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Research article
Deregulation and pricing of medical services: A policy experiment based in China
Shaoyang Zhao
Sichuan University
Corresponding Author
ORCiD: https://orcid.org/0000-0002-3498-4357
License:
This work is licensed under a CC BY 4.0 License. Read Full License
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.
Keywords
Price regulation, Private hospitals, Information advantage, Medical expenditure
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CURRENT STATUS: Under Review
Version 2
Posted 17 Sep, 2020
No community comments so far
Review #1 received
Received 10 Jan, 2021
Reviewer #1 agreed
On 17 Dec, 2020
Reviewers invited
Invitations sent on 14 Oct, 2020
Editor assigned
On 14 Sep, 2020
Submission checks complete
On 13 Sep, 2020
Editor invited
On 13 Sep, 2020
No comments provided
Editorial decision: Revise before sending to peer reviewers
On 27 Aug, 2020
First submitted
On 27 Jul, 2020
Editor assigned
On 27 Jul, 2020
Submission checks complete
On 26 Jul, 2020
Editor invited
On 26 Jul, 2020
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This preprint is under consideration at BMC Health Services Research. A preprint is a preliminary version of a manuscript that has not completed peer review at a journal. Research Square does not conduct peer review prior to posting preprints. The posting of a preprint on this server should not be interpreted as an endorsement of its validity or suitability for dissemination as established information or for guiding clinical practice.
Learn more about In Review
Research article
Deregulation and pricing of medical services: A policy experiment based in China
Shaoyang Zhao
Sichuan University
Corresponding Author
ORCiD: https://orcid.org/0000-0002-3498-4357
Badges
Prescreen
This manuscript passed our Prescreen assessment
Complete author information
Appropriate declaration statements
Potential risks to human health
Prescreen
Peer Review Timeline
CURRENT STATUS: Under Review
Version 2
Posted 17 Sep, 2020
No community comments so far
Review #1 received
Received 10 Jan, 2021
Reviewer #1 agreed
On 17 Dec, 2020
Reviewers invited
Invitations sent on 14 Oct, 2020
Editor assigned
On 14 Sep, 2020
Submission checks complete
On 13 Sep, 2020
Editor invited
On 13 Sep, 2020
No comments provided
Editorial decision: Revise before sending to peer reviewers
On 27 Aug, 2020
First submitted
On 27 Jul, 2020
Editor assigned
On 27 Jul, 2020
Submission checks complete
On 26 Jul, 2020
Editor invited
On 26 Jul, 2020
Metrics
Comments: 0
PDF Downloads: ...
HTML Views: ...
License:
This work is licensed under a CC BY 4.0 License. Read Full License
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.