Supplier-Induced Demand for Newborn Treatment: Evidence from Japan

43 Pages Posted: 13 Nov 2012 Last revised: 10 Mar 2014

See all articles by Hitoshi Shigeoka

Hitoshi Shigeoka

Simon Fraser University (SFU); University of Tokyo - University of Tokyo, Graduate School of Public Policy; IZA Institute of Labor Economics; National Bureau of Economic Research (NBER)

Kiyohide Fushimi

Tokyo Medical and Dental University - Department of Health Policy and Informatics

Multiple version iconThere are 2 versions of this paper

Date Written: March 9, 2014

Abstract

We estimate the degree of supplier-induced demand for newborn treatment by exploiting changes in reimbursement arising from the introduction of the partial prospective payment system (PPS) in Japan. Under the partial PPS, neonatal intensive care unit (NICU) utilization became relatively more profitable than other procedures, since it was excluded from prospective payments. We find that hospitals have responded to PPS adoption by increasing NICU utilization and by more frequently manipulating infants’ reported birth weights which in large part determine their maximum allowable stay in the NICU. This induced demand substantially increases the reimbursements received by hospitals.

Keywords: Supplier-Induced Demand, Neonatal Intensive Care Unit, Prospective Payment System, Birth Weight, Hospital Gaming

JEL Classification: I10, H51, L20

Suggested Citation

Shigeoka, Hitoshi and Fushimi, Kiyohide, Supplier-Induced Demand for Newborn Treatment: Evidence from Japan (March 9, 2014). Available at SSRN: https://ssrn.com/abstract=2174758 or http://dx.doi.org/10.2139/ssrn.2174758

Hitoshi Shigeoka (Contact Author)

Simon Fraser University (SFU) ( email )

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University of Tokyo - University of Tokyo, Graduate School of Public Policy ( email )

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IZA Institute of Labor Economics ( email )

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Kiyohide Fushimi

Tokyo Medical and Dental University - Department of Health Policy and Informatics ( email )

Japan

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