The strange case of less C‐sections: Hospital ownership, market concentration, and DRG‐tariff regulation

Abstract

We evaluate the relationship between hospital ownership and responses to a policy providing large financial incentives for vaginal deliveries and financial disincentives for C‐sections. We compare for‐profit, nonprofit, and public hospitals operating in a public health care system organized according to the quasi‐market model. We first theoretically show that hospital ownership matters insofar different hospitals are characterized by different ethical preferences. We also show that competition makes ownership less important. We then consider the case study of Lombardy in Italy. We exploit spatial variation in hospital ownership and in market concentration at the local level to evaluate the relationship between ownership and the probability of C‐section. According to theory, empirical results strongly suggest that competitive pressures from alternative providers tend to homogenize behaviors. However, in local monopolies, in presence of a strong monetary incentive toward vaginal deliveries, we do observe less C‐section from private for‐profit hospitals than from public and private nonprofit hospitals, especially when C‐sections are medically appropriate.

Innovation, aging, and health care: Unraveling “silver” from “red” herrings?

“…Studies in this special issue shows that the use of innovative health care is influenced by financial barriers. Berta, Martini, Piacenza, and Turati (2020) evaluate the response to financial incentives to cesarean sections based on hospital ownership. They find that in local monopolies, private hospitals seem to respond more to financial incentives, even to the point of (possibly) reducing the appropriateness of the treatment.…”

The Comparison Between Different Hospital Market Definition Approaches: An Empirical Analysis of 11 Representative Diseases in Sichuan Province, China

“…The structure-conduct-performance (SCP) paradigm hypothesizes a causal link from the market structure to the conduct of the hospital and then to the industry performance, mainly reflected in the medical quality and cost (6)(7)(8). An extensive empirical literature about the effectiveness of hospital market structure was carried out (6,7,(9)(10)(11)(12)(13)(14)(15). However, these empirical studies employed different market definition methods, which would affect the empirical results (16,17).…”