IDEAS home Printed from https://ideas.repec.org/a/eee/chieco/v20y2009i4p625-633.html
   My bibliography  Save this article

The role of for-profit hospitals in medical expenditures: Evidence from aggregate data in China

Author

Listed:
  • Liu, Gordon G.
  • Li, Lin
  • Hou, Xiaohui
  • Xu, Judy
  • Hyslop, Daniel

Abstract

The health care delivery system in China, which is dominated by state hospitals, is being increasingly challenged by public concerns: it is too expensive and too inaccessible, a complaint commonly phrased as "kai bin nan, kan bin gui" in Chinese. As the penetration of for-profit hospitals has gradually increased, there is a growing need for policy research to assess their impact on medical spending from the patient perspective. Using panel data at the provincial level in China, this paper examines the impact of the penetration of for-profit hospitals on average medical expenditures for both outpatient and inpatient services in public general hospitals. Based on fixed-effect model estimates, the study shows that the penetration of for-profit hospitals has lowered the average medical expenditures for both inpatient and outpatient services across regions, especially for pharmaceuticals. Together with other results, this study finds no evidence that private for-profit hospitals drive up average medical expenditures while serving their profit-maximization objectives. Rather, they help increase the market supply of health care, which in turn better serves the increasing demand.

Suggested Citation

  • Liu, Gordon G. & Li, Lin & Hou, Xiaohui & Xu, Judy & Hyslop, Daniel, 2009. "The role of for-profit hospitals in medical expenditures: Evidence from aggregate data in China," China Economic Review, Elsevier, vol. 20(4), pages 625-633, December.
  • Handle: RePEc:eee:chieco:v:20:y:2009:i:4:p:625-633
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1043-951X(09)00077-7
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Karen Eggleston & Li Ling & Meng Qingyue & Magnus Lindelow & Adam Wagstaff, 2008. "Health service delivery in China: a literature review," Health Economics, John Wiley & Sons, Ltd., vol. 17(2), pages 149-165, February.
    2. Mehdi Farsi & Massimo Filippini, 2008. "Effects of ownership, subsidization and teaching activities on hospital costs in Switzerland," Health Economics, John Wiley & Sons, Ltd., vol. 17(3), pages 335-350, March.
    3. Yu-Chu Shen & Karen Eggleston & Joseph Lau & Christopher Schmid, 2005. "Hospital Ownership and Financial Performance: A Quantitative Research Review," NBER Working Papers 11662, National Bureau of Economic Research, Inc.
    4. Karen Eggleston & Winnie Yip, 2004. "Hospital Competition under Regulated Prices: Application to Urban Health Sector Reforms in China," International Journal of Health Economics and Management, Springer, vol. 4(4), pages 343-368, December.
    5. Eulália Dalmau-Atarrodona & Jaume Puig-Junoy, 1998. "Market Structure and Hospital Efficiency: Evaluating Potential Effects of Deregulation in a National Health Service," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 13(4), pages 447-466, August.
    6. Hou, Xiaohui & Coyne, Joseph, 2008. "The emergence of proprietary medical facilities in China," Health Policy, Elsevier, vol. 88(1), pages 141-151, October.
    7. Barro, Jason R. & Huckman, Robert S. & Kessler, Daniel P., 2006. "The effects of cardiac specialty hospitals on the cost and quality of medical care," Journal of Health Economics, Elsevier, vol. 25(4), pages 702-721, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pan, Jay & Qin, Xuezheng & Li, Qian & Messina, Joseph P. & Delamater, Paul L., 2015. "Does hospital competition improve health care delivery in China?," China Economic Review, Elsevier, vol. 33(C), pages 179-199.
    2. Lu, Liyong & Pan, Jay, 2019. "The association of hospital competition with inpatient costs of stroke: Evidence from China," Social Science & Medicine, Elsevier, vol. 230(C), pages 234-245.
    3. Pan, Jay & Liu, Gordon G. & Gao, Chen, 2013. "How does separating government regulatory and operational control of public hospitals matter to healthcare supply?," China Economic Review, Elsevier, vol. 27(C), pages 1-14.
    4. Luan, Mengna & Shao, Xiang & Dou, Fengman, 2020. "Financial conditions, health care provision, and patient outcomes: Evidence from Chinese public hospitals," Economics Letters, Elsevier, vol. 186(C).
    5. Hu, Hsin-Hui & Qi, Qinghui & Yang, Chih-Hai, 2012. "Analysis of hospital technical efficiency in China: Effect of health insurance reform," China Economic Review, Elsevier, vol. 23(4), pages 865-877.
