The strange case of less C‐sections: Hospital ownership, market concentration, and DRG‐tariff regulation

• DOI: 10.1002/hec.4110
• Publication Date: 2020-06-04T16:20:28Z
• Authors: Paolo Berta; Gianmaria Martini; Massimiliano Piac...; Gilberto Turati
• Keywords: 330; Hospitals, Public; public; Ownership; 05 social sciences; market for birth deliverie; and nonprofit hospitals; C-sections; Market for birth deliveries; Public, for-profit, and nonprofit hospitals; Tariff regulation;; Hospitals, Proprietary; United States; Hospitals, Private; 3. Good health; market for birth deliveries; C-section; for-profit; tariff regulation; and nonprofit hospitals; C-sections; for-profit; market for birth deliveries; public; tariff regulation;; 0502 economics and business; Humans; Female; and nonprofit hospital; C-sections; Delivery of Health Care

AbstractWe evaluate the relationship between hospital ownership and responses to a policy providing large financial incentives for vaginal deliveries and financial disincentives for C‐sections. We compare for‐profit, nonprofit, and public hospitals operating in a public health care system organized according to the quasi‐market model. We first theoretically show that hospital ownership matters insofar different hospitals are characterized by different ethical preferences. We also show that competition makes ownership less important. We then consider the case study of Lombardy in Italy. We exploit spatial variation in hospital ownership and in market concentration at the local level to evaluate the relationship between ownership and the probability of C‐section. According to theory, empirical results strongly suggest that competitive pressures from alternative providers tend to homogenize behaviors. However, in local monopolies, in presence of a strong monetary incentive toward vaginal deliveries, we do observe less C‐section from private for‐profit hospitals than from public and private nonprofit hospitals, especially when C‐sections are medically appropriate.