Economic Analysis Of Hospital's Behavior In China

This paper employs health economics and industrial organization theories to study hospital's behavior in China, especially that of not-for profit ones.This paper contains the following 5 chapters:Chapter 1 gives a comprehensive introduction to the relevant theories in foreign literature on hospital's behavior.Chapter 2 analyses the motives for hospitals in China in choosing their business forms. The main idea of this chapter includes the ownership structures for hospitals in China, and background information for the systematic management of hospitals in different categories and its major stipulations, and the leading factors influencing hospitals in their choice of business forms.Chapter 3 analyses how compensation mechanism influences the behavior of state-owned hospitals. This paper demonstrates that the reduction of government allowance has led to stronger motives for higher profit in the state-owned hospitals, and fee-for-service payment has increased the hospital's motive to increase checkups and medicine sales to patients. In addition, government's control over medical services and "to cover hospital expenses based on medicine revenue" policy have caused the increasing share of medicine revenue in the business revenue in hospitals.Chapter 4 analyses how market competition influences hospital's behavior. This paper calculates market concentration ratio of medical market in Beijing, and probes into the competitive relationship between not-for-profit hospitals, as well as competitive relationship among government-sponsored hospitals, non-governmental hospitals and joint hospitals in China.Chapter 5 employs an economic model to study the behavior of state-owned hospitals in China. In addition, a comparative study on the behavior of not-for-profit hospitals and that of for-profit-hospitals has been carried out.This paper contributes to the current literature in the following 3 ways:First, in the first section of chapter 4, this paper analyses the market structure of hospitals in Beijing by employing four-firm concentration ratio and Herfindahl -Hirschman index, based on daily data covering 328 large-scale hospitals and special hospitals. The study shows the coexistence of monopoly and competition in the medical service market in Beijing.Second, in the second section of chapter 4 this paper analyses the market competition modes between hospitals in Beijing based on data released by Beijing Health Bureau, concerning in-hospital charges, number of patients discharged and duration of patients' hospitalization once they contract a certain disease and need operation. The main results of this section are the following: the great volatility of charges for medical services in stated-owned hospitals indicates that they have become a price maker, to a certain degree; non-price competition has been more popular among hospitals than price competition; and consumers are more sensitive to price change in simple operations than that in complex operations.Third, in the first section of chapter 5, this paper builds a theoretical model to explain the hospital's behavior in China.JEL classification:HO, H3, H42, H51.