Physician agency in China: Evidence from a drug-percentage incentive scheme

2021

BMC Health Serv Res

Background Price regulation is a common constraint in Chinese hospitals. Based on a policy experiment conducted in China on the price deregulation of private nonprofit hospitals, this study empirically examines the impact of medical service price regulation on the pricing of medical services by hospitals. Methods Using the claim data of insured inpatients residing in a major Chinese city for the period 2010–2015, this study constructs a DID (difference-in-differences) model to compare the impact of price deregulation on medical expenditure and expenditure structure between public and private nonprofit hospitals. Results The empirical results based on micro data reveal that, price deregulated significantly increased the total expenditure per inpatient visit by 10.5%. In the itemized expenditure, the diagnostic test and drug expenditure per inpatient visit of private nonprofit hospitals decreased significantly, whereas the physician service expenditure per inpatient visit increased significantly. For expenditure structure, the proportions of drug expenditure and diagnostic test expenditure per inpatient visit significantly decreased by 5.7 and 3.1%, respectively. Furthermore, this paper also found that hospitals had larger price changes for dominant diseases than for non-dominant diseases. Conclusions Under price regulation, medical service prices generally become lower than their costs. Therefore, after price deregulation, private nonprofit hospitals increase medical service prices above their cost and achieve the service premium increasing physician medical services. Further, although price deregulation causes patient expenditure to increase to a certain level, it optimizes the expenditure structure, as well.

Section: Introductionmentioning

confidence: 99%

Deregulation and pricing of medical services: a policy experiment based in China

2021

BMC Health Serv Res

“…When the government controls the drug expenditure proportion, hospitals compensate for this decline in proportion by increasing their diagnostic test expenditure [8][9][10][11][12].…”

Section: Introductionmentioning

confidence: 99%

“…On encountering price regulation, such as a reduction in the proportion of drug expenditure, doctors increase the non-drug expenditure, rather than reducing the drug expenditure, of patients. Although this action does not alleviate the nancial burden on patients, it distorts, to a certain extent, the expenditure structure and reduces the welfare of patients [1,9]. Since doctors have information advantage and hospitals monopolize the medical services market, price regulation cannot improve patients' welfare without changing the advantageous position of hospitals and doctors.…”

Section: Introductionmentioning

confidence: 99%

Deregulation and pricing of medical services A policy experiment based in China

2020

Preprint

Background: Price regulation is a common constraint in Chinese hospitals. Based on a policy experiment conducted in China on the price deregulation of private nonprofit hospitals, this study empirically examines the impact of medical service price regulation on the pricing of medical services by hospitals. Methods: Using the claim data of insured inpatients residing in a major Chinese city for the period 2010–2015, this study constructs a DID (difference-in-differences) model to compare the impact of price deregulation on medical expenditure and expenditure structure between for-profit and nonprofit hospitals. Results: The empirical results based on micro data reveal that, price deregulated significantly increased the total expenditure per inpatient visit by 10.5%. In the itemized expenditure, the diagnostic test and drug expenditure per inpatient visit of private nonprofit hospitals decreased significantly, whereas the physician service expenditure per inpatient visit increased significantly. For expenditure structure, the proportions of drug expenditure and diagnostic test expenditure per inpatient visit significantly decreased by 5.7% and 3.1%, respectively. Conclusions: Under price regulation, medical service prices generally become lower than their costs. Therefore, after price deregulation, private nonprofit hospitals increase medical service prices above their cost and achieve the service premium by providing high-quality medical services and a comfortable medical environment. Further, although price deregulation causes patient expenditure to increase to a certain level, it optimizes the expenditure structure, as well.

“…For example, after the implementation of the Zero Markup Drug Policy, hospitals and pharmaceutical companies conspired to increase drug prices and deny the market to low-price drugs. When the government controls the drug expenditure proportion, hospitals compensate for this decline in proportion by increasing their diagnostic test expenditure [8][9][10][11][12].…”

Section: Introductionmentioning

confidence: 99%

“…On encountering price regulation, such as a reduction in the proportion of drug expenditure, doctors increase the non-drug expenditure, rather than reducing the drug expenditure, of patients. Although this action does not alleviate the financial burden on patients, it distorts, to a certain extent, the expenditure structure and reduces the welfare of patients [1,9]. Since doctors have information advantage and hospitals monopolize the medical services market, price regulation cannot improve patients' welfare without changing the advantageous position of hospitals and doctors.…”

Section: Introductionmentioning

confidence: 99%

Deregulation and pricing of medical services: A policy experiment based in China

2020

Preprint

Background: Price regulation is a common constraint in Chinese hospitals. Based on a policy experiment conducted in China on the price deregulation of private nonprofit hospitals, this study empirically examines the impact of medical service price regulation on the pricing of medical services by hospitals. Methods: Using the claim data of insured inpatients residing in a major Chinese city for the period 2010–2015, this study constructs a DID (difference-in-differences) model to compare the impact of price deregulation on medical expenditure and expenditure structure between public and private nonprofit hospitals. Results: The empirical results based on micro data reveal that, price deregulated significantly increased the total expenditure per inpatient visit by 10.5%. In the itemized expenditure, the diagnostic test and drug expenditure per inpatient visit of private nonprofit hospitals decreased significantly, whereas the physician service expenditure per inpatient visit increased significantly. For expenditure structure, the proportions of drug expenditure and diagnostic test expenditure per inpatient visit significantly decreased by 5.7% and 3.1%, respectively. Conclusions: Under price regulation, medical service prices generally become lower than their costs. Therefore, after price deregulation, private nonprofit hospitals increase medical service prices above their cost and achieve the service premium by providing high-quality medical services and a comfortable medical environment. Further, although price deregulation causes patient expenditure to increase to a certain level, it optimizes the expenditure structure, as well.