Ownership, System of reimbursement and Mortality rate relationships

The issue is the real effect of the hospital type on the mortality rate. The statistical results on the mortality rate by hospital type (ownership and system of reimbursement) can lead to tremendous misinterpretations. According to statistical results we could conclude that the incentive created by fee-for-service reimbursement allows on 8 point save on the mortality rate. In fact, this ranking on hospital quality is completely dependant of characteristics and illness severity of patients. The computation on mortality rate by age structure crossed with sex totally changes the ranking. To take into account this difficulty, we use a innovative duration model applied to panel data. We consider a duration model with two kinds of unobserved heterogeneity, patient unobserved heterogeneity and hospital unobserved heterogeneity. No assumption of distribution is done on the latter component. By taking into account the observable and unobservable patient heterogeneity, we control the fact that patients admitted in the private sector can be different in term of disease gravity than patients admitted in the public one. We find that the hospital type effect on the instantaneous death probability depends more on the capacity to perform innovative procedure than on the system of reimbursement and/or the ownership. However, hospitals of the private sector both provide more innovative procedures and are more numerous to adopt innovation. Thereby, hospitals of the private sector provide a better quality of care, measured by the probability of dying. Nevertheless, heterogeneity within the type of hospital is bigger in the for-profit hospitals in comparison with the other types of hospital. It suggests that by choosing for-profit hospital, the patient of reference have in average, a lower of instantaneous probability of dying but are less sure about the quality of the hospital.