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Competition and efficiency in the end stage renal disease program.

P J Held, M V Pauly

    Journal of Health Economics
    |July 10, 1983
    PubMed
    Summary
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    Dialysis facility costs are biased by competitive amenity bias, making efficiency hard to measure. Higher reimbursement increases costs, amenities, and patient well-being, requiring policy decisions on amenity levels.

    Area of Science:

    • Health economics
    • Healthcare management

    Background:

    • Medical service cost functions can suffer from 'competitive amenity bias'.
    • This bias can hinder the identification of factors influencing economic efficiency in healthcare provision.

    Purpose of the Study:

    • To investigate the productivity and potential biases in dialysis facilities.
    • To understand the relationship between reimbursement levels, costs, amenities, and patient well-being.

    Main Methods:

    • Analysis of production or cost functions in dialysis facilities.
    • Qualitative investigation of factors affecting economic efficiency and amenity provision.

    Main Results:

    • Evidence of 'competitive amenity bias' was found in dialysis facilities.

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  • Difficulty in accurately estimating cost functions due to this bias.
  • Reimbursement levels positively correlate with incurred costs, amenity levels, and patient well-being in competitive markets.
  • Conclusions:

    • Policy decisions are needed to determine optimal reimbursement levels.
    • Societal preferences for amenity delivery to public program beneficiaries must be considered.
    • Balancing cost, amenity, and patient well-being is crucial in healthcare policy.