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How does separating government regulatory and operational control of public hospitals matter to healthcare supply?

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  • Pan, Jay
  • Liu, Gordon G.
  • Gao, Chen

Abstract

This paper evaluates the effect of regulatory reform separating the operational control and regulatory oversight of public hospitals in China. Using city-level data and a difference-in-difference (DID) model, this paper estimates the changes in healthcare supply in response to the regulatory reform. Based on the DID estimates, in Weifang between 2006 and 2008, the reform led to a 39.3% increase in the number of doctors per 10,000 residents and 40.1% increase in the number of health workers per 10,000 residents. Similarly, in Suzhou between 2005 and 2008 the reform led to increases of 60.5%, 30.8% and 36.6% for hospital beds, doctors and health workers per 10,000 people, respectively. Moreover, the magnitude of this impact appears to increase over time. Furthermore, the effect of the reform is consistent regardless of whether the separation reform takes place inside or outside the government. These findings lead us to conclude that the government should focus only on the regulation of healthcare markets, while leaving hospital operation to the free market.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:chieco:v:27:y:2013:i:c:p:1-14
    DOI: 10.1016/j.chieco.2013.07.002
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    References listed on IDEAS

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    Cited by:

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    2. 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.
    3. 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.
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    5. Sheng Nong & Nengliang Aaron Yao, 2019. "Reasons behind stymied public hospital governance reform in China," PLOS ONE, Public Library of Science, vol. 14(9), pages 1-11, September.
    6. Liyong Lu & Jay Pan, 2021. "Does hospital competition lead to medical equipment expansion? Evidence on the medical arms race," Health Care Management Science, Springer, vol. 24(3), pages 582-596, September.

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    More about this item

    Keywords

    Public hospital; Separation; Healthcare supply; Healthcare reform; China;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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