IDEAS home Printed from https://ideas.repec.org/a/kap/ijhcfe/v9y2009i2p211-232.html
   My bibliography  Save this article

The effect of soft budget constraints on access and quality in hospital care

Author

Listed:
  • Yu-Chu Shen

    ()

  • Karen Eggleston

Abstract

Given an increasingly complex web of financial pressures on providers, studies have examined how the hospitals' overall financial health affect different aspects of hospital operation. In our study, we analyze this issue focusing on hospital access and quality by introducing an important aspect of the financial incentives, soft budget constraints (SBC), that takes into account both hospital's current and past financial health as well as their expected financial outlook (i.e., whether there is a sponsoring organization to bail them out). We develop a conceptual framework of SBC by considering the resultant incentives on cost control and quality improvement innovations; and examine the effect of SBC on the following aspects of access and quality: safety net service survival and AMI mortality rates. We find that hospitals with softer budget constraints are less likely to shut down safety net services. In addition, hospitals with softer budget constraints appear to have better mortality outcomes, suggesting that the reduced incentive to engage in cost control innovation as the result of SBC outweighs the dampening effect of quality improvement innovation.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Yu-Chu Shen & Karen Eggleston, 2009. "The effect of soft budget constraints on access and quality in hospital care," International Journal of Health Economics and Management, Springer, vol. 9(2), pages 211-232, June.
  • Handle: RePEc:kap:ijhcfe:v:9:y:2009:i:2:p:211-232
    DOI: 10.1007/s10754-009-9066-2
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10754-009-9066-2
    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. Gloria J. Bazzoli & Hsueh-Fen Chen & Mei Zhao & Richard C. Lindrooth, 2008. "Hospital financial condition and the quality of patient care," Health Economics, John Wiley & Sons, Ltd., vol. 17(8), pages 977-995.
    2. Sujoy Chakravarty & Martin Gaynor & Steven Klepper & William B. Vogt, 2006. "Does the profit motive make Jack nimble? Ownership form and the evolution of the US hospital industry," Health Economics, John Wiley & Sons, Ltd., vol. 15(4), pages 345-361.
    3. Eggleston, Karen & Shen, Yu-Chu, 2011. "Soft budget constraints and ownership: Empirical evidence from US hospitals," Economics Letters, Elsevier, vol. 110(1), pages 7-11, January.
    4. Eggleston, Karen, 2008. "Soft budget constraints and the property rights theory of ownership," Economics Letters, Elsevier, vol. 100(3), pages 425-427, September.
    5. J. Kornai & E. Maskin & G. Roland., 2004. "Understanding the Soft Budget Constraint," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 12.
    6. 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.
    7. János Kornai, 2009. "The soft budget constraint syndrome in the hospital sector," International Journal of Health Economics and Management, Springer, vol. 9(2), pages 117-135, June.
    8. Mark B. McClellan & Douglas O. Staiger, 2000. "Comparing Hospital Quality at For-Profit and Not- for-Profit Hospitals," NBER Chapters,in: The Changing Hospital Industry: Comparing For-Profit and Not-for-Profit Institutions, pages 93-112 National Bureau of Economic Research, Inc.
    9. Baker, Laurence C., 2001. "Managed care and technology adoption in health care: evidence from magnetic resonance imaging," Journal of Health Economics, Elsevier, vol. 20(3), pages 395-421, May.
    10. Shen, Yu-Chu, 2003. "The effect of financial pressure on the quality of care in hospitals," Journal of Health Economics, Elsevier, vol. 22(2), pages 243-269, March.
    11. Cutler, David M, 1995. "The Incidence of Adverse Medical Outcomes under Prospective Payment," Econometrica, Econometric Society, vol. 63(1), pages 29-50, January.
    12. Mark G. Duggan, 2000. "Hospital Ownership and Public Medical Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 115(4), pages 1343-1373.
    13. Katherine Baicker & Douglas Staiger, 2005. "Fiscal Shenanigans, Targeted Federal Health Care Funds, and Patient Mortality," The Quarterly Journal of Economics, Oxford University Press, vol. 120(1), pages 345-386.
    14. repec:hrv:faseco:30727607 is not listed on IDEAS
    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. Audibert, Martine & Mathonnat, Jacky & Pelissier, Aurore & Huang, Xiao Xian & Ma, Anning, 2013. "Health insurance reform and efficiency of township hospitals in rural China: An analysis from survey data," China Economic Review, Elsevier, vol. 27(C), pages 326-338.
    2. Pérotin, Virginie & Zamora, Bernarda & Reeves, Rachel & Bartlett, Will & Allen, Pauline, 2013. "Does hospital ownership affect patient experience? An investigation into public–private sector differences in England," Journal of Health Economics, Elsevier, vol. 32(3), pages 633-646.
    3. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2015. "Hospital Competition with Soft Budgets," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(3), pages 1019-1048, July.
    4. Kornai, János, 2008. "A puha költségvetési korlát szindrómája a kórházi szektorban
      [The soft budget constraint syndrome in the hospital sector]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1037-1056.
    5. Cavalieri, M. & Guccio, C. & Lisi, D. & Pignataro, G., 2015. "Does the Extent of Per-Case Payment System Affect Hospital Efficiency? Evidence from the Italian NHS," Health, Econometrics and Data Group (HEDG) Working Papers 15/29, HEDG, c/o Department of Economics, University of York.
    6. Eggleston, Karen & Shen, Yu-Chu, 2011. "Soft budget constraints and ownership: Empirical evidence from US hospitals," Economics Letters, Elsevier, vol. 110(1), pages 7-11, January.
    7. Kamhon Kan & Shu-Fen Li & Wei-Der Tsai, 2014. "The impact of global budgeting on treatment intensity and outcomes," International Journal of Health Economics and Management, Springer, vol. 14(4), pages 311-337, December.
    8. János Kornai, 2009. "The soft budget constraint syndrome in the hospital sector," International Journal of Health Economics and Management, Springer, vol. 9(2), pages 117-135, June.
    9. Donald J. Wright, 2016. "Soft Budget Constraints in Public Hospitals," Health Economics, John Wiley & Sons, Ltd., vol. 25(5), pages 578-590, May.
    10. Karen Eggleston & Yu-Chu Shen & Mingshan Lu & Congdong Li & Jian Wang & Zhe Yang & Jing Zhang, 2009. "Soft budget constraints in China: Evidence from the Guangdong hospital industry," International Journal of Health Economics and Management, Springer, vol. 9(2), pages 233-242, June.

    More about this item

    Keywords

    Hospitals; Safety net services; Quality; Bail-outs; Soft budget constraints; I11;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    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:9:y:2009:i:2:p:211-232. 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.