Financial Incentives and Competitive Pressure: The Case of the Hospital Industry

Choné, Philippe and Lionel Wilner
Authors registered in the RePEc Author Service: Philippe Choné

No 14328, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In the late 2000s, a regulatory reform dramatically strengthened the incentives of French nonprofit hospitals to attract patients. Exploiting exhaustive data for surgery treatments and modeling hospitals as supplying utility to patients, we show that increased competitive pressure on nonprofit hospitals caused them to perform more procedures but did not inflate overall activity. Although they have gained market shares, nonprofit hospitals have been significantly worse off after the reform. To adjust to stronger financial incentives, they incurred an additional effort (pecuniary and non-pecuniary costs) equivalent to about a quarter of their annual revenue.

Keywords: Competition in utility space; Financial incentives; Payment reform; Hospital choice (search for similar items in EconPapers)
JEL-codes: D22 I11 L13 (search for similar items in EconPapers)
Date: 2020-11
New Economics Papers: this item is included in nep-com, nep-hea and nep-upt
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Related works:
Journal Article: Financial Incentives and Competitive Pressure: The Case of the Hospital Industry (2022)
Working Paper: Financial Incentives and Competitive Pressure: The Case of the Hospital Industry (2022)
Working Paper: Competition on Unobserved Attributes: The Case of the Hospital Industry (2019)
Working Paper: Competition on Unobserved Attributes: The Case of the Hospital Industry (2019)
Working Paper: Complementarity or substitutability in networks? Methodology and application to the hospital industry (2015)
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