IDEAS home Printed from https://ideas.repec.org/a/eee/chieco/v87y2024ics1043951x24001391.html
   My bibliography  Save this article

Impact of a health system vertical integration program on patient expenditures and healthcare utilization: Evidence from county hospitals in East China

Author

Listed:
  • Jiang, Wei
  • Chen, Qiulin
  • Lou, Xuyan
  • Song, Lina
  • Chen, Zhuo

Abstract

In 2009, China launched a vertical integration pilot program to promote collaboration between tertiary and county hospitals to reduce rural-urban disparities and strengthen capacity building in healthcare services delivery in county healthcare facilities. Through the program, tertiary hospitals implemented a workforce mobility program to temporarily assign selected physicians and healthcare staff to paired county hospitals. This study uses hospital-level data from 2009 to 2015 to investigate the program's impact on medical expenditures and healthcare utilization among patients visiting the paired county hospitals. A difference-in-differences method with hospital and year-fixed effects is used to address the unobservable heterogeneity of hospitals and the potential impact of national healthcare reform. We find that the average outpatient expenditure experienced a 4.0% decline after the county hospitals received paired assistance from tertiary hospitals. The decline is mainly driven by a reduced proportion of diagnostic testing expenditures. However, there is no evidence that the program affected inpatient expenditures. In addition, county hospitals had 5.1% more outpatient visits after receiving paired assistance, while the average length of stay remains stable. These results are robust when we control the effect of the Zero-Markup drug policy and conduct permutation tests of sample assignment. We conclude that the paired assistance program has successfully improved hospital healthcare services delivery and controlled patient expenditures. Vertical integration has improved healthcare system performance in East China from 2009 to 2015.

Suggested Citation

  • Jiang, Wei & Chen, Qiulin & Lou, Xuyan & Song, Lina & Chen, Zhuo, 2024. "Impact of a health system vertical integration program on patient expenditures and healthcare utilization: Evidence from county hospitals in East China," China Economic Review, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:chieco:v:87:y:2024:i:c:s1043951x24001391
    DOI: 10.1016/j.chieco.2024.102250
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1043951X24001391
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.chieco.2024.102250?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    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. Fu, Hongqiao & Li, Ling & Yip, Winnie, 2018. "Intended and unintended impacts of price changes for drugs and medical services: Evidence from China," Social Science & Medicine, Elsevier, vol. 211(C), pages 114-122.
    2. Yuting Zhang & Qianheng Ma & Yingchun Chen & Hongxia Gao, 2017. "Effects of Public Hospital Reform on Inpatient Expenditures in Rural China," Health Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 421-430, April.
    3. Song, Lina & Saghafian, Soroush, 2019. "Do Hospital Closures Improve the Efficiency and Quality of Other Hospitals?," Working Paper Series rwp19-006, Harvard University, John F. Kennedy School of Government.
    4. Jonathan Skinner & Douglas Staiger, 2015. "Technology Diffusion and Productivity Growth in Health Care," The Review of Economics and Statistics, MIT Press, vol. 97(5), pages 951-964, December.
    5. Ho, Vivian & Hamilton, Barton H., 2000. "Hospital mergers and acquisitions: does market consolidation harm patients?," Journal of Health Economics, Elsevier, vol. 19(5), pages 767-791, September.
    6. Peipei Chai & Quan Wan & Yohannes Kinfu, 2021. "Efficiency and productivity of health systems in prevention and control of non-communicable diseases in China, 2008–2015," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(2), pages 267-279, March.
    7. Kondo, Ayako & Shigeoka, Hitoshi, 2013. "Effects of universal health insurance on health care utilization, and supply-side responses: Evidence from Japan," Journal of Public Economics, Elsevier, vol. 99(C), pages 1-23.
    8. Zhou, Mei & Zhao, Shaoyang & Fu, Mingwei, 2021. "Supply-induced demand for medical services under price regulation: Evidence from hospital expansion in China," China Economic Review, Elsevier, vol. 68(C).
    9. Yun Liu & Qingxia Kong & Shasha Yuan & Joris van de Klundert, 2018. "Factors influencing choice of health system access level in China: A systematic review," PLOS ONE, Public Library of Science, vol. 13(8), pages 1-21, August.
    10. Jiang, Shan & Gu, Yuanyuan & Yang, Fan & Wu, Tao & Wang, Hui & Cutler, Henry & Zhang, Lufa, 2020. "Tertiary hospitals or community clinics? An enquiry into the factors affecting patients' choice for healthcare facilities in urban China," China Economic Review, Elsevier, vol. 63(C).
    11. 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).
    12. Zhou, Zhongliang & Zhao, Yaxin & Shen, Chi & Lai, Sha & Nawaz, Rashed & Gao, Jianmin, 2021. "Evaluating the effect of hierarchical medical system on health seeking behavior: A difference-in-differences analysis in China," Social Science & Medicine, Elsevier, vol. 268(C).
    13. Shi, Julie & Liang, Lirong & Hou, Manqi, 2023. "The impacts of China's drug price zero-markup policy on medical expenditures and health outcomes," China Economic Review, Elsevier, vol. 79(C).
    14. Capps, Cory & Dranove, David & Ody, Christopher, 2018. "The effect of hospital acquisitions of physician practices on prices and spending," Journal of Health Economics, Elsevier, vol. 59(C), pages 139-152.
    Full references (including those not matched with items on IDEAS)

