The Effects Of Competition Among Primary Medical Institutions On Medical Expenses

The development of primary medical institutions plays a very important role in improving the healthcare system in China.However,the domestic health resource allocation and service provision are dominated by hospitals,resulting in the development of primary medical institutions lagging behind hospitals,and the bottleneck continues to appear.Therefore,there is an urgent need to further optimize the allocation of existing health resources through supply side reform in the field of health care,so as to improve the quality of primary medical services and further promote hierarchical medical system.Promoting the development of medical institutions at all levels and the improvement of the medical system has always been an important goal of China’s medical reform.Many studies put forward that the introduction of competition mechanism is one of the ways to achieve the above goal.However,there are very few studies in current literature that examine the effects of market competition on medical expenses in this sector,especially the competitive effect of the primary medical market needs to be further systematically evaluated.Understanding the competitive effect of China’s medical market is of great significance to the formulation of medical reform policies in the future.In this paper,we empirically study how primary medical institutions respond to market competition.Specifically,we analyze the effect of market competition on medical expenses in primary medical institutions by utilizing a detailed micro-level administrative data set of inpatients and medical institutions from a sub provincial city in China.It provides new ideas and evidence for promoting the development of primary medical institutions and promoting hierarchical medical system.The main research ideas of this paper are as follows:firstly,we compile and summarize the relevant literature and theories of medical market competition,and grasp the current situation and frontier methods of domestic and foreign research;Secondly,we comb and analyze the development process and current situation of primary medical institutions in China and the sub provincial city,and discusses the competitive pattern of China’s current medical market;Thirdly,based on empirical data,from the two aspects of outpatient expenses and hospitalization expenses,this paper analyzes the impact and influence channels of external competition,internal competition and competition effect under policy intervention on medical expenses;Finally,we summarize the findings,puts forward the corresponding countermeasures and suggestions,and look forward to the prospect of the next research.The research and main findings of this paper are as follows:First,the competition effects of public medical institutions ownership reform,and the competitive effect of public medical institutions and private medical institutions.We find significantly reduces the outpatient expenses of all medical institutions,public medical institutions and private medical institutions themselves.On the other hand,private medical institutions entering the medical market and participating in market competition will increase the per capita hospitalization expenses of inpatients in primary medical institutions,showing the opposite trend with the average outpatient expenses.Our results reflect that the external competition in the primary medical market has shown an effect in reducing outpatient expenses,but in terms of hospitalization expenses,the effect of price competition has not yet shown.Second,the competition effects formed by changes in market structure.Firstly,according to the data of medical institutions,the competition degree is measured by the competition index HHI(Herfindahl Hirschman index)calculated by the actual diagnosis and treatment volume.It is found that the degree of market competition is negatively correlated with the average outpatient cost,but positively correlated with the average hospitalization cost per capita,indicating that when the primary medical institutions are facing market competition,It will further reduce outpatient expenses and increase hospitalization expenses.Secondly,according to the matching data of inpatients and medical institutions,the HHI calculated by predicting patient flow is used to measure the competitiveness of medical institutions.Our results show that market competition will lead to the rise of medical expenses of inpatients under the current healthcare system.Specifically,after controlling for the type of diseases,characteristics of patients and primary medical institutions,total medical expenses of inpatients will significantly increase by 3.8%(about 87 RMB)when the competition index of HHI decreases from 0.64 to 0.17,indicating that the more competitive the market is,the higher the total inpatient expenses will be.In addition,the regression results also show that drug expenses as well as treatment expenses will increase by 4.69%and 6.11%,respectively,when HHI decreases from 0.64 to 0.17.And in contrast,diagnosis and treatment expenses will decrease with the increase in market competition.We also analyzed the potential impact mechanism of market competition on total medical expenses and the results illustrate that market competition is significantly and positively correlated with hospital length of stay,number of beds,number of medical personnel,and investment of medical equipment.Third,the competition effects under exogenous policy interventions.The impact of the policy of canceling the local supplementary catalogue and appropriately increasing the proportion of non-essential drugs on the medical behavior and resource expenditure of primary medical institutions varies according to the degree of market competition,that is,primary medical institutions facing different market concentration charge different treatment fees for patients.Firstly,after the implementation of the policy,the medical expenses of patients in primary medical institutions in different competitive markets have increased to varying degrees;Secondly,after dividing the competitive market,it is found that the more intense the market competition is,the more the total hospitalization expenses of patients increase;In addition,the more intense the market competition is,the more the hospitalization days and average daily hospitalization expenses of patients will increase,which is consistent with the change trend of total hospitalization expenses;Finally,after the implementation of the policy,public medical institutions are more inclined to spend more resources and hospitalization medical expenses on patients.The hospitalization medical expenses of Urban Vocational insurance patients and"unusual diseases" patients have increased significantly after the implementation of the policy,and the stronger the market competition,the more the expenses increase.According to the above conclusions,this paper finds that whether external competition or internal competition,the response trend of outpatient expenses and inpatient expenses to competition is different,that is,outpatient expenses decrease with the increase of the degree of competition,on the contrary,inpatient expenses increase with the increase of the degree of competition.The research of this paper proves the existence of "Medical Arms Race" in the competition of hospitalization in the primary medical market,that is,under the system of full coverage of China’s medical insurance and project payment,the competition among medical institutions is more manifested in non price competition.In the highly competitive market,in order to attract patients,the medical quality may be improved by increasing the number of beds and the investment in personnel and equipment,which will also lead to the increase of hospitalization medical expenses.Therefore,policy makers should fully consider the characteristics of primary medical institutions,strengthen the reform of primary medical institutions,deepen the reform of medical insurance payment mode,and strengthen the supervision of drug use,length of hospitalization and personnel and equipment investment,so as to improve the allocation and use efficiency of grass-roots medical resources.