Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/114089
Authors: 
Salm, Martin
Wübker, Ansgar
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 9229
Abstract: 
Medical providers often have a significant influence on treatment decisions which they can use in their own financial interest. Classical models of supplier-induced demand predict that medical providers will supply fewer services if they face increasing prices. We test this prediction based on a reform of hospital financing in Germany. Uniquely, this reform changed the overall level of reimbursement – with increasing prices for some hospitals and decreasing prices for others – without affecting the relative prices for different types of patients. Based on administrative data, we find that hospitals do indeed react to increasing prices by reducing service supply.
Subjects: 
physician-induced demand
hospital care
prospective payment
JEL: 
I11
L10
L21
Document Type: 
Working Paper

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