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Do hospitals respond to decreasing prices by supplying more services?

Martin Salm and Wübker, A.;

Health, Econometrics and Data Group (HEDG) Working Papers from HEDG, c/o Department of Economics, University of York

Abstract: Regulated prices are common in markets for medical care. We estimate the effect of changes in regulated reimbursement prices on volume of hospital care based on a reform of hospital financing in Germany. Uniquely, this reform changed the overall level of reimbursement – with increasing prices for some hospitals and decreasing prices for others – without affecting the relative prices for different groups of patients or types of treatment. Based on administrative data, we find that hospitals react to decreasing prices by supplying more services. We interpret our findings as evidence for a negative income effect of lower prices on higher volume of care.

Keywords: government expenditures and health; hospital care; procurement (search for similar items in EconPapers)
JEL-codes: I11 L10 L21 (search for similar items in EconPapers)
Date: 2018-08
New Economics Papers: this item is included in nep-eur and nep-ind
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Journal Article: Do hospitals respond to decreasing prices by supplying more services? (2020) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:yor:hectdg:18/25

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