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Session: Issues in Provider Payment
Room: Meeting Rooms 25+26
Time: Sat 10:15-11:30

Presenter: Eila Kankaanpää (University of Eastern Finland (Kuopio Campus). Department of Health and Social Management)

Abstract

Reforms in publicly funded health systems rely heavily on competition. Thus it is important to know how health care providers react to competition. In European countries, it is difficult to study providers in different markets, but in Finnish occupational health services, both public and private for-profit and non-profit providers co-exist.
The Finnish Institute of Occupational Health (FIOH) has a series of surveys to all OHS providers and collected data on clients, services and occupational health (OH) professionals from the providers for the years 1992, 1995, 1997, 2000 and 2004 (response rate over 90% per survey). An employer-based register of the provider, contents and costs of OHS exists as a result of the reimbursement system. This data at the Social Insurance Institution was merged with FIOH's data using the provider's name and address. The merged data contains (in 2004 survey) 230 public and 155 private providers. Due to the reimbursement system, records on services provided by the OHS units are well standardized. The FIOH collected the number of hours of various workplace activities and the number of health examinations and medical visits separately for physicians, nurses, physiotherapists and psychologists over a whole year.
The service mix varies between OHS units. We constructed an indicator - cost-weighted activity (CWA) - to represent the output. All services were converted into minutes and summed by OH professional group. The minutes of each OH professional group was then weighted by its wage, proportioned to physicians’ wage in 2004. The wages are national averages provided by the Commission for Local Authority Employers. CWA –output is the sum of the wage-adjusted output of all OH professional groups.
The explanatory variables in our models (fixed and random effects regression models) are quality (intensity), productivity, proportion of medical care of the production, unit costs, and total revenue of the unit. Competition was measured by the structure of the regional market, i.e, by the number of providers in the region and the Herfindahl index of the production.
Our results show that quality, productivity, and service mix seem to be associated with competition in pooled regression models, but in panel regression models only weakly or even not at all. The same applies for both public and private providers. However, the unit price and the total revenue increase for both types of providers with increased competition.
The effect of competition on intensity, productivity or service mix seems to be weak for both public and private providers. But, when a provider operates in a market with many providers it is more inclined to raise unit price, and might also be able to raise its total revenues. The public and private providers seem to behave in similar manner in our data. We will discuss our results from the following points of view: the competitiveness of the OHS market and health care market in general, 2) why public and private providers might react differently to competition.

Key Terms

market competition, occupational health, public and private providers, performance

Authors:

Eila Kankaanpää (of Eastern Finland (Kuopio Campus). Department of Health and Social Management) , Hannu Valtonen (of Eastern Finland (Kuopio Campus). Department of Health and Social Management) and Ismo Linnosmaa (of Eastern Finland (Kuopio Campus). Department of Health and Social Management)

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