Do Hospitals Respond to Increasing Prices by Supplying Fewer Services?

Arbeitspapier

Medical providers often have a significant influence on treatment decisions which they can use in their own financial interest. Classical models of supplier-induced demand predict that medical providers will supply fewer services if they face increasing prices. We test this prediction 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 types of patients. Based on administrative data, we find that hospitals do indeed react to increasing prices by reducing service supply.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 9229

Classification and Topics

• Classification: Wirtschaft ; Analysis of Health Care Markets ; Market Structure, Firm Strategy, and Market Performance: General ; Business Objectives of the Firm
• Subject: physician-induced demand ; hospital care ; prospective payment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Salm, Martin ; Wübker, Ansgar
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/114089
• Last update: 10.03.2025, 11:42 AM CET