    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. Wang, Tianyu & Wen, Ke & Gao, Qiuming & Sun, Ruochen, 2023. "Small money, big change: The distributional impact of differentiated doctor's visit fee on healthcare utilization," Social Science & Medicine, Elsevier, vol. 339(C).
    2. Zhou, Mei & Zhao, Shaoyang & Fu, Mingwei, 2021. "Supply-induced demand for medical services under price regulation: Evidence from hospital expansion in China," China Economic Review, Elsevier, vol. 68(C).
    3. Fangye Du & Jiaoe Wang & Haitao Jin, 2021. "Whether Public Hospital Reform Affects the Hospital Choices of Patients in Urban Areas: New Evidence from Smart Card Data," IJERPH, MDPI, vol. 18(15), pages 1-14, July.
    4. Mengna Luan & Wenjing Shi & Zhigang Tao & Hongjie Yuan, 2023. "When patients have better insurance coverage in China: Provider incentives, costs, and quality of care," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 31(4), pages 1073-1106, October.
    5. Martin Gaynor & Kate Ho & Robert J. Town, 2015. "The Industrial Organization of Health-Care Markets," Journal of Economic Literature, American Economic Association, vol. 53(2), pages 235-284, June.
    6. Wei, Zhongyu & Bai, Jianjun & Feng, Ruitao, 2023. "Optimization referral rate design for hierarchical diagnosis and treatment system based on accessibility-utilization efficiency bi-objective collaboration: A case study of China," Social Science & Medicine, Elsevier, vol. 322(C).
    7. Fu, Hongqiao & Li, Ling & Yip, Winnie, 2018. "Intended and unintended impacts of price changes for drugs and medical services: Evidence from China," Social Science & Medicine, Elsevier, vol. 211(C), pages 114-122.
    8. Ambar La Forgia, 2023. "The Impact of Management on Clinical Performance: Evidence from Physician Practice Management Companies," Management Science, INFORMS, vol. 69(8), pages 4646-4667, August.
    9. Ashantha Ranasinghe & Xuejuan Su, 2023. "When social assistance meets market power: A mixed duopoly view of health insurance in the United States," Economic Inquiry, Western Economic Association International, vol. 61(4), pages 851-869, October.
    10. Martin B. Hackmann & Jörg Heining & Roman Klimke & Maria Polyakova & Holger Seibert, 2025. "Health Insurance as Economic Stimulus? Evidence from Long-Term Care Jobs," NBER Working Papers 33429, National Bureau of Economic Research, Inc.
    11. Christoph Schwierz & Boris Augurzky & Axel Focke & Jürgen Wasem, 2012. "Demand, selection and patient outcomes in German acute care hospitals," Health Economics, John Wiley & Sons, Ltd., vol. 21(3), pages 209-221, March.
    12. Amitabh Chandra & Amy Finkelstein & Adam Sacarny & Chad Syverson, 2016. "Health Care Exceptionalism? Performance and Allocation in the US Health Care Sector," American Economic Review, American Economic Association, vol. 106(8), pages 2110-2144, August.
    13. Maynou, L. & McGuire, A. & Serra-Sastre, V., 2019. "Exploring the Impact of New Medical Technology on Workforce Planning," Working Papers 19/07, Department of Economics, City University London.
    14. Baltagi, Badi H. & Yen, Yin-Fang, 2014. "Hospital treatment rates and spillover effects: Does ownership matter?," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 193-202.
    15. Jonathan Zhang & Yiwei Chen & Liran Einav & Jonathan Levin & Jay Bhattacharya, 2021. "Consolidation of primary care physicians and its impact on healthcare utilization," Health Economics, John Wiley & Sons, Ltd., vol. 30(6), pages 1361-1373, June.
    16. Santosh Kumar & Fidel Gonzalez, 2018. "Effects of health insurance on birth weight in Mexico," Health Economics, John Wiley & Sons, Ltd., vol. 27(8), pages 1149-1159, August.
    17. Gabriella Conti & Rita Ginja, 2023. "Who Benefits from Free Health Insurance?: Evidence from Mexico," Journal of Human Resources, University of Wisconsin Press, vol. 58(1), pages 146-182.
    18. Ando, Michihito & Mori, Hiroaki & Yamaguchi, Shintaro, 2022. "Universal early childhood education and adolescent risky behavior," SocArXiv rnkgs, Center for Open Science.
    19. Shu Yan & Lizi Pan & Yan Lu & Juan Chen & Ting Zhang & Dongzi Xu & Zhaolian Ouyang, 2023. "Towards Sustainable Drug Supply in China: A Bibliometric Analysis of Drug Reform Policies," Sustainability, MDPI, vol. 15(13), pages 1-20, June.
    20. Martin Gaynor, "undated". "What Do We Know About Competition and Quality in Health Care Markets?," GSIA Working Papers 2006-E62, Carnegie Mellon University, Tepper School of Business.

    More about this item

    Keywords

    County hospitals; Hospital vertical integration; China; Different-in-differences;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    Statistics

    Access and download statistics

    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:87:y:2024:i:c:s1043951x24001391. 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.