Rune J. Sørensen

Type of contract and supplier-induced demand for primary physicians in Norway

The focus of the present study is to examine whether supplier-induced demand exists for primary care physician services in Norway. We compare how two groups of physicians, with and without incentives to induce, respond to increased competition. Contract physicians receive their income from fee-for-item payments. They have an incentive to compensate for a lack of patients by inducing demand for services. Salaried physicians receive a salary which is independent of output. Even though increased competition for patients reduces the availability of patients, they have no financial incentive to induce. Neither of the two groups of physicians increased their output as a response to an increase in physician density. This result could be expected for salaried physicians, while it provides evidence against the inducement hypothesis for contract physicians.

Local government service production: The politics of allocative sluggishness*

A partial adjustment model with endogenous speed of adjustment is developed to analyze how pressure from interest groups and mass media influence the adjustment process of local governments. A survey questionnaire to the local politicians is used to measure the pressure indicators. Based on a combined cross-section and time-series data base for Norwegian local governments, the sluggishness of the adjustment process is estimated. The dynamics of the adjustment process is shown to reflect the activity of interest groups and media pressure. Pressure groups related to primary education explain an important part of the sluggishness observed. Pressure groups promoting kindergartens and health care/care for the elderly stimulate reallocations.

The political economy of intergovernmental grants: The Norwegian case

The centralization of local public finance is commonly justified in terms of equal- ity. The welfare state regulates local government and allocates grants in a way that sacri- fices efficiency to achieve equality. The political economy model suggests that democratically elected national politicians may pursue policies that diverge from this. This article outlines a version of the political economy model based on seat-maximizing politicians in central and local government. Both parliamentary policy making and local government lobbying may generate disparities in grant allocation. On the basis of data on central grant distribu- tion in Norway, we observe persistent disparities in local government revenues that cannot be accounted for by regional policy aims or egalitarian objectives. Extensive data on local governments, the lobbying activities of local council members and the Storting (the Norwegian Parliament) allows us to test the political economy hypotheses. Disparities in the number of seats allocated to the national election districts, and differences in the local lobbying activities, influence the distribution of grants between municipalities and counties.

Competitive Tendering in the Welfare State: Perceptions and Preferences among Local Politicians

Competitive tendering for public services has triggered a heated academic debate. In political economy, competition is claimed to improve efficiency. If this is true, why are most governments faithful to the monopoly model? Political economists suggest that public sector employees and unions influence the preferences of the elected politicians. In new institutional theory, competition is claimed to undermine democratic governance. If this is true, why do some elected governments make use of competitive tendering? In this tradition, organisational solutions are seen as expressions of autonomous values and perceptions about the outcomes of organisational solutions – not as manifestations of vote–maximising politicians subject to self–interested interest groups. When governments use competition, it is due to misconceived management fads that have temporarily penetrated long–established perceptions and value systems. These propositions have not been subjected to proper empirical testing. We have analysed extensive data about Norwegian local politicians, and found support for the notion that the perceptions of elected politicians affect their preferences for tendering for residential care services for elderly people and hospital services. But we found support for the political economy propositions as well. Party affiliation, interest group background and economic situation influence the perceptions and organisational preferences of elected politicians. Reform may be a question of political values and perceived consequences, but these values, perceptions and policy preferences are influenced by political self–interest and can be changed by exogenous economic shocks.

Do expert patients get better treatment than others? Agency discrimination and statistical discrimination in obstetrics.

We address models that can explain why expert patients (obstetricians, midwives and doctors) are treated better than non-experts (mainly non-medical training). Models of statistical discrimination show that benevolent doctors treat expert patients better, since experts are better at communicating with the doctor. Agency theory suggests that doctors have an incentive to limit hospital costs by distorting information to non-expert patients, but not to expert patients. The hypotheses were tested on a large set of data, which contained information about the highest education of the parents, and detailed medical information about all births in Norway during the period 1967-2005 (Medical Birth Registry). The empirical analyses show that expert parents have a higher rate of Caesarean section than non-expert parents. The educational disparities were considerable 40 years ago, but have become markedly less over time. The analyses provide support for statistical discrimination theory, though agency theory cannot be totally excluded.

Do Mothers Decide?: The Impact of Preferences in Healthcare

In this study we analyze whether immigrant mothers in Norway can influence their mode of delivery. Patient preferences were measured as the rate of Caesarean section from their home country, and by a survey question measuring the extent to which people believe they have freedom of choice and control over their lives in their home country. Preferences have a causal effect on the likelihood of Caesarean section. Medical risk factors are still the most important reasons for having a Caesarean section, but our regression estimates show that a substantial share of Caesarean sections is due to preferences as well.

