Scandinavian Working Papers in Economics

DaCHE discussion papers,
University of Southern Denmark, Dache - Danish Centre for Health Economics

No 2021:1: The dynamic interdependence in the demand of primary and emergency secondary care: A hidden Markov approach

Mauro Laudicella () and Paolo Li Donni ()
Additional contact information
Mauro Laudicella: University of Southern Denmark, DaCHE - Danish Centre for Health Economics, Postal: DaCHE - Danish Centre for Health Economics, Institut for Sundhedstjenesteforskning, Syddansk Universitet, J.B. Winsløws Vej 9B, 2. sal, DK-5000 Odense, Denmark
Paolo Li Donni: University of Palermo, Department of Economics, Business and Statistics, Postal: and University of Southern Denmark, DaCHE - Danish Centre for Health Economics.

Abstract: This paper develops an extension of the class of finite mixture models for longitudinal count data to the bivariate case by using a trivariate reduction technique and a hidden Markov chain approach. The model allows for disentangling unobservable time-varying heterogeneity from the dynamic effect of utilisation of primary and secondary care and measuring their potential substitution effect. Three points of supports adequately describe the distribution of the latent states suggesting the existence of three profiles of low, medium and high users who shows persistency in their behaviour, but not permanence as some switch to their neighbour's profile.

Keywords: mixture distributions; hidden Markov models; panel data; primary care; secondary care; Denmark healthcare.

JEL-codes: C33; D12; I11; I18

35 pages, March 25, 2021

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