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How to Regulate Heterogeneous Hospistals

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  • Brigitte Dormont

Abstract

Ways to regulate French public hospitals? The purpose of this paper is to study hospital costs in the event of introduction of a Prospective Payment System in France. We use a nested three dimensional database (stays-hospitals-years) in order to identify hospital unobservable heterogeneity and a transitory moral hazard component of cost variability. Econometric estimate are performed on a sample of 7,314 stays for acute myocardial infarction observed in 36 French public hospitals over the period 1994 to 1997. Transitory moral hazard is far from negligible : its estimated standard error is about 50 % of the standard error we estimate for cost variability due to permanent unobervable heterogeneity between hospitals. Simulations show that a cost reduction of about 16 % can be expected from implmentation of a payment system which allows for permanent unobserved heterogeneity and eliminates only transitory moral hazard.
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Suggested Citation

  • Brigitte Dormont, 2003. "How to Regulate Heterogeneous Hospistals," THEMA Working Papers 2003-11, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    • Handle: RePEc:ema:worpap:2003-11
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    File URL: http://www.u-cergy.fr/IMG/documents//2003-11Dormont.pdf
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    References listed on IDEAS

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    1. Joseph P. Newhouse, 1996. "Reimbursing Health Plans and Health Providers: Efficiency in Production versus Selection," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1236-1263, September.
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    1. repec:dau:papers:123456789/12066 is not listed on IDEAS
    2. Dormont, Brigitte & Milcent, Carine, 2012. "Ownership and Hospital Productivity," CEPREMAP Working Papers (Docweb) 1205, CEPREMAP.
    3. Carine Milcent & Brigitte Dormont, 2017. "Ownership and Hospital Productivity
      [Productivité et l’efficacité des hôpitaux publics et privés]      ," PSE Working Papers hal-01521269, HAL.
    4. Daidone, Silvio & Street, Andrew, 2013. "How much should be paid for specialised treatment?," Social Science & Medicine, Elsevier, vol. 84(C), pages 110-118.
    5. repec:dau:papers:123456789/5430 is not listed on IDEAS

    More about this item

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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