Competition, regulation, and hospital costs, 1982 to 1986.

Department of Social and Administrative Health Sciences, School of Public Health, University of California, Berkeley 94720.
JAMA The Journal of the American Medical Association (Impact Factor: 30.39). 12/1988; 260(18):2676-81. DOI: 10.1001/jama.260.18.2676
Source: PubMed

ABSTRACT We used data on 5490 nonfederal, short-term general hospitals to evaluate the relative effectiveness of regulatory and market-oriented cost-control policies on hospital cost inflation between 1982 and 1986. All-payer rate-regulation programs reduced inflation rates by 16.3% in Massachusetts, 15.4% in Maryland, and 6.3% in New York, compared with the control hospitals in 43 states with neither all-payer rate regulation nor an aggressive market-oriented strategy. New Jersey hospitals experienced a rate of cost inflation similar to the control hospitals. Given the effectiveness of its regulatory program in the 1970s, however, New Jersey began and ended the period from 1982 to 1986 with the lowest costs, controlling for wages and patient mix. California's market-oriented cost-control policy reduced inflation rates by 10.1%. Hospitals with large percentages of patients insured by Medicare's prospective payment system experienced cost inflation rates 16.1% lower than hospitals with small percentages of Medicare patients. Investor-owned hospitals experienced rates of cost increase 11.6% higher than private nonprofit hospitals and 15.0% higher than public hospitals.

  • Source
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: How health care providers compete and how competition among them affects their behavior are crucial questions in theory and health policy. In ordinary markets, competition improves social welfare, However in health care markets facing uncertainty and information asymmetry, competition can take the form of wasteful quality competition and result in cost increase. The purpose of this study is to examine the characteristics of hospital service markets and examine the impact of hospital competition on hospital behavior, more specifically hospital cost and the size of personnel. Based on patient discharge data of 2002 by the Ministry of Health and Welfare and Korea Institute for Health and Social Affairs, and health insurance EDI claims data of 2002, this study measures the degree of competition in the inpatient service market of hospitals, using variable radius method and Herfindahl index. The result of the study shows that the hospital service market consists of on average 3.13 government administrative units(shi, gun, or gu). Compared with hospitals, general or general specialized hospitals cover larger markets and operate in more competitive markets. Nearly 60% of patients use hospitals, which are not located in their government administrative units, meaning that market definition based on variable radius is better than the conventional method of market definition based on government administrative units. The results of multivariate analysis show that competition is not associated with high cost index of hospitals. But hospitals in more competitive markets employ larger(more intensive) input of personnel per 100 beds, implying that hospital competition in Korea can have the form of quality and cost-increasing competition.
    01/2008; 18(1). DOI:10.4332/KJHPA.2008.18.1.001
  • [Show abstract] [Hide abstract]
    ABSTRACT: Objective. —To examine the effects of neonatal intensive care unit (NICU) patient volume and the level of NICU care available at the hospital of birth on neonatal mortality.Design. —Birth certificate data linked to infant death certificates and to infant discharge abstracts were used in a logistic regression model to control for differences in each patient's clinical and demographic risks. Hospitals were classified by the level of NICU care available (no NICU: level I; intermediate NICU: level II; expanded intermediate NICU: level II+: tertiary NICU: level III) and by the average patient census in the NICU.Setting. —All nonfederal hospitals in California with maternity services.Patients. —All births in nonfederal hospitals in California in 1990 (N=594 104), 473 209 (singletons only) of which were successfully linked with discharge abstracts. Of these infants, 53 229 were classified as likely NICU admissions.Main Outcome Measures. —Death within the first 28 days of life, or within the first year of life, if continuously hospitalized.Results. —Patient volume and level of NICU care at the hospital of birth both had significant effects on mortality. Compared with hospitals without an NICU, infants born in a hospital with a level III NICU with an average NICU census of at least 15 patients per day had significantly lower risk-adjusted neonatal mortality (odds ratio, 0.62; 95% confidence interval, 0.47-0.82; P=.002). Risk-adjusted neonatal mortality for infants born in smaller level III NICUs, and in level II+ and level II NICUs, regardless of size, was not significantly different from hospitals without an NICU, and was significantly higher than hospitals with large level III NICUs.Conclusions. —Risk-adjusted neonatal mortality was significantly lower for births that occurred in hospitals with large (average census, >15 patients per day) level III NICUs. Despite the differences in outcomes, costs for the birth of infants born at hospitals with large level III NICUs were not more than those for infants born at other hospitals with NICUs. Concentration of high-risk deliveries in urban areas in a smaller number of hospitals that could provide level III NICU care has the potential to decrease neonatal mortality without increasing costs.
    JAMA The Journal of the American Medical Association 10/1996; 276(13):1054-1059. DOI:10.1001/jama.276.13.1054 · 30.39 Impact Factor