Heterogeneous effects of hospital competition on inpatient expenses: an empirical analysis of diseases grouping basing on conditions\u2019 complexity and urgency

Liyong Lu,Xiaojun Lin,Jay Pan

doi:10.1186/s12913-021-07331-1

Abstract

BackgroundMultiple pro-competition policies were implemented during the new round of healthcare reform in China. Differences in conditions’ complexity and urgency across diseases associating with various degrees of information asymmetry and choice autonomy in the process of care provision, would lead to heterogeneous effects of competition on healthcare expenses. However, there are limited studies to explore it. This study aims to examine the heterogeneous effects of hospital competition on inpatient expenses basing on disease grouping according to conditions’ complexity and urgency.MethodsCollecting information from discharge data of inpatients and hospital administrative data of Sichuan province in China, we selected representative diseases. K-means clustering was used to group the selected diseases and Herfindahl-Hirschman Index (HHI) was calculated based on the predicted patient flow to measure the hospital competition. The log-linear multivariate regression model was used to examine the heterogeneous effects of hospital competition on inpatient expenses.ResultsWe selected 19 representative diseases with significant burdens (more than 1.1 million hospitalizations). The selected diseases were divided into three groups, including diseases with highly complex conditions, diseases with urgent conditions, and diseases with less complex and less urgent conditions. For diseases with highly complex conditions and diseases with urgent conditions, the estimated coefficients of HHI are mixed in the direction and statistical significance in the identical regression model at the 5% level. For diseases with less complex and less urgent conditions, the coefficients of HHI are all positive, and almost all of them significant at the 5% level.ConclusionsWe found heterogeneous effects of hospital competition on inpatient expenses across disease groups: hospital competition does not play an ideal role in reducing inpatient expenses for diseases with highly complex conditions and diseases with urgent conditions, but it has a significant effect in reducing inpatient expenses of diseases with less complex and less urgent conditions. Our study offers implications that the differences in condition’s complexity and urgency among diseases would lead to different impacts of hospital competition, which would be given full consideration when designing the pro-competition policy in the healthcare delivery system to achieve the desired goal.

Highlights

In recent decades, competition was introduced in the healthcare market across countries, such as Germany, France, and the United Kingdom, with the objective of improving the efficiency of health care services [1,2,3,4,5,6,7]
The results suggest that heterogeneous effects of hospital competition on inpatient expenses across disease groups: hospital competition does not play an ideal role in reducing inpatient expenses for diseases with highly complex conditions and diseases with urgent conditions, but it has a significant effect on reducing inpatient expenses of diseases with less complex and less urgent conditions
Calculating Herfindahl-Hirschman Index based on the predicted patient flow to measure the hospital competition, and using the log-linear multivariate regression model, we found heterogeneous effects of hospital competition on inpatient expenses across disease groups: hospital competition does not play an ideal role in reducing inpatient expenses for diseases with highly complex conditions and diseases with urgent conditions, but it has a significant effect in reducing inpatient expenses of diseases with less complex and less urgent conditions

Summary

Introduction

Competition was introduced in the healthcare market across countries, such as Germany, France, and the United Kingdom, with the objective of improving the efficiency of health care services [1,2,3,4,5,6,7]. Multiple pro-competition policies including enlarging operational autonomy of public hospitals, and encouraging private hospital development [8,9,10], were implemented during the reform to improve the efficiency of the healthcare delivery system in China [11]. Highly asymmetric information between physicians and patients, and patient’s limited choice autonomy in service selection exists in the healthcare market [16, 18], complicating the effectiveness of competition [19, 20]. Differences in conditions’ complexity and urgency across diseases associating with various degrees of information asymmetry and choice autonomy in the process of care provision, would lead to heterogeneous effects of competition on healthcare expenses. This study aims to examine the heterogeneous effects of hospital competition on inpatient expenses basing on disease grouping according to conditions’ complexity and urgency

Objectives

Methods

Results

Discussion

Conclusion