The Role of Hospital Competition on Treatment Expenditure and Outcome: Evidence from Stroke and Cardiac Treatment in Taiwan

22 Pages Posted: 21 Jun 2010

See all articles by Hsien-Ming Lien

Hsien-Ming Lien

affiliation not provided to SSRN

Shin-Yi Chou

Lehigh University - Department of Economics; National Bureau of Economic Research (NBER)

Jin‐Tan Liu

National Taiwan University - Department of Economics; National Bureau of Economic Research (NBER)

Abstract

This article examines whether market competition affects treatment expenditure and health outcomes of stroke and cardiac treatment in Taiwan. Our measure of treatment expenditure is the hospital expenditure paid at the index admission (short term) and the sum of inpatient and outpatient expenditures paid in the subsequent year (long term). Our measure of health outcome is the probability of death in 1 and 12 months after the hospital's discharge. Our measure of competition follows the method developed by Kessler and McClellan that calculates the Herfindal index based on the predicted patient flows using exogenous variables (e.g., traveling distance to hospitals). Using data of patients hospitalized for new stroke and cardiac treatment between 1997 and 2001 in Taiwan, we find that an increase of market competition results in an insignificant impact on a patient's mortality. In terms of treatment expenditure, our results indicate that hospitals facing more competition incur higher expenditures, either the short- or long-term expenditure. Finally, we find evidence showing that an increase of treatment expenditure at admission is due to a raise of length of stay and treatment intensity per day as well as the usage of expensive equipment.

Suggested Citation

LIEN, HSIEN-MING and Chou, Shin-Yi and Liu, Jin-Tan, The Role of Hospital Competition on Treatment Expenditure and Outcome: Evidence from Stroke and Cardiac Treatment in Taiwan. Economic Inquiry, Vol. 48, Issue 3, pp. 668-689, July 2010, Available at SSRN: https://ssrn.com/abstract=1627408 or http://dx.doi.org/10.1111/j.1465-7295.2009.00226.x

HSIEN-MING LIEN (Contact Author)

affiliation not provided to SSRN

No Address Available

Shin-Yi Chou

Lehigh University - Department of Economics ( email )

620 Taylor Street
Bethlehem, PA 18015
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jin-Tan Liu

National Taiwan University - Department of Economics ( email )

21 Hsu-Chow Road
Taipei, 10020
Taiwan

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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