Manageable Hospital Service Volume under Global Budgeting: Evidence from a Policy Reform in Taiwan

Published in under submission, 2020

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This paper investigates how hospitals managed their service volumes under global budgeting. Previous literature found it difficult to study the effect of global budgeting on hospitals’ service volumes because global budgets were implemented simultaneously on all the hospitals. This paper focuses on the policy effect of the Hospital Excellence Initiatives in Taiwan, which was a policy that allowed hospitals to have their own budgets under the global budgeting system. Only the participant hospitals were affected by this policy, which allows the analysis to compare participant and non-participant hospitals in terms of the change of their service volumes before and after the policy was implemented. Empirical results reveal that hospitals reduced their service volumes after participating in the initiative for both outpatient and inpatient services. But the number of inpatient days and the number of outpatient services for cancer patients were unaffected by the policy.