American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
How Do Hospitals Respond to Price Changes?
American Economic Review
vol. 95,
no. 5, December 2005
(pp. 1525–1547)
Abstract
This paper examines hospital responses to changes in diagnosis-specific prices by exploiting a 1988 policy reform that generated large price changes for 43 percent of Medicare admissions. I find hospitals responded primarily by "upcoding" patients to diagnosis codes with the largest price increases. This response was particularly strong among for-profit hospitals. I find little evidence hospitals increased the volume of admissions differentially for diagnoses subject to the largest price increases, despite the financial incentive to do so. Neither did they increase intensity or quality of care in these diagnoses, suggesting hospitals do not compete for patients at the diagnosis level.Citation
Dafny, Leemore, S. 2005. "How Do Hospitals Respond to Price Changes?" American Economic Review, 95 (5): 1525–1547. DOI: 10.1257/000282805775014236Additional Materials
JEL Classification
- I11 Analysis of Health Care Markets
- I18 Health: Government Policy; Regulation; Public Health