1 / 9

Dynamic Cost Shifting in Hospitals: Evidence from the 80s and 90s

Dynamic Cost Shifting in Hospitals: Evidence from the 80s and 90s Journal Article by: Jan P. Clement Inquiry 34, 1997 Presentation by: Kevin Gebhard . Purpose of Paper. Determine whether cost shifting occurred among hospitals during this time.

gage
Download Presentation

Dynamic Cost Shifting in Hospitals: Evidence from the 80s and 90s

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Dynamic Cost Shifting in Hospitals: Evidence from the 80s and 90s Journal Article by: Jan P. Clement Inquiry 34, 1997 Presentation by: Kevin Gebhard

  2. Purpose of Paper • Determine whether cost shifting occurred among hospitals during this time. • Determine what variables affect the likelihood of cost shifting, both dynamic and static, including market factors. • Author dissatisfied with previous research

  3. Dynamic Cost Shifting • Differs from static cost shifting, which is basically price discrimination. • Rather, it is charging a higher price to those who are able to pay once another is unable to. • Concerns about such actions: • Fairness • May limit incentives to control costs • Higher Insurance Premiums

  4. Current Events of the Decade • HMOs created, helping to make hospitals more cost conscious • Medicaid paying less, and also paying by perspective payments, not reimbursements • Fewer inpatients • Research done on California hospitals, which had these reforms early

  5. Variables and Hypothesized Signs • Dependent: Markup by hospital PRVMKP. Calculated by revenue per patient per AC • Independent Variables: • NEED measures: Medicaid/care (-) • Financial Strength: Total Margin, Y/TR (-) • Mkt Conditions: Competition (-) and HMO (-) • Hospital itself: Dependance on Private (-)

  6. Results and Variable Analysis • Medicaid dropped payments from 80% of costs to 55% of costs from ’83 to ‘92 • Markup over cost rose from 11.7% to 30% • BIG effect: Medicaid, Fin Strength, ICU • Smalleffect: Competition and HMOs • Opposite effect: Reliance on private was + (OLS used, and little multicollinearity found)

  7. Hospital’s Actions with Price Discrimination P AC D P QE QREQ Q

  8. Now, new demand for the uninsured D2 P • Will be below AC, causing a loss of Box • Now must charge a higher P2 to others D1 P2 AC D2 P1 Q1 Q2 QE Q

  9. Conclusions and Findings • California hospitals did practice both dynamic and static cost shifting • However, the ability to shift the costs decreased over time

More Related