y2004i4p343-368.html
   My bibliography  Save this article

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

Author

Listed:
  • Karen Eggleston

    ()

  • Winnie Yip

Abstract

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.

Suggested Citation

  • Karen Eggleston & Winnie Yip, 2004. "Hospital Competition under Regulated Prices: Application to Urban Health Sector Reforms in China," International Journal of Health Economics and Management, Springer, vol. 4(4), pages 343-368, December.
  • Handle: RePEc:kap:ijhcfe:v:4:y:2004:i:4:p:343-368
    as

    Download full text from publisher

    File URL: http://journals.kluweronline.com/issn/1389-6563/contents
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Banerjee, A.V., 1997. "A Theory of Misgovernance," Working papers 97-4, Massachusetts Institute of Technology (MIT), Department of Economics.
    2. 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.
    3. 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.
    4. Ma, Ching-to Albert, 1994. "Health Care Payment Systems: Cost and Quality Incentives," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 93-112, Spring.
    5. Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1127-1161.
    6. Frank, Richard G. & Glazer, Jacob & McGuire, Thomas G., 2000. "Measuring adverse selection in managed health care," Journal of Health Economics, Elsevier, vol. 19(6), pages 829-854, November.
    7. Abhijit V. Banerjee, 1997. "A Theory of Misgovernance," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1289-1332.
    8. Mark G. Duggan, 2000. "Hospital Ownership and Public Medical Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 115(4), pages 1343-1373.
    9. Pedro Pita Barros & Xavier Martinez-Giralt, 2002. "Public and Private Provision of Health Care," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(1), pages 109-133, March.
    10. Joseph P. Newhouse, 2004. "Pricing the Priceless: A Health Care Conundrum," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262640589, January.
    11. 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.
    12. McGuire, Thomas G., 2000. "Physician agency," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 9, pages 461-536 Elsevier.
    13. 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.
    14. Liu, Yuanli, 2002. "Reforming China's urban health insurance system," Health Policy, Elsevier, vol. 60(2), pages 133-150, May.
    15. Fleisher, Belton M. & Wang, Xiaojun, 2001. "Efficiency Wages and Work Incentives in Urban and Rural China," Journal of Comparative Economics, Elsevier, vol. 29(4), pages 645-662, December.
    16. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Multiproduct Firms, Product Differentiation, and Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
    17. repec:hrv:faseco:30727607 is not listed on IDEAS
    18. Keeler, Emmett B. & Carter, Grace & Newhouse, Joseph P., 1998. "A model of the impact of reimbursement schemes on health plan choice," Journal of Health Economics, Elsevier, vol. 17(3), pages 297-320, June.
    19. Winnie Yip & Karen Eggleston, 2001. "Provider payment reform in China: the case of hospital reimbursement in Hainan province," Health Economics, John Wiley & Sons, Ltd., vol. 10(4), pages 325-339.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Currie, Janet & Lin, Wanchuan & Zhang, Wei, 2011. "Patient knowledge and antibiotic abuse: Evidence from an audit study in China," Journal of Health Economics, Elsevier, vol. 30(5), pages 933-949.
    2. Lijian Qin & Suwen Pan & Chenggang Wang & Zhongyi Jiang, 2012. "Adverse selection in China's New Rural Cooperative Medical Scheme," China Agricultural Economic Review, Emerald Group Publishing, vol. 4(1), pages 69-83, January.
    3. LIN, Zhijun & YU, Zengbiao & ZHANG, Liqun, 2014. "Performance outcomes of balanced scorecard application in hospital administration in China," China Economic Review, Elsevier, vol. 30(C), pages 1-15.
    4. Wang, Hufeng & Gusmano, Michael K. & Cao, Qi, 2011. "An evaluation of the policy on community health organizations in China: Will the priority of new healthcare reform in China be a success?," Health Policy, Elsevier, vol. 99(1), pages 37-43, January.
    5. Wang, Hufeng, 2009. "A dilemma of Chinese healthcare reform: How to re-define government roles?," China Economic Review, Elsevier, vol. 20(4), pages 598-604, December.
    6. repec:bla:ijhplm:v:32:y:2017:i:3:p:339-350 is not listed on IDEAS
    7. Tabea Bork-HÜffer & Frauke Kraas, 2015. "Health Care Disparities in Megaurban China: The Ambivalent Role of Unregistered Practitioners," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 106(3), pages 339-352, July.
    8. Liu, Gordon G. & Li, Lin & Hou, Xiaohui & Xu, Judy & Hyslop, Daniel, 2009. "The role of for-profit hospitals in medical expenditures: Evidence from aggregate data in China," China Economic Review, Elsevier, vol. 20(4), pages 625-633, December.
    9. Eggleston, Karen & Wang, Jian & Rao, Keqin, 2008. "From plan to market in the health sector?: China's experience," Journal of Asian Economics, Elsevier, vol. 19(5-6), pages 400-412.
    10. Philip H. Brown & Caroline Theoharides, 2009. "Health‐seeking behavior and hospital choice in China's New Cooperative Medical System," Health Economics, John Wiley & Sons, Ltd., vol. 18(S2), pages 47-64, July.
    11. Currie, Janet & Lin, Wanchuan & Meng, Juanjuan, 2014. "Addressing antibiotic abuse in China: An experimental audit study," Journal of Development Economics, Elsevier, vol. 110(C), pages 39-51.
    12. Eggleston, Karen, 2005. "Multitasking and mixed systems for provider payment," Journal of Health Economics, Elsevier, vol. 24(1), pages 211-223, January.
    13. Karen Eggleston & Anupa Bir, 2009. "Measuring Selection Incentives in Managed Care: Evidence From the Massachusetts State Employee Insurance Program," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 76(1), pages 159-175.
    14. Ng, Ying Chu, 2011. "The productive efficiency of Chinese hospitals," China Economic Review, Elsevier, vol. 22(3), pages 428-439, September.
    15. Jia CUI & Shaomin HUANG & Gerald RAMEY, 2009. "China’s Healthcare Reform And Resources Redistribution: Lessons For Emerging Nations," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 4, pages 27-42, November.
    16. Janet Currie & Wanchuan Lin & Juanjuan Meng, 2012. "Using Audit Studies to Test for Physician Induced Demand: The Case of Antibiotic Abuse in China," NBER Working Papers 18153, National Bureau of Economic Research, Inc.
    17. Hou, Xiaohui & Coyne, Joseph, 2008. "The emergence of proprietary medical facilities in China," Health Policy, Elsevier, vol. 88(1), pages 141-151, October.

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:ijhcfe:v:4:y:2004:i:4:p:343-368. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.