Supplier-induced Demand in Newborn Treatment: Evidence from Japan

Seminar

Speaker(s)

Hitoshi Shigeoka, Simon Fraser University

Date and Time

February 12, 2014 12:00 PM - 1:30 PM

Availability

RSVP

Open to the public.

RSVP required by 5PM February 11.

Location

Philippines Conference Room

FSI Contact

Lisa Lee

llee888@stanford.edu

We measure the degree of supplier-induced demand in newborn treatment, by exploiting changes in reimbursement arising from the introduction in Japan of the partial prospective payment system (PPS). 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 respond to PPS adoption by increasing NICU utilization and more frequently manipulating infants' reported birth weights -- the latter of which is a measure that determines the infant's maximum allowable length of stay in NICU. This induced demand substantially increases hospitals' reimbursements.

Hitoshi Shigeoka received a B.A. (2001) and an MA (2003) in chemical engineering from University of Tokyo, and master of international affairs (2006) and PhD in economics (2012) from Columbia University. Hitoshi’s research interests include health, labor, public economics, and experimental economics. His current research involves estimating the demand elasticity of health care utilization, examining the degree of supplier-induced demand by physicians and hospitals, examining the effects of competition and peer-to-peer teaching on learning, and investigating how the long-term incentives of mothers affect the timing of births.