Summary
This study empirically examines the effect of hospital competition on prescribing behaviors of oral hypoglycemic agents (OHAs) for ambulatory care in a market setting where hospitals are classified into three levels according to the Taiwanese accreditation system. Without distinguishing the types of market structures and hospital levels, there might be no significant relationship between hospital competition and prescribing behavior. However, the relationship between competition and prescribing behaviors may differ among hospitals at various levels under each type of market structure. Our findings suggest that a market mechanism may improve the prescribing quality of regional and district hospitals under a market structure composed of three level hospitals where more medical resources and information are likely allocated.
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Extract
Hospital Competition and Prescribing Behaviors: Empirical Evidence From Taiwan
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INTRODUCTIONIn 1995, Taiwan launched a compulsory national health insurance scheme with all payments being made through a single-payer and reimbursed in a cost-based fee scheme. Because of the compulsory feature of universal health insurance, the Bureau of National Health Insurance (NHI) has monopsony power over the health services market, resulting in that most of hospitals and clinics were contracted with the Bureau of NHI. In addition, there is no restriction on choices of medical providers for the insured, implying patient-driven competition among hospitals in Taiwan.The studies of patient-driven competition is reflected in those based on data prior to the mid-1980s which suggests that competition among hospitals tends to increase costs, prices, or resource capacity (Joskow, 1980; Robinson and Luft, 1985, 1987, 1988; Robinson et al., 1987, 1988; Luft et al., 1986; Noether, 1988; Hughes and Luft, 1991). On the other hand, those studies using more recent data tend to be the results of payer-driven competition. With the exception of Manheim et al. (1994), those studies find prices, costs, or resource capacity likely decrease in more competitive markets. (Zwanziger and Melnick, 1988; Wooley, 1989; Dranove, Shanley, and Simon, 1992; Melnick et al., 1992; Dranove, Shanley, and White, 1993; Gruber, 1994; Kessler and McClellan, 2000). If the measure of hospital performance is based on quality measures rather than price or cost, results indicate that hospital competition tends to have an ambiguous effect on quality of care, which would seem to stem from d...See the full content of this document
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