%0 Report
        %A Salm, Martin
%A Wübker, Ansgar
        %T Do Hospitals Respond to Increasing Prices by Supplying Fewer Services?
        %D 2015
        %8 2015 Jul
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 9229
        %U https://www.iza.org/index.php/publications/dp9229
        %X Medical providers often have a significant influence on treatment decisions which they can use in their own financial interest. Classical models of supplier-induced demand predict that medical providers will supply fewer services if they face increasing prices. We test this prediction based on a reform of hospital financing in Germany. Uniquely, this reform changed the overall level of reimbursement – with increasing prices for some hospitals and decreasing prices for others – without affecting the relative prices for different types of patients. Based on administrative data, we find that hospitals do indeed react to increasing prices by reducing service supply.
        %K physician-induced demand
%K hospital care
%K prospective payment