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Introducing activity-based payment in the hospital industry: Evidence from French data

  • P. CHONÉ

    (Insee)

  • F. EVAIN

    (Insee)

  • L. WILNER

    (Insee)

  • E. YILMAZ

    (Insee)

Many countries have reformed hospital reimbursement policies to provide stronger incentives for quality and cost reduction. The purpose of this work is to show how the effect of such reforms depends on the intensity of local competition. We build a nonprice competition model to examine the effect of a shift from global budget to patient-based payment for public hospitals in France. We predict that the number of patient admissions should increase in public hospitals by more than in private clinics and that the increase in admissions should be stronger in public hospitals that are more exposed to competitive pressure from private clinics. Considering the reform implemented in France between 2005 and 2008, we find empirical evidence supporting these predictions: the activity increased up to 10% in public hospitals more exposed to competitive pressure from private clinics while it hardly raised by 4% in public hospitals less exposed to such a competitive pressure, in comparison with private clinics.

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File URL: http://www.insee.fr/en/publications-et-services/docs_doc_travail/G2013-11bis.pdf
File Function: Document de travail de la DESE numéro G2013-11
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Paper provided by Institut National de la Statistique et des Etudes Economiques, DESE in its series Documents de Travail de la DESE - Working Papers of the DESE with number g2013-11.

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Date of creation: 2013
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Handle: RePEc:crs:wpdeee:g2013-11
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  1. Randall P. Ellis & Thomas G. McGuire, 1994. "Hospital Response to Prospective Payment: Moral Hazard, Selection, and Practice-Style Effects," Papers 0050, Boston University - Industry Studies Programme.
  2. Moreno-Serra, Rodrigo & Wagstaff, Adam, 2009. "System-wide impacts of hospital payment reforms : evidence from central and eastern Europe and central Asia," Policy Research Working Paper Series 4987, The World Bank.
  3. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2008. "Hospital competition and quality with regulated prices," NIPE Working Papers 06/2008, NIPE - Universidade do Minho.
  4. Andrei Shleifer, 1985. "A Theory of Yardstick Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 319-327, Autumn.
  5. Hodgkin, Dominic & McGuire, Thomas G., 1994. "Payment levels and hospital response to prospective payment," Journal of Health Economics, Elsevier, vol. 13(1), pages 1-29, March.
  6. Carol Propper, 2012. "Competition, incentives and the English NHS," Health Economics, John Wiley & Sons, Ltd., vol. 21(1), pages 33-40, 01.
  7. Lancaster, Tony, 2000. "The incidental parameter problem since 1948," Journal of Econometrics, Elsevier, vol. 95(2), pages 391-413, April.
  8. Zack Cooper & Stephen Gibbons & Simon Jones & Alistair McGuire, 2011. "Does Hospital Competition Save Lives? Evidence From The English NHS Patient Choice Reforms," Economic Journal, Royal Economic Society, vol. 121(554), pages F228-F260, 08.
  9. Martin Gaynor & Robert J Town, 2012. "Competition in Health Care Markets," The Centre for Market and Public Organisation 12/282, Department of Economics, University of Bristol, UK.
  10. Leemore S. Dafny, 2005. "How Do Hospitals Respond to Price Changes?," American Economic Review, American Economic Association, vol. 95(5), pages 1525-1547, December.
  11. Ching-to Albert Ma, 1994. "Health Care Payment Systems: Cost and Quality Incentives," Papers 0047, Boston University - Industry Studies Programme.
  12. Ellis, Randall P., 1998. "Creaming, skimping and dumping: provider competition on the intensive and extensive margins1," Journal of Health Economics, Elsevier, vol. 17(5), pages 537-555, October.
  13. Gowrisankaran, Gautam & Lucarelli, Claudio & Schmidt-Dengler, Philipp & Town, Robert, 2011. "The impact of the Medicare Rural Hospital Flexibility Program on patient choice," International Journal of Industrial Organization, Elsevier, vol. 29(3), pages 342-344, May.
  14. Pope, Gregory C., 1989. "Hospital nonprice competition and medicare reimbursement policy," Journal of Health Economics, Elsevier, vol. 8(2), pages 147-172, June.
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