Privatization of local public hospitals: effect on budget, medical service quality, and social welfare.
We analyze a duopolistic health care market in which a rural public hospital competes against an urban public hospital on medical quality, by using a Hotelling-type spatial competition model extended into a two-region model. We show that the rural public hospital provides excess quality for each unit of medical service as compared to the first-best quality, and the profits of the rural public hospital are lower than those of the urban public hospital because the provision of excess quality requires larger expenditure. In addition, we investigate the impact of the partial (or full) privatization of local public hospitals.
Aiura
Hiroshi
H
Faculty of Economics, Oita University, 700, Dannoharu, Oita, Japan. office@aiura.info
Sanjo
Yasuo
Y
D002755:Choice Behavior; D004465:Economic Competition; D005102:Health Expenditures / Q000639:trends*; D006273:Health Facility Merger / Q000191:economics / Q000592:standards / Q000639:trends; D006779:Hospitals, Public / Q000191:economics* / Q000592:standards / Q000639:trends; D006801:Humans; D007564:Japan; D018803:Models, Economic; D057240:Patient Preference; D011332:Privatization / Q000191:economics* / Q000639:trends; D011787:Quality of Health Care / Q000191:economics* / Q000592:standards / Q000639:trends; D019035:Rural Health Services / Q000191:economics / Q000592:standards / Q000639:trends; D019037:Urban Health Services / Q000191:economics / Q000592:standards / Q000639:trends