Supplier-Induced Demand for Newborn Treatment: Evidence from Japan

Shigeoka, Hitoshi; Fushimi, Kiyohide

doi:10.2139/ssrn.2407110

Download This Paper

Open PDF in Browser

Add Paper to My Library

Supplier-Induced Demand for Newborn Treatment: Evidence from Japan

Stanford Asia Health Policy Program Working Paper No. 39

44 Pages Posted: 12 Mar 2014

See all articles by Hitoshi Shigeoka

Hitoshi Shigeoka

Simon Fraser University (SFU); University of Tokyo - University of Tokyo, Graduate School of Public Policy; IZA Institute of Labor Economics; National Bureau of Economic Research (NBER)

Kiyohide Fushimi

Tokyo Medical and Dental University - Department of Health Policy and Informatics

There are 2 versions of this paper

Date Written: March 10, 2014

Abstract

We estimate the degree of supplier-induced demand for newborn treatment by exploiting changes in reimbursement arising from the introduction of the partial prospective payment system (PPS) in Japan. Under the partial PPS, neonatal intensive care unit (NICU) utilization became relatively more profitable than other procedures, since it was excluded from prospective payments. We find that hospitals have responded to PPS adoption by increasing NICU utilization and by more frequently manipulating infants' reported birth weights which in large part determine their maximum allowable stay in the NICU. This induced demand substantially increases the reimbursements received by hospitals.

Keywords: Supplier-induced Demand, Neonatal Intensive Care Unit, Prospective Payment System, Birth Weight Manipulation, Hospital Gaming

JEL Classification: I10, H51, L20

Suggested Citation: Suggested Citation

Shigeoka, Hitoshi and Fushimi, Kiyohide, Supplier-Induced Demand for Newborn Treatment: Evidence from Japan (March 10, 2014). Stanford Asia Health Policy Program Working Paper No. 39, Available at SSRN: https://ssrn.com/abstract=2407110 or http://dx.doi.org/10.2139/ssrn.2407110