Avoidable hospitalizations in Switzerland: a small area analysis on regional variation, density of physicians, hospital supply and rurality.

BACKGROUND Avoidable hospitalizations (AH) are hospital admissions for diseases and conditions that could have been prevented by appropriate ambulatory care. We examine regional variation of AH in Switzerland and the factors that determine AH. METHODS We used hospital service areas, and data from 2008-2010 hospital discharges in Switzerland to examine regional variation in AH. Age and sex standardized AH were the outcome variable, and year of admission, primary care physician density, medical specialist density, rurality, hospital bed density and type of hospital reimbursement system were explanatory variables in our multilevel poisson regression. RESULTS Regional differences in AH were as high as 12-fold. Poisson regression showed significant increase of all AH over time. There was a significantly lower rate of all AH in areas with more primary care physicians. Rates increased in areas with more specialists. Rates of all AH also increased where the proportion of residences in rural communities increased. Regional hospital capacity and type of hospital reimbursement did not have significant associations. Inconsistent patterns of significant determinants were found for disease specific analyses. CONCLUSION The identification of regions with high and low AH rates is a starting point for future studies on unwarranted medical procedures, and may help to reduce their incidence. AH have complex multifactorial origins and this study demonstrates that rurality and physician density are relevant determinants. The results are helpful to improve the performance of the outpatient sector with emphasis on local context. Rural and urban differences in health care delivery remain a cause of concern in Switzerland.

Primary care physician supply and other key determinants of health care utilisation: The case of Switzerland

Background The Swiss government decided to freeze new accreditations for physicians in private practice in Switzerland based on the assumption that demand-induced health care spending may be cut by limiting care offers. This legislation initiated an ongoing controversial public debate in Switzerland. The aim of this study is therefore the determination of socio-demographic and health system-related factors of per capita consultation rates with primary care physicians in the multicultural population of Switzerland. Methods The data were derived from the complete claims data of Swiss health insurers for 2004 and included 21.4 million consultations provided by 6564 Swiss primary care physicians on a fee-for-service basis. Socio-demographic data were obtained from the Swiss Federal Statistical Office. Utilisation-based health service areas were created and were used as observational units for statistical procedures. Multivariate and hierarchical models were applied to analyze the data. Results Models within the study allowed the definition of 1018 primary care service areas with a median population of 3754 and an average per capita consultation rate of 2.95 per year. Statistical models yielded significant effects for various geographical, socio-demographic and cultural factors. The regional density of physicians in independent practice was also significantly associated with annual consultation rates and indicated an associated increase 0.10 for each additional primary care physician in a population of 10,000 inhabitants. Considerable differences across Swiss language regions were observed with reference to the supply of ambulatory health resources provided either by primary care physicians, specialists, or hospital-based ambulatory care. Conclusion The study documents a large small-area variation in utilisation and provision of health care resources in Switzerland. Effects of physician density appeared to be strongly related to Swiss language regions and may be rooted in the different cultural backgrounds of the served populations.

Bargaining for power and information : an experimental and theoretical analysis of the interaction between institutions, externalities and adverse selection

