The Political Economy of Diagnosis-Related Groups

Paola Bertoli and Veronica Grembi

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: We provide a political economy interpretation of the variations in the prices of 6 obstetric diagnosis-related groups (DRGs) using Italy as a case study. Italy provides a unique institutional setting since its 21 regional governments can decide to adopt the national DRG system or to adjust/waive it. Using a panel fixed effects model, we exploit the results of 66 electoral ballots between 2000 and 2013 to estimate how obstetric DRGs are affected by the composition and characteristics of regional governments. We find that the incidence of physicians among regional politicians explains variations in DRGs with low technological intensity, such as normal newborns, but not of those with high technological intensity, as severely premature newborns. We further investigate these results by exploiting the implementation of a budget constraint policy. Applying a difference-in-difference strategy, we observe a decrease in the average levels of DRGs after the implementation of the policy, but the magnitude of this decrease depends on the presence of physicians among politicians and the political alignment between the regional and the national government. Finally, we rely on patient data (6,500,000 infant deliveries) to assess whether any of the political economy variables have a positive impact on the quality of regional obstetric systems. We find no effect.

Keywords: diagnosis-related groups; regional governments; difference in differences (search for similar items in EconPapers)
JEL-codes: H51 H70 I1 (search for similar items in EconPapers)
Date: 2017-06
New Economics Papers: this item is included in nep-eur, nep-hea and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: The political economy of diagnosis-related groups (2017)
Working Paper: The Political Economy of Diagnosis-Related Groups (2016)
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