    6. Guanfu Fang & Hui Cao, 2020. "State versus private provision: How does China’s market‐oriented reform affect healthcare delivery?," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 28(3), pages 381-411, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Judy Xu & Gordon Liu & Guoying Deng & Lin Li & Xianjun Xiong & Kisalaya Basu, 2015. "A Comparison of Outpatient Healthcare Expenditures Between Public and Private Medical Institutions in Urban China: An Instrumental Variable Approach," Health Economics, John Wiley & Sons, Ltd., vol. 24(3), pages 270-279, March.
    2. Currie, Janet & Lin, Wanchuan & Zhang, Wei, 2011. "Patient knowledge and antibiotic abuse: Evidence from an audit study in China," Journal of Health Economics, Elsevier, vol. 30(5), pages 933-949.
    3. Hou, Xiaohui & Coyne, Joseph, 2008. "The emergence of proprietary medical facilities in China," Health Policy, Elsevier, vol. 88(1), pages 141-151, October.
    4. Rize Jing & Tingting Xu & Xiaozhen Lai & Elham Mahmoudi & Hai Fang, 2019. "Technical Efficiency of Public and Private Hospitals in Beijing, China: A Comparative Study," IJERPH, MDPI, vol. 17(1), pages 1-18, December.
    5. Xuanyi Nie, 2023. "The ‘medical city’ and China’s entrepreneurial state: Spatial production under rising consumerism in healthcare," Urban Studies, Urban Studies Journal Limited, vol. 60(6), pages 1102-1122, May.
    6. Tabea Bork-HÜffer & Frauke Kraas, 2015. "Health Care Disparities in Megaurban China: The Ambivalent Role of Unregistered Practitioners," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 106(3), pages 339-352, July.
    7. Currie, Janet & Lin, Wanchuan & Meng, Juanjuan, 2013. "Social networks and externalities from gift exchange: Evidence from a field experiment," Journal of Public Economics, Elsevier, vol. 107(C), pages 19-30.
    8. Currie, Janet & Lin, Wanchuan & Meng, Juanjuan, 2014. "Addressing antibiotic abuse in China: An experimental audit study," Journal of Development Economics, Elsevier, vol. 110(C), pages 39-51.
    9. Lu, Liyong & Pan, Jay, 2019. "The association of hospital competition with inpatient costs of stroke: Evidence from China," Social Science & Medicine, Elsevier, vol. 230(C), pages 234-245.
    10. Hu, Hsin-Hui & Qi, Qinghui & Yang, Chih-Hai, 2012. "Analysis of hospital technical efficiency in China: Effect of health insurance reform," China Economic Review, Elsevier, vol. 23(4), pages 865-877.
    11. Ng, Ying Chu, 2011. "The productive efficiency of Chinese hospitals," China Economic Review, Elsevier, vol. 22(3), pages 428-439, September.
    12. Wang, Jian & Iversen, Tor & Hennig-Schmidt, Heike & Godager, Geir, 2017. "How Changes in Payment Schemes Influence Provision Behavior," HERO Online Working Paper Series 2017:2, University of Oslo, Health Economics Research Programme.
    13. Eggleston, Karen & Wang, Jian & Rao, Keqin, 2008. "From plan to market in the health sector?: China's experience," Journal of Asian Economics, Elsevier, vol. 19(5-6), pages 400-412.
    14. Monica Giancotti & Annamaria Guglielmo & Marianna Mauro, 2017. "Efficiency and optimal size of hospitals: Results of a systematic search," PLOS ONE, Public Library of Science, vol. 12(3), pages 1-40, March.
    15. Yamei Bai & Aaron Yao & Yulei Song & Guihua Xu, 2018. "Redesigning the patient classification system in China: A pilot study," Nursing & Health Sciences, John Wiley & Sons, vol. 20(2), pages 181-186, June.
    16. Pan, Jay & Qin, Xuezheng & Li, Qian & Messina, Joseph P. & Delamater, Paul L., 2015. "Does hospital competition improve health care delivery in China?," China Economic Review, Elsevier, vol. 33(C), pages 179-199.
    17. Qian Long & Weixi Jiang & Di Dong & Jiaying Chen & Li Xiang & Qiang Li & Fei Huang & Henry Lucas & Shenglan Tang, 2020. "A New Financing Model for Tuberculosis (TB) Care in China: Challenges of Policy Development and Lessons Learned from the Implementation," IJERPH, MDPI, vol. 17(4), pages 1-11, February.
    18. Zhou, Wenhui & Wan, Qiang & Zhang, Ren-Qian, 2017. "Choosing among hospitals in the subsidized health insurance system of China: A sequential game approach," European Journal of Operational Research, Elsevier, vol. 257(2), pages 568-585.
    19. Guillem López & Joan Costa-Font & Ivan Planas, 2004. "Diversity and regional inequalities: Assessing the outcomes of the Spanish 'System of Health Care Services'," Working Papers, Research Center on Health and Economics 745, Department of Economics and Business, Universitat Pompeu Fabra.
    20. Suhui Li & Avi Dor, 2013. "How Do Hospitals Respond to Market Entry? Evidence from A Deregulated Market for Cardiac Revascularization," NBER Working Papers 18926, National Bureau of Economic Research, Inc.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:chieco:v:20:y:2009:i:4:p:625-633. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/chieco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.