Bargaining is the building block of many economic interactions, ranging from bilateral to multilateral encounters and from situations in which the actors are individuals to negotiations between firms or countries. In all these settings, economists have been intrigued for a long time by the fact that some projects, trades or agreements are not realized even though they are mutually beneficial. On the one hand, this has been explained by incomplete information. A firm may not be willing to offer a wage that is acceptable to a qualified worker, because it knows that there are also unqualified workers and cannot distinguish between the two types. This phenomenon is known as adverse selection. On the other hand, it has been argued that even with complete information, the presence of externalities may impede efficient outcomes. To see this, consider the example of climate change. If a subset of countries agrees to curb emissions, non-participant regions benefit from the signatories’ efforts without incurring costs. These free riding opportunities give rise to incentives to strategically improve ones bargaining power that work against the formation of a global agreement. This thesis is concerned with extending our understanding of both factors, adverse selection and externalities. The findings are based on empirical evidence from original laboratory experiments as well as game theoretic modeling. On a very general note, it is demonstrated that the institutions through which agents interact matter to a large extent. Insights are provided about which institutions we should expect to perform better than others, at least in terms of aggregate welfare. Chapters 1 and 2 focus on the problem of adverse selection. Effective operation of markets and other institutions often depends on good information transmission properties. In terms of the example introduced above, a firm is only willing to offer high wages if it receives enough positive signals about the worker’s quality during the application and wage bargaining process. In Chapter 1, it will be shown that repeated interaction coupled with time costs facilitates information transmission. By making the wage bargaining process costly for the worker, the firm is able to obtain more accurate information about the worker’s type. The cost could be pure time cost from delaying agreement or cost of effort arising from a multi-step interviewing process. In Chapter 2, I abstract from time cost and show that communication can play a similar role. The simple fact that a worker states to be of high quality may be informative. In Chapter 3, the focus is on a different source of inefficiency. Agents strive for bargaining power and thus may be motivated by incentives that are at odds with the socially efficient outcome. I have already mentioned the example of climate change. Other examples are coalitions within committees that are formed to secure voting power to block outcomes or groups that commit to different technological standards although a single standard would be optimal (e.g. the format war between HD and BlueRay). It will be shown that such inefficiencies are directly linked to the presence of externalities and a certain degree of irreversibility in actions. I now discuss the three articles in more detail. In Chapter 1, Olivier Bochet and I study a simple bilateral bargaining institution that eliminates trade failures arising from incomplete information. In this setting, a buyer makes offers to a seller in order to acquire a good. Whenever an offer is rejected by the seller, the buyer may submit a further offer. Bargaining is costly, because both parties suffer a (small) time cost after any rejection. The difficulties arise, because the good can be of low or high quality and the quality of the good is only known to the seller. Indeed, without the possibility to make repeated offers, it is too risky for the buyer to offer prices that allow for trade of high quality goods. When allowing for repeated offers, however, at equilibrium both types of goods trade with probability one. We provide an experimental test of these predictions. Buyers gather information about sellers using specific price offers and rates of trade are high, much as the model’s qualitative predictions. We also observe a persistent over-delay before trade occurs, and this mitigates efficiency substantially. Possible channels for over-delay are identified in the form of two behavioral assumptions missing from the standard model, loss aversion (buyers) and haggling (sellers), which reconcile the data with the theoretical predictions. Chapter 2 also studies adverse selection, but interaction between buyers and sellers now takes place within a market rather than isolated pairs. Remarkably, in a market it suffices to let agents communicate in a very simple manner to mitigate trade failures. The key insight is that better informed agents (sellers) are willing to truthfully reveal their private information, because by doing so they are able to reduce search frictions and attract more buyers. Behavior observed in the experimental sessions closely follows the theoretical predictions. As a consequence, costless and non-binding communication (cheap talk) significantly raises rates of trade and welfare. Previous experiments have documented that cheap talk alleviates inefficiencies due to asymmetric information. These findings are explained by pro-social preferences and lie aversion. I use appropriate control treatments to show that such consideration play only a minor role in our market. Instead, the experiment highlights the ability to organize markets as a new channel through which communication can facilitate trade in the presence of private information. In Chapter 3, I theoretically explore coalition formation via multilateral bargaining under complete information. The environment studied is extremely rich in the sense that the model allows for all kinds of externalities. This is achieved by using so-called partition functions, which pin down a coalitional worth for each possible coalition in each possible coalition structure. It is found that although binding agreements can be written, efficiency is not guaranteed, because the negotiation process is inherently non-cooperative. The prospects of cooperation are shown to crucially depend on i) the degree to which players can renegotiate and gradually build up agreements and ii) the absence of a certain type of externalities that can loosely be described as incentives to free ride. Moreover, the willingness to concede bargaining power is identified as a novel reason for gradualism. Another key contribution of the study is that it identifies a strong connection between the Core, one of the most important concepts in cooperative game theory, and the set of environments for which efficiency is attained even without renegotiation.