Adoption of Diagnostic Technology and Variation in Caesarean Section Rates: A Test of the Practice Style Hypothesis in Norway

OBJECTIVE To examine whether the introduction of advanced diagnostic technology in maternity care has led to less variation in type of delivery between hospitals in Norway. DATA SOURCES The Medical Birth Registry of Norway provided detailed medical information for 1.7 million deliveries from 1967 to 2005. Information about diagnostic technology was collected directly from the maternity units. STUDY DESIGN The data were analyzed using a two-level binary logistic model with Caesarean section as the outcome measure. Level one contained variables that characterized the health status of the mother and child. Hospitals are level two. A heterogeneous variance structure was specified for the hospital level, where the error variance was allowed to vary according to the following types of diagnostic technology: two-dimensional ultrasound, cardiotocography, ST waveform analysis, and fetal blood analyses. PRINCIPAL FINDING There was a marked variation in Caesarean section rates between hospitals up to 1973. After this the variation diminished markedly. This was due to the introduction of ultrasound and cardiotocography. CONCLUSION Diagnostic technology reduced clinical uncertainty about the diagnosis of risk factors of the mother and child during delivery, and variation in type of delivery between hospitals was reduced accordingly. The results support the practice style hypothesis.

Regionalization and Local Hospital Closure in Norwegian Maternity Care—The Effect on Neonatal and Infant Mortality

OBJECTIVE To study whether neonatal and infant mortality, after adjustments for differences in case mix, were independent of the type of hospital in which the delivery was carried out. DATA The Medical Birth Registry of Norway provided detailed medical information for all births in Norway. STUDY DESIGN Hospitals were classified into two groups: local hospitals/maternity clinics versus central/regional hospitals. Outcomes were neonatal and infant mortality. The data were analyzed using propensity score weighting to make adjustments for differences in case mix between the two groups of hospitals. This analysis was supplemented with analyses of 13 local hospitals that were closed. Using a difference-in-difference approach, the effects that these closures had on neonatal and infant mortality were estimated. PRINCIPAL FINDING Neonatal and infant mortality were not affected by the type of hospital where the delivery took place. CONCLUSION A regionalized maternity service does not lead to increased neonatal and infant mortality. This is mainly because high-risk deliveries were identified well in advance of the birth, and referred to a larger hospital with sufficient perinatal resources to deal with these deliveries.

Contract design for primary care physicians: Physician location and practice behaviour in small communities

Most western countries employ a combination of fee-for-service, fixed salary and per capita subsidies to finance the services of general practitioners. Based on Norwegian data, the authors demonstrate that these fianancial schemes have been used in different types of municipalities.The authors argue that the fee-for-service and per capita components should be allowed to vary between primary physicians and municipalities: (a) If the patient population per primary physician is low and patient supply is unstable, the per capita subsidy or work-free income should be differentiated to ensure recruitment of physicians. (b) Physicians in municipalities with low physician coverage should be allotted a low basic grant, whilst per capita subsidy and fee-for-service payments should be used to stimulate service production. The opposite situation exists where there is a potential of supplier inducement due to high physician coverage. (c) The responsibility for designing contracts should be assigned to local rather than national authorities.These suggestions go against important elements in the reform of primary physician services in Norway.

The impact of hospital revenue on the increase in Caesarean sections in Norway. A panel data analysis of hospitals 1976-2005

BackgroundThere has been a marked increase in the number of Caesarean sections in many countries during the last decades. In several countries, Caesarean sections are carried out in more than 20 per cent of births. These high Caesarean section rates give cause for concern, both from an economic and a medical perspective. A general opinion among epidemiologists is that the increase in the number of Caesarean sections during the last decade has been greater than could be expected in relation to medical risk factors. Therefore, other explanations must be sought. We studied one potential explanation; the effect that the increase in hospital revenue per bed during the period 1976-2005 has had on the Caesarean section rate in Norway. During this period, hospital revenue increased by about 260% (adjusted for inflation).MethodsThe analyses were carried out using data from the Medical Birth Registry 1976-2005 from Norway. The data were merged with data about hospital revenue, which were obtained from Statistics Norway. The analyses were carried out using annual data from 46 hospitals. A fixed effect regression model was estimated. Relevant medical control variables were included.ResultsThe elasticity of the Caesarean section rate with respect to hospital revenue per bed was 0.13 (p < 0.05). This represents an increase in the Caesarean section rate from the basis year 1976 to the final year 2005 of about 35 per cent. Most of the variables measuring characteristics of the health status of the mother and child had the expected effects.ConclusionThe increase in hospital revenue explains only a small part of the increase in the Caesarean section rate in Norway during the last three decades. The increase in the Caesarean section rate is considerably greater than could be expected, based on the increase in hospital revenue alone. The strength of our study is that we have estimated a cause and effect relationship. This was done by using fixed effects for hospitals, a lagged revenue variable and by including an extensive set of control variables for the risk factors of the mother and the baby.