Ou Yang: Cream skimming, hospital transfers and capacity pressure

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Jan Kabátek


Title: Cream skimming, hospital transfers and capacity pressure

Abstract: This paper investigates cream skimming behaviour by examining hospital transfers in a mixed public-private hospital system. Previous work has shown that the likelihood of  private-to-public transfers rose with patient complexity and severity. In contrast, the likelihood of public-to-private transfers tended to fall with patient complexity and severity. It has been argued that the observed pattern of transfers, although consistent with cream skimming, could also reflect the pattern of specialisation of private and public hospitals. This paper reconsiders the previous work by examining the pattern of transfers when hospitals were facing capacity pressure, which we argue is a plausible identification of cream skimming. We make use of 12 years of hospital administrative data from the state of Victoria, Australia. Unfortunately, hospital capacity was not observed in the data. Instead it was approximated by first calculating observed weekly patient throughput, referred to as weekly utilisation; capacity was then approximated as the maximum weekly utilisation of a given year. The capacity pressure of a hospital was measured as the hospital's observed weekly utilisation relative to its approximated capacity. Patient severity and complexity was measured by Charlson comorbidity index. The data were divided into two subsamples according to whether the patient was initially admitted as public or private patients. For each subsample we estimate the probability of transfers using linear probability fixed effects and logistic equation estimation. The statistics of interest were the marginal effects of the interaction between capacity pressure and severity/complexity measures. The main findings were that, for patients initially admitted into the private setting, the transfer probability of complex and severe patients dramatically increased during times of capacity pressure, whereas this pattern was not observed for patients initially admitted into the public sector.

Presenter: Ou Yang, Melbourne Institute: Applied Economic & Social Research

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