Summary
We assess the relative importance of demand and supply factors as determinants of regional variation in healthcare expenditures in the Netherlands. Our empirical approach follows individuals who migrate between regions. We use individual data on annual healthcare expenditures for the entire Dutch population between the years 2006 and 2013. Regional variation in healthcare expenditures is mostly driven by demand factors, with an estimated share of around 70%. The relative importance of different causes varies with the groups of regions being compared.
We evaluate the introduction of a reimbursement schedule for self-employed mental health care providers in the Netherlands in 2008. The reimbursement schedule follows a discontinuous discrete step function-once the provider has passed a treatment duration threshold the fee is flat until a next threshold is reached. We use administrative mental health care data of the total Dutch population from 2008 to 2010. We find an "efficiency" effect: on the flat part of the fee schedule providers reduce treatment duration by 2 to 7% compared to a control group. However, we also find unintended effects: providers treat patients longer to reach a next threshold and obtain a higher fee. The data shows gaps and bunches in the distribution function of treatment durations, just before and after a threshold. About 11 to 13% of treatments are shifted over a next threshold, resulting in a cost increase of approximately 7 to 9%.
We study heterogeneity in provider altruism among self-employed mental health care providers in the Netherlands. Using a large administrative data set, we exploit the discontinuities in the compensation scheme to separate altruistically motivated providers from financially motivated providers. We find strong heterogeneity in provider altruism. Moreover, we find that more altruistically motivated providers treat mental health patients for shorter durations and report better treatment outcomes, as measured by the improvement in Global Assessment of Functioning. These results suggest that provider altruism is positively related to treatment outcomes.
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