A demand-smoothing incentive for cesarean deliveries

Ramiro de Elejalde and Eugenio Giolito

Journal of Health Economics, 2021, vol. 75, issue C

Abstract: We study the demand-smoothing incentives for private hospitals to perform c-sections. First, we show that a policy change in Chile that increased delivery at private hospitals by reducing the out-of-pocket cost for women with public insurance increased the probability of a c-section by 8.6 percentage points despite private hospitals receiving the same price for a vaginal or cesarean delivery. Second, to understand hospitals’ incentives to perform c-sections, we present a model of hospital decisions about the mode of delivery without price incentives. The model predicts that, because c-sections can be scheduled, a higher c-section rate increases total deliveries, compensating the forgone higher margin of vaginal deliveries. Finally, we provide evidence consistent with the demand-smoothing mechanism: hospitals with higher c-section rates are more likely to reschedule deliveries when they expect a high-demand week.

Keywords: Health care; Provider incentives; Labor and delivery (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: More Hospital Choices, More C-Sections: Evidence from Chile (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:75:y:2021:i:c:s0167629620310572

DOI: 10.1016/j.jhealeco.2020.102411

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