Hospital Choices, Hospital Prices and Financial Incentives to Physicians

Kate Ho and Ariel Pakes

No 19333, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We estimate an insurer-specific preference function which rationalizes hospital referrals for privately-insured births in California. The function is additively separable in: a hospital price paid by the insurer, the distance traveled, and plan and severity-specific hospital fixed effects (capturing hospital quality). We use an inequality estimator that allows for errors in price and detailed hospital-severity interactions and obtain markedly different results than those from a logit. The estimates indicate that insurers with more capitated physicians are more responsive to price. Capitated plans send patients further to utilize similar-quality lower-priced hospitals; but the cost-quality trade-off does not vary with capitation rates.

JEL-codes: I11 L1 (search for similar items in EconPapers)
Date: 2013-08
New Economics Papers: this item is included in nep-dcm, nep-hea and nep-reg
Note: EH IO
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Published as Ho, Kate, and Ariel Pakes. 2014. "Hospital Choices, Hospital Prices, and Financial Incentives to Physicians." American Economic Review, 104(12): 3841-84.
Published as Kate Ho & Ariel Pakes, 2014. "Hospital Choices, Hospital Prices, and Financial Incentives to Physicians," American Economic Review, American Economic Association, vol. 104(12), pages 3841-84, December.

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Journal Article: Hospital Choices, Hospital Prices, and Financial Incentives to Physicians (2014)
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