Study On The Motivation And Effects Of Public Hospital Integration In Shanghai

Integration of health care resources is an important means to optimize the allocation of health care resources, improve the usage efficiency of health care resources and solve the public problem of "high cost of medical services and difficulty in seeking medical services". Since 1990s, large public hospitals in metropolises of China have been exploring for integration. Since 2000, the government has promulgated a series of matching policies and documents to bolster and encourage cooperation and amalgamation of various kinds of medical institutions to carry out integration of health care resources. Driven by these policies, the integration of public hospitals and the construction of multi hospital system have ushered in a stage of rapid development and many multi hospital systems and hospital continuums have been constructed in the whole country. Likewise, integration of public hospitals in Shanghai was also in full swing, giving birth to quite a few multi hospital systems, including Ruijin Hospital Group and Shanghai Sixth People's Hospital Group.Integration of public hospitals incurs some new research subjects. With a comprehensive review of home and abroad studies, it can be found that current study on hospital integration is still far from being systematic or thorough. Especially, more efforts are needed to expand the study on integration behavior and the corresponding effect of public hospital integration in China. Currently, domestic scholars mainly focused on the motivations and the governance structure of integration in their study of hospital integration and their study of integration motivation was mostly normative study, without in-depth theoretical analysis. What's more, current study could not disclose, besides governmental policies, what factors affected public hospitals'participation in integration, let alone giving comments on post-integration effect. Therefore, it could not offer practice and policy suggestions to health care administrative department and hospital manager. Due to restrictions in data, sample and research methodology, foreign scholars'study on the effect of hospital M&A on economy of scale, cost, medical care quality of the hospitals did not come to a unanimous conclusion. In this regard, this thesis analyzed in-depth the motivations of integration of public hospitals from the perspective of patients'and hospitals'utility. In addition, this thesis conducted empirical study on the effect of integration of public hospitals through multiple linear regression analysis and Logistic regression analysis, with aim to provide suggestions on policies and operation to the government and hospital managers. .In accordance with the evolution process of public hospital integration, the thesis discussed six topics: firstly, it analyzed the process of hospital integration both at home and abroad as well as the characteristics of integration of Chinese public hospitals. According to the research, the integration model of loose collaboration prevails in China currently. The government plays an important impetus role in integration. Usually a combination of several models is adopted in public hospital integration. Loose collaboration integration mode is tended to develope to close cooperation. Seeing from conditions in Shanghai, public hospital integration not only optimized the allocation of health care resources but also spurred the development of secondary level hospitals and community health services, realized cross-region integration and played an important role in"based on Shanghai, driving the development of the Yangtze River Delta and exerting nationwide influences". Currently, hospital integration in Shanghai mostly occurs among secondary and tertiary level hospitals, while the integration of community health service centers is still under exploration. Secondly, through establishing utility function of patients and hospital managers, the thesis used Salop circle model to theoretically study the motivations of integration of core hospitals. According to the research, after hospitals are integrated, some patients flow from tertiary level hospitals to secondary level hospitals due to technology diffusion effect and brand extension effect, which, as a result, lessens the burden of tertiary level hospitals and realizes the goal of optimizing health care resource allocation and conducting regional medical planning. Compared with before integration, patients'demand for integrated multi-hospital systems has increased, while their demand for non-integrated ones decreased. From the perspective of hospitals, integration can increase the number of patients multi-hospital systems receive and enhance the hospitals'utility. Through two-stage dynamic game analysis, this thesis finds that hospital manager has the motive for proactive integration and each tertiary hospital is likely to fulfill integration activities several times. Integration of hospitals in Shanghai can well prove this argument. Moreover, integration of public hospitals also improves the standard of social welfare.With the motivations of public hospital integration made clear, next this thesis studied the difference between integrated secondary level hospitals and non-integrated ones and the main factors affecting integration of secondary level hospitals and tertiary ones. Mann-Whitney U test was performed to compare the difference between integrated secondary level hospitals and non-integrated ones. Health care quality, scale, outputs, and financial condition are significantly different between two groups, while other indexes have no significantly difference. According to binary logistic regression analysis, health care quality, scale, outputs, and financial condition all have impact on integration. Secondary level hospitals with larger scale, greater output, better health care quality and financial condition are more likely to be integrated by core tertiary level hospitals. It can be seen that current integration of hospitals to some extent is a kind of"alliance between giants".Next, a flexible multi-output cost function was specified to study the impact of public hospital integration in Shanghai on economies of scale of core hospitals and integrated ones. To core hospitals, slight diseconomies of scale existed only in 2002 and economies of scale were realized in all other years. Hospital integration weakened economies of scale of core hospitals at the very beginning, but it began to rally from 2003 and exceeded the prior-integration level. To district-level central hospitals, economies of scale existed both in integrated district-level central hospitals and control hospitals, but the number of accepted patients failed to reach the optimum scale. In 1999, 2000 and 2001, SRVF and EOS values of integrated district-level central hospitals did not differ much from those of the control group. From 2002, the former values began to go lower than the latter. In the case of suburban central hospitals, economies of scale, no matter long-term or short-term, existed in the integrated suburban central hospitals and the control group. Moreover, as time passed by, their economies of scale dropped. In 1999, economies of scale of integrated suburban central hospitals was larger than that of the control group, but with integration moving on, economies of scale of the former began to go lower than the latter starting from 2000. This indicates that public hospital integration will reduce economies of scale at the beginning, but economies of scale of integrated district-level central hospitals and suburban central hospitals have always kept above 1, which means none of the integrated secondary level hospitals has reached the optimum scale and integration didn't incurred diseconomies of scale in integrated secondary level hospitals. As integration moved on, the scale of integrated secondary level hospitals kept expanding and the output kept increasing. Decrease of economies of scale indicates that the integrated hospitals are moving closer to the optimum scale.Then the thesis studied the effect of public hospital integration on cost, health care quality and market share. According to the study, the integration does not lead to cost saving within the following four years; single DRG patients can be better treated and cured in integrated hospitals, but the length of stays does not obviously decrease; and the output, market shares and market power of integrated secondary level hospitals can be enhanced.Finally, this thesis probed into the future development of public hospital integration in China and put forward policy suggestions.The originality of this thesis is exhibited in the following three aspects:1. Through mathematical modeling, it theoretically analyzed the motivations of public hospital integration and the effect on social welfare, hence filling in the research gap in this aspect;2. It studied the effect of integration on economies of scale from short term and long term by specifying multiple output cost function;3. It conducted substantive empirical studies on the influencing factors of public hospital integration as well as on the effect of such integration on hospital cost, health care quality and market share, and fetches up the deficiencies of previous study, i.e., too much theoretical analysis but little empirical study.All in all, this thesis not only theoretically analyzed the motivations of public hospital integration in China, but also conducted substantive empirical studies on the influencing factors of such integration as well as its effect on economies of scale, hospital cost, health care quality and market share and draw several significant conclusions. This thesis is of theoretical importance and practical significance for us to correctly understand integration behavior of Chinese public hospitals, promote sound development of Chinese medical industry and formulate scientific policies to regulate and guide the integration of public hospitals.