Do Public Hospitals Respond to Changes in DRG Price Regulation? The Case of Birth Deliveries in the Italian NHS

Marina Di Giacomo, Massimiliano Piacenza, Luigi Siciliani, Gilberto Turati

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We study how changes in Diagnosis-Related Group price regulation affect hospital behaviour in quasi-markets with exclusive provision by public hospitals. Exploiting a quasi-natural experiment, we use a difference-in-differences approach to test whether public hospitals respond to an exogenous change in Diagnosis-Related Group tariffs by increasing C-section rates and/or by upcoding. Controlling for a detailed set of mother characteristics, we find that price changes did not affect the probability of a C-section. We do however find evidence of upcoding: Conditional on the birth delivery method (either a C-section or a vaginal delivery), public hospitals experiencing the largest price change exhibit a higher probability of treating patients coded as complicated. This finding suggests that even public hospitals may be sensitive to market incentives.

Original languageEnglish
Pages (from-to)23-37
Number of pages15
JournalHealth Economics
Publication statusPublished - 21 Sept 2017

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© 2017 John Wiley & Sons, Ltd. This is an author-produced version of the published paper. Uploaded in accordance with the publisher’s self-archiving policy. Further copying may not be permitted; contact the publisher for details.


  • DRG price regulation
  • birth deliveries
  • inappropriateness
  • public hospitals
  • upcoding

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