Initial Impacts of the Global Budget Scheme on the Effect of Market Competition upon physician's behavior

[[abstract]]With the implementation of the National Health Insurance (NHI) in 1995, medical services to the all citizens are guaranteed and it improves the availability of medical treatments. As the middle- and large-scale hospitals established, the competition in the medical industry is getting incandescing. Under the limited medical resources, the payment system in NHI is calculated by quantity, which causes medical service providers to provide unnecessary medical services using the unbalanced medical information between the medical service providers and the patients. To be more specific, physicians might induce the patients to require more medical treatments and results in the rising of the medical expense. In the planning phase of NHI, the Global Budget System was begun drafted in order to control the medical expense growing up in a reasonable range, and it was put into practice in each hospital in July 2002. In other words, the responsibility of distributing medical resource under NHI has been transferred from the Bureau of National Health Insurance (BNHI) to medical service providers. It is anticipated that under the Global Budget System, the unnecessary wastes in medical resources is reduced and the medical resources are utilized in the most effective way with the aid of supervision between medical organizations. This research probes into the relation between medical market competition and physician?s behavior before and after the Global Budget System was put into practice, and uses the Herfindahl index to analyze the degree of market competition in medical industry. Physician?s behaviors are analyzed by the average medical resources reported by each physician surveyed from January 1998 to December 2003 and investigated in the medical industry delimited by medical sub-region in the objective of the Medical Care Network Project implemented by the Department of Health, Executive Yuan, Taiwan, R.O.C. in July 1990. The results of the research show that the average behaviors of each physician are much more in the area of high market competition and the situation of physicians inducing patients to require more medical treatment is found before the Global Budget System was put into practice. But after the Global Budget System was carried out, the degree of market competition doesn?t affect physician?s behaviors, which demonstrates there is no supplier-induced demand situation. When comparing the relation between market competition and physician?s behaviors before and after the Global Budget System was carried out, we observe that the influence of the market competition to the physician?s behaviors is not significant, and the aspects of the influence are not fixed. In addition, this research shows that both the urbanization in the medical sub-region and the number of patients treated by each physician affect the physician?s behaviors