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

Philippe Choné and Lionel Wilner
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Philippe Choné: CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique

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Abstract: In the late 2000s, a regulatory reform dramatically strengthened the incentives of French nonprofit (NP) hospitals to attract patients. Exploiting exhaustive data for surgery treatments between 2005 and 2008, and modeling hospitals as supplying utility to patients, we show that increased competitive pressure on NP hospitals caused them to perform more procedures, but did not inflate overall activity at the industry level. Although they have gained market shares over their for-profit (FP) counterparts, NP 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.

Date: 2022-04-18
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Published in Journal of the European Economic Association, 2022, 20 (2), pp.626-666. ⟨10.1093/jeea/jvab031⟩

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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 (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04799390

DOI: 10.1093/jeea/jvab031

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