Do VIP medical services damage efficiency? New evidence of medical institutions’ total factor productivity using Chinese panel data

Abstract

This study examines the causal impact of very important person (VIP) medical services on hospital total factor productivity in Deyang, a prefectural-level city in western China, spanning the years 2015–2020. This aims to offer empirical evidence and policy recommendations for the implementation of VIP practices in the medical field. A secondary unbalanced panel dataset of 416 observations was collected from the annual reports of the Health Commission and 92 eligible medical institutions were included. This study utilized a two-stage strategy. First, the Global Malmquist index was used to calculate the total factor productivity and its decomposition terms for hospitals from 2015 to 2020. In the second stage, two-way fixed effects models and Tobit models were used to identify the relationship between VIP medical services and hospital efficiency; instrumental variables were used to solve potential endogeneity problems in the model. The results showed that VIP medical services had a significantly negative impact on medical institutions’ efficiency. The technological advances and pure technical efficiency related to VIP medical care may help explain these negative impacts, which were heterogeneous across groups divided by the nature of the hospital and the outside environment. It is imperative to prioritize the standardized provision of VIP medical services for medical institutions, optimize management and service process, enhance the training of clinical and scientific research capabilities of medical personnel, and scientifically allocate resources for both VIP and general medical services. This will help mitigate health inequality while improving the overall quality of medical services.