The impact of global budgeting on treatment intensity and outcomes

  • Kamhon KanEmail author
  • Shu-Fen Li
  • Wei-Der Tsai


This paper investigates the effects of global budgets on the amount of resources devoted to cardio-cerebrovascular disease patients by hospitals of different ownership types and these patients’ outcomes. Theoretical models predict that hospitals have financial incentives to increase the quantity of treatments applied to patients. This is especially true for for-profit hospitals. If that’s the case, it is important to examine whether the increase in treatment quantity is translated into better treatment outcomes. Our analyses take advantage of the National Health Insurance of Taiwan’s implementation of global budgets for hospitals in 2002. Our data come from the National Health Insurance’s claim records, covering the universe of hospitalized patients suffering acute myocardial infarction, ischemic heart disease, hemorrhagic stroke, and ischemic stroke. Regression analyses are carried out separately for government, private not-for-profit and for-profit hospitals. We find that for-profit hospitals and private not-for-profit hospitals did increase their treatment intensity for cardio-cerebrovascular disease patients after the 2002 implementation of global budgets. However, this was not accompanied by an improvement in these patients’ mortality rates. This reveals a waste of medical resources and implies that aggregate expenditure caps should be supplemented by other designs to prevent resources misallocation.


Global budget Treatment outcomes AMI Ischemic heart disease Hemorrhagic stroke Ischemic stroke 

JEL codes

I10 I13 I18 



The authors are grateful to the financial supports from the Ministry of Science Technology (NSC97-2401-H-008-013-MY3).


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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Institute of EconomicsAcademia SinicaTaipeiTaiwan
  2. 2.National Central UniversityTaoyuanTaiwan
  3. 3.Central Taiwan University of Science and TechnologyTaichungTaiwan

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