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The strange case of appropriate C-sections:DRG-tariff regulation, hospital ownership, and market concentration

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  • Berta, P.;
  • Martini, G.;
  • Piacenza, M.;
  • Turati, G.;

Abstract

The aim of this paper is to discuss how different types of hospitals respond to large financial incentives for vaginal deliveries and to financial disincentives for C-sections. We focus on a public health care system based on the quasi–market model. We theoretically and empirically evaluate a government policy equalizing the tariff for C-section and vaginal deliveries at a level such that hospitals face monetary disincentives for C-section and monetary incentives for vaginal deliveries. We first theoretically show that hospital ownership matters insofar different types of hospitals are characterized by different ethical preferences; but ownership interacts with market concentration. We then consider the case-study of Lombardy in Italy. We exploit spatial variation in the presence of for-profit, not-for-profit and public hospitals and in the market concentration at the local level to evaluate the relationship between ownership and the probability of C-section. Our empirical results strongly suggest that competitive pressures from alternative providers tend to homogenize behaviors. However, in local monopolies, we do observe less C-section from private for-profit hospitals than from public and private non-profit hospitals especially when they are medically appropriate.

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  • 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.
  • Handle: RePEc:yor:hectdg:19/02
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    More about this item

    Keywords

    public; for-profit and nonprofit hospital; market for birth deliveries; tariff regulation; c-sections;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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