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"Cost Effect of Mergers in Public Hospitals in Japan" (in Japanese)

Sahoko Furuta, Daiya Isogawa and Hiroshi Ohashi ()
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Sahoko Furuta: The Bank of Japan
Daiya Isogawa: Graduate School of Public Policy, The University of Tokyo

No CIRJE-J-290, CIRJE J-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: The purpose of the paper is to assess the extent to which the merger between public hospitals reduce the operation costs in Japan. To deal with the endogeneity of the hospitals' decisions to merger, we employ two approaches; (1) a generalized difference in difference by use of hospitals' fixed effects, and (2) an instrumental variable that identify whether municipal jurisdiction in which public hospitals locate consolidate. The estimates indicate that the operation costs reduce by approximately 20 percent because of the merger. Two major components of this cost reduction are salaries to doctors and nurses; and material costs. For the former, the paper observes that an increase in the average salaries to doctors working at the merged public hospitals; this is because more experienced doctors remain to work at the merged hospitals.

Pages: 26 pages
Date: 2017-08
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