Most empirical studies on physicians responses to competition focus on their activities as measured by their volume of services, their hours of work, or their productivity. In general, this research does provide evidence that these choices are influenced by competition and physician remuneration schemes. However, very few studies have analyzed the impact on hospital patients’ length of stay (LOS) and the risk of their rehospitalisation post- discharge. This is unfortunate for at least three reasons. Firstly, for a given diagnosis, outcomes such as LOS in hospital are potentially verifiable, albeit imperfect, measures of inputs that may affect specialists’ quality of service. For instance, an increase in LOS in hospital may reflect more time spent by a specialist to better identify the nature of his patient’s health problem and to improve the quality of treatment. Of course, an increase in LOS in hospital may just reflect the fact that specialists spend more time on nonclinical activities (e. g., teaching, administrative tasks and research) and less time on clinical activities. In this case, one should not expect an increase in the quality of treatment at least in the short run, ceteris paribus. Secondly, the risk of re-hospitalisation post-discharge to the same department is a natural measure of adverse outcome and is often used as a proxy for morbidity. Therefore, one may expect that a longer LOS in hospital, as long as it leads to better service quality in hospital, will reduce the risk of re-hospitalisation post-discharge. Finally, LOS in hospital is generally considered as a major determinant of hospital costs per patient, while hospitalisations account for a large portion of total health care costs, even if they are a relatively rare occurrence. This paper attempts to pry open the «black box» of the impact of competition on LOS in hospital and the risk of re-hospitalisation post-discharge to the same department with the same diagnosis. We analyzed the competition effects on physician in-patient practice from the vantage point of rational agent theory of classical health economics. The pivot assumed to be modern model of profit maximization. Later recognizes physician as rational agent who tries to maximize one’s utilities. Consequently, we refined our concept by suggest- ing theoretical model of physician behavior in hospitals. We worked out behavioral model based on maximization of physician’s utility curve under non-linear budget constraints and applied Slutsky equations that decompose virtual price effects into substitution and income effects. The main conclusions of the model envisage the decrease in vol- ume of services rendered by physician as well as the decrease in physician’s clinical hours. Thereby physician shifts toward activities that improve performance by spending more time on each procedure. By the model in relation to fore mentioned the increase in hospital stays anticipated. Evidences from hospitals records appeared to sustain theoretical propositions. These effects are strong and were probably not anticipated by policy makers. Moreover an important increase in patients’ hospital LOS is likely to be seen as a perverse impact of the reform. However, the full policy implications of our analysis are mixed. On the one hand, an increase in patients’ number of days in hospital is costly both in time and money, ceteris paribus. Indeed, this is why a large number of health care policies mainly aim at reducing hospital LOS. Microdata of cohort setup substantiated the preposition of theoretical model on relation between quality of services and time spent on each service. We extended physician behavior theory finding that rational agent type of behavior is realized only at first and partially to second episodes of hospitalization. Further physician’s behavior yields to the type of «perfect agent» with physician being a perfect agent of patient. Our results raise an important issue regarding the measure of health care services quality. Does an increase in the risk of read- mission to hospital necessarily indicate a reduction in the quality of these services? We believe that this is not nec- essary the case. For instance, for a given diagnosis, physicians who spend more time with their patients in hospital may also be more inclined to rehospitalise them in order to provide them with a better treatment. A natural research extension of our paper could thus be to compare the evolution of health status of several cohorts of patients with a same diagnosis but treated in different economic environment (e. g. different insurance policies).
«Bulletin of problems biology and medicine» Issue 3 part 1 (110), 2014 year, 391-400 pages, index UDK 614. 253. 1:614. 2(477. 44)
