How do Hospitals Respond to Price Changes? Evidence from Norway.

Many publicly funded health systems use activity-based financing to increase hospital production and efficiency. The aim of this study is to investigate whether price changes for different treatments affect the number of patients treated and the mix of activity provided by hospitals. We exploit the variations in prices created by the changes in the national average treatment cost per diagnosis-related group (DRG) offered to Norwegian hospitals over a period of 5 years (2003-2007). We use the data from Norwegian Patient Register, containing individual-level information on age, gender, type of treatment, diagnosis, number of co-morbidities and the national average treatment costs per DRG. We employ fixed-effect models to examine the changes in the number of patients treated within the DRGs over time. The results suggest that a 10% increase in price leads to about 0.8-1.3% increase in the number of patients treated for DRGs, which are medical (for both emergency and elective patients). In contrast, we find no price effect for DRGs that are surgical (for both emergency and elective patients). Moreover, we find evidence of upcoding. A 10% increase in the ratio of prices between patients with and without complications increases the proportion of patients coded with complications by 0.3-0.4 percentage points.

The impact of different prioritisation policies on waiting times: case studies of Norway and Scotland.

We investigate the distributional consequences of two different waiting times initiatives, one in Norway, and one in Scotland. The primary focus of Scotland's recent waiting time reforms, introduced in 2003, and modified in 2005 and 2007, has been on reducing maximum waiting times through the imposition of high profile national targets accompanied by increases in resources. In Norway, the focus of the reform introduced in September 2004, has been on assigning patients referred to hospital a maximum waiting time based on disease severity, the expected benefit and the cost-effectiveness of the treatment. We use large, national administrative datasets from before and after each of these reforms and assign priority groups based on the maximum waiting times stipulated in medical guidelines. The analysis shows that the lowest priority patients benefited most from both reforms. This was at the cost of longer waiting times for patients that should have been given higher priority in Norway, while Scotland's high priority patients remained unaffected.