Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Bergen, Department of Economics

No 12/17: Is incentivizing by subsidizing a better way of managing chronic health conditions?

M. Kamrul Islam () and Egil Kjerstad ()
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M. Kamrul Islam: University of Bergen, Department of Economics, Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway
Egil Kjerstad: University of Bergen, Department of Economics, Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway

Abstract: The recognition that chronic care delivery is sub-optimal has led many health authorities around the world to its redesign. In Norway, the Department of Health implemented the Coordination Reform in January 2012 with the granting of subsidies to municipalities establishing emergency bed capacity (EBC) within their primary care facilities, with the explicit aim of reducing unnecessary admissions to hospitals. We examine the impact of this EBC policy on changes in emergency hospital admissions. Municipalities took advantage of these subsidies at different points of time, which means that there are differences in the local implementation of EBC, enabling us to use an identifying restriction to define the treatment and control groups. Using five different sources of register data and a quasi-experimental framework (the difference-in-differences regression approach), we estimate the causal effect of the changes in EBC on aggregate emergency admissions for eight ambulatory care sensitive conditions (ACSCs). We also estimate the impact on each condition separately. The results show that EBC exerted a significant and negative effect on the changes in emergency admissions. The effects are largely consistent with alternative model specifications but we find mixed results for the different ACSCs, in that EBC negatively affected emergency hospital admissions for angina and chronic obstructive pulmonary disease, but not congestive heart failure and diabetes. The main implication of the study is that EBC within primary care is a sensible way of redesigning chronic care as it leads to a meaningful reduction in hospital emergency admissions.

Keywords: Incentives; Emergency bed capacity; Emergency admissions; Subsidies; Difference-in-differences

JEL-codes: C21; I10; I18

37 pages, September 29, 2017

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