Hospital Choices, Hospital Prices and Financial Incentives to Physicians [report]

Kate Ho, Ariel Pakes
2013 unpublished
We investigate whether patients whose physicians have a ...nancial incentive to control costs receive care at lower-priced hospitals than similar patients. Using California hospital discharge data from 2003, we ...rst estimate multinomial logit demand models that include price in the choice equation. We obtain price coe¢ cients which di¤er in sign with the severity of the patient's condition on entering the hospital. We then develop an estimator based on inequalities that addresses endogeneity
more » ... oncerns by matching patients based on insurer and severity and then averaging. The estimates indicate that the impact of price varies with the capitation rate of the patient's insurance plan; higher capitation rate plans are more averse to high priced hospitals. In constrast severity-adjusted outcome measures do not di¤er signi...cantly across insurers. PRELIMINARY AND INCOMPLETE
doi:10.3386/w19333 fatcat:a745j7m44bgmdgsn5c67kffg4i