Egil Kjerstad

Prospective Funding of General Hospitals in Norway—Incentives for Higher Production?

In Norway, a new system of Activity Based Financing (ABF) for general hospitals was introduced on a comprehensive basis in July 1997. The main purpose of the reform was to increase activity so that more patients could receive treatment more quickly without reducing the quality of care. In this paper we analyse whether the reform has had any significant effect using two different performance indicators: number of patients treated and production of DRG points (Diagnosis Related Group). We divide the hospitals into two groups: hospitals owned by counties that have adopted the ABF system, and hospitals owned by counties using other funding systems. The first group then becomes the experiment group, while the second serves as a comparison group. It is argued that fixed-effect models are suitable specifications for this evaluation study, handling selection bias and the influence of unobservable explanatory variables in a consistent manner. We find that the reform has had a significant effect on the number of patients treated and DRG points produced. The results are sensitive as to how the experiment and the comparison group are determined.

A low-key social insurance reform—effects of multidisciplinary outpatient treatment for back pain patients in Norway

This paper estimates treatment effects for back pain patients using observational data from a low-key social insurance reform in Norway. Using a latent variable model, we estimate the average treatment effect (ATE), the average effect of treatment on the treated (TT), and the distribution of treatment effects for multidisciplinary outpatient treatment at three different locations. To estimate these treatment effects, we use a discrete-choice model with unobservables generated by a factor structure model. Distance to the nearest hospital (in kilometres) is used as an instrument in estimating the different treatment effects. We find a positive effect of treatment of around 6 percentage points on the probability of leaving the sickness benefits scheme after allowing for selection effects and full heterogeneity in treatment effects. We also find that there are sound arguments for expanding the multidisciplinary outpatient programme for treating back pain patients.

Between two beds: inappropriately delayed discharges from hospitals

Acknowledging the necessity of a division of labour between hospitals and social care services regarding treatment and care of patients with chronic and complex conditions, is to acknowledge the potential conflict of interests between health care providers. A potentially important conflict is that hospitals prefer comparatively short length of stay (LOS) at hospital, while social care services prefer longer LOS all else equal. Furthermore, inappropriately delayed discharges from hospital, i.e. bed blocking, is costly for society. Our aim is to discuss which factors that may influence bed blocking and to quantify bed blocking costs using individual Norwegian patient data, merged with social care and hospital data. The data allow us to divide hospital LOS into length of appropriate stay (LAS) and length of delay (LOD), the bed blocking period. We find that additional resources allocated to social care services contribute to shorten LOD indicating that social care services may exploit hospital resources as a buffer for insufficient capacity. LAS increases as medical complexity increases indicating hospitals incentives to reduce LOS are softened by considerations related to patients’ medical needs. Bed blocking costs constitute a relatively large share of the total costs of inpatient care.

Prioritization and the elusive effect on welfare – A Norwegian health care reform revisited

The Faster Return to Work (FRW) scheme that Norwegian authorities implemented in 2007 is an example of a policy that builds on the human capital approach. The main idea behind the scheme is that long waiting times for hospital treatment lead to unnecessarily long periods of absence from work. To achieve a reduction in average sickness absence duration, the allocation of FRW funds and new treatment capacity is exclusively aimed at people on sick leave. Many countries have allocated funds to reduce waiting times for hospital treatment and research shows that more resources allocated to the hospital sector can reduce waiting times. Our results support this as the FRW scheme significantly reduces waiting times. However, on average the reduction in waiting times is not transformed into an equally large reduction in the sickness absence period. We find significant difference in the effects of FRW on length of sick leave between surgical and non-surgical patients though. The duration of sick leave for FRW patients undergoing surgical treatment is approximately 14 days shorter than for surgical patients on the regular waiting list. We find no significant effect of the scheme on length of sick leave for non-surgical patients. In sum, our welfare analysis indicates that prioritization of the kind that the FRW scheme represents is not as straightforward as one would expect. The FRW scheme costs more than it contributes in reduced productivity loss. We base our analyses on several different econometric methods using register data on approximately 13,500 individuals over the period 2007-2008.

The Ambiguous Effect of GP Competition: The Case of Hospital Admissions

Summary In the theoretical literature on general practitioner (GP) behaviour, one prediction is that intensified competition induces GPs to provide more services resulting in fewer hospital admissions. This potential substitution effect has drawn political attention in countries looking for measures to reduce the growth in demand for hospital care. However, intensified competition may induce GPs to secure hospital admissions a signal to attract new patients and to keep the already enlisted ones satisfied, resulting in higher admission rates at hospitals. Using both static and dynamic panel data models, we aim to enhance the understanding of whether such relations are causal. Results based on ordinary least square (OLS) models indicate that aggregate inpatient admissions are negatively associated with intensified competition both in the full sample and for the sub‐sample patients aged 45 to 69, while outpatient admissions are positively associated. Fixed‐effect estimations do not confirm these results though. However, estimations of dynamic models show significant negative (positive) effects of GP competition on aggregate inpatient (outpatient) admissions in the full sample and negative effects on aggregate inpatient admissions and emergency admissions for the sub‐sample. Thus, intensified GP competition may reduce inpatient hospital admissions by inducing GPs to provide more services, whereas, the alternative hypothesis seems valid for outpatient admissions.