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Do public hospitals respond to changes in DRG price regulation? The case of birth deliveries in the Italian NHS

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  • Marina Di Giacomo
  • Massimiliano Piacenza
  • Luigi Siciliani
  • Gilberto Turati

Abstract

We study how changes in Diagnosis‐Related Group price regulation affect hospital behaviour in quasi‐markets with exclusive provision by public hospitals. Exploiting a quasi‐natural experiment, we use a difference‐in‐differences approach to test whether public hospitals respond to an exogenous change in Diagnosis‐Related Group tariffs by increasing C‐section rates and/or by upcoding. Controlling for a detailed set of mother characteristics, we find that price changes did not affect the probability of a C‐section. We do however find evidence of upcoding: Conditional on the birth delivery method (either a C‐section or a vaginal delivery), public hospitals experiencing the largest price change exhibit a higher probability of treating patients coded as complicated. This finding suggests that even public hospitals may be sensitive to market incentives.

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  • Marina Di Giacomo & Massimiliano Piacenza & Luigi Siciliani & Gilberto Turati, 2017. "Do public hospitals respond to changes in DRG price regulation? The case of birth deliveries in the Italian NHS," Health Economics, John Wiley & Sons, Ltd., vol. 26(S2), pages 23-37, September.
    • Handle: RePEc:wly:hlthec:v:26:y:2017:i:s2:p:23-37
    DOI: 10.1002/hec.3541
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    Cited by:

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    2. Barili, Emilia & Bertoli, Paola & Grembi, Veronica, 2021. "Fee equalization and appropriate health care," Economics & Human Biology, Elsevier, vol. 41(C).
    3. De Luca, Giacomo & Lisi, Domenico & Martorana, Marco & Siciliani, Luigi, 2021. "Does higher Institutional Quality improve the Appropriateness of Healthcare Provision?," Journal of Public Economics, Elsevier, vol. 194(C).
    4. Berta, P.; & Martini, G.; & Piacenza, M.; & Turati, G.;, 2019. "The strange case of appropriate C-sections:DRG-tariff regulation, hospital ownership, and market concentration," Health, Econometrics and Data Group (HEDG) Working Papers 19/02, HEDG, c/o Department of Economics, University of York.
    5. Alex Proshin & Alexandre Cazenave‐Lacroutz & Lise Rochaix, 2023. "Impact of tariff refinement on the choice between scheduled C‐section and normal delivery: Evidence from France," Health Economics, John Wiley & Sons, Ltd., vol. 32(7), pages 1397-1433, July.
    6. Paolo Berta & Gianmaria Martini & Massimiliano Piacenza & Gilberto Turati, 2020. "The strange case of less C‐sections: Hospital ownership, market concentration, and DRG‐tariff regulation," Health Economics, John Wiley & Sons, Ltd., vol. 29(S1), pages 30-46, October.
    7. Matthias Bäuml, 2021. "How do hospitals respond to cross price incentives inherent in diagnosis‐related groups systems? The importance of substitution in the market for sepsis conditions," Health Economics, John Wiley & Sons, Ltd., vol. 30(4), pages 711-728, April.
    8. Lai, Yi & Fu, Hongqiao & Li, Ling & Yip, Winnie, 2022. "Hospital response to a case-based payment scheme under regional global budget: The case of Guangzhou in China," Social Science & Medicine, Elsevier, vol. 292(C).
    9. Bäuml, Matthias & Dette, Tilman & Pollmann, Michael, 2022. "Price and income effects of hospital reimbursements," Journal of Health Economics, Elsevier, vol. 81(C).
    10. Levaggi, Laura & Levaggi, Rosella, 2023. "Competition in the provision of hospital care: Are mixed markets a valid alternative?," Economic Modelling, Elsevier, vol. 127(C).

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