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The financial health of “swing hospitals” during the first COVID-19 outbreak

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  • Takaku, Reo
  • Yokoyama, Izumi

Abstract

The hospitals in Japan have hitherto had complete autonomy in deciding whether to admit COVID-19 patients. In fact, they were “swinging” between admitting or not COVID-19 patients, especially during the initial COVID-19 outbreak. To address endogenous decision making, we estimated the effect of admitting COVID-19 patients on hospital profits using instrumental variable (IV) regression. We derived the IVs from the guidelines of the national government on which hospital types should admit COVID-19 patients. Our empirical results revealed that the monthly profits per bed decreased by approximately JPY 600,000 (≈ USD 4615), which is 15 times the average monthly profit in 2019. This overwhelming financial damage indicates it is costly for some hospitals to treat COVID-19 patients because of their low suitability in admitting such patients. Based on the implications of our main results, we propose an alternative strategy to handling patient surges in case of new infectious disease outbreaks.

Suggested Citation

  • Takaku, Reo & Yokoyama, Izumi, 2022. "The financial health of “swing hospitals” during the first COVID-19 outbreak," Journal of the Japanese and International Economies, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:jjieco:v:65:y:2022:i:c:s0889158322000272
    DOI: 10.1016/j.jjie.2022.101218
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    References listed on IDEAS

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    More about this item

    Keywords

    COVID-19; Hospital finance; Instrumental variable; Complier characteristics;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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