Deregulation and pricing of medical services: A policy experiment based in China
Background: Price regulation is a common constraint in Chinese hospitals. Based on a policy experiment conducted in China on the price deregulation of private nonprofit hospitals, this study empirically examines the impact of medical service price regulation on the pricing of medical services by hospitals.
Methods: Using the claim data of insured inpatients residing in a major Chinese city for the period 2010–2015, this study constructs a DID (difference-in-differences) model to compare the impact of price deregulation on medical expenditure and expenditure structure between public and private nonprofit hospitals.
Results: The empirical results based on micro data reveal that, price deregulated significantly increased the total expenditure per inpatient visit by 10.5%. In the itemized expenditure, the diagnostic test and drug expenditure per inpatient visit of private nonprofit hospitals decreased significantly, whereas the physician service expenditure per inpatient visit increased significantly. For expenditure structure, the proportions of drug expenditure and diagnostic test expenditure per inpatient visit significantly decreased by 5.7% and 3.1%, respectively.
Conclusions: Under price regulation, medical service prices generally become lower than their costs. Therefore, after price deregulation, private nonprofit hospitals increase medical service prices above their cost and achieve the service premium by providing high-quality medical services and a comfortable medical environment. Further, although price deregulation causes patient expenditure to increase to a certain level, it optimizes the expenditure structure, as well.
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Due to technical limitations, full-text HTML conversion of this manuscript could not be completed. However, the manuscript can be downloaded and accessed as a PDF.
Posted 17 Sep, 2020
Received 10 Jan, 2021
On 17 Dec, 2020
Invitations sent on 14 Oct, 2020
On 14 Sep, 2020
On 13 Sep, 2020
On 13 Sep, 2020
On 27 Aug, 2020
On 27 Jul, 2020
On 27 Jul, 2020
On 26 Jul, 2020
On 26 Jul, 2020
Deregulation and pricing of medical services: A policy experiment based in China
Posted 17 Sep, 2020
Received 10 Jan, 2021
On 17 Dec, 2020
Invitations sent on 14 Oct, 2020
On 14 Sep, 2020
On 13 Sep, 2020
On 13 Sep, 2020
On 27 Aug, 2020
On 27 Jul, 2020
On 27 Jul, 2020
On 26 Jul, 2020
On 26 Jul, 2020
Background: Price regulation is a common constraint in Chinese hospitals. Based on a policy experiment conducted in China on the price deregulation of private nonprofit hospitals, this study empirically examines the impact of medical service price regulation on the pricing of medical services by hospitals.
Methods: Using the claim data of insured inpatients residing in a major Chinese city for the period 2010–2015, this study constructs a DID (difference-in-differences) model to compare the impact of price deregulation on medical expenditure and expenditure structure between public and private nonprofit hospitals.
Results: The empirical results based on micro data reveal that, price deregulated significantly increased the total expenditure per inpatient visit by 10.5%. In the itemized expenditure, the diagnostic test and drug expenditure per inpatient visit of private nonprofit hospitals decreased significantly, whereas the physician service expenditure per inpatient visit increased significantly. For expenditure structure, the proportions of drug expenditure and diagnostic test expenditure per inpatient visit significantly decreased by 5.7% and 3.1%, respectively.
Conclusions: Under price regulation, medical service prices generally become lower than their costs. Therefore, after price deregulation, private nonprofit hospitals increase medical service prices above their cost and achieve the service premium by providing high-quality medical services and a comfortable medical environment. Further, although price deregulation causes patient expenditure to increase to a certain level, it optimizes the expenditure structure, as well.
Figure 1
Figure 2
Due to technical limitations, full-text HTML conversion of this manuscript could not be completed. However, the manuscript can be downloaded and accessed as a PDF.