Abstract
BackgroundPrice 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.MethodsUsing 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.ResultsThe 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. Furthermore, this paper also found that hospitals had larger price changes for dominant diseases than for non-dominant diseases.ConclusionsUnder 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 increasing physician medical services. Further, although price deregulation causes patient expenditure to increase to a certain level, it optimizes the expenditure structure, as well.
Highlights
Price regulation is a common constraint in Chinese hospitals
We mainly examined the changes in inpatient expenditure and expenditure structure before and after the implementation of price deregulation
The patients who were treated in private nonprofit secondary hospitals formed our experimental group, whereas those treated in public nonprofit secondary hospitals that were subject to price regulation before and after the policy change formed the control group
Summary
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. Hospitals must follow government-specified price regulation standards while pricing their medical services and drugs. Zang et al BMC Health Services Research (2021) 21:501 regulation has long been criticized for excessive medical treatment in China [2,3,4]. Due to the presence of relatively serious information asymmetry in the medical service market, price regulation will lead to excessive medical treatment. Since Pricing and payment is predominantly on a FFS (fee-for-service) basis, hospitals and doctors tend to avoid the price regulation of medical services by drug overusing and diagnostic over-testing [1, 2, 5]. When the government controls the drug revenue proportion, hospitals compensate for this decline in proportion by increasing their diagnostic test expenditure [6,7,8,9,10]
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