What Determines the Medical Expenses in China?–Evidence from Outpatients Case - Innovative Management in Information and Production - page 322

simultaneously with the drug addiction abolishment under the framework of
returning to public welfare. Chinese Health Statistics Summary 2012, issued by
Health Ministry of China, illustrates that average medical care expense and average
drug expense for both inpatients and outpatients increase during period 2007-2011,
which implies the health reform still needs to be further deepened. Therefore, to
confirm effective determinants of average medical expenses is the prerequisite to
realize the objective of controlling medical expenses for patients.
Since health expenditure is an issue closely related to economic growth ( Wa n g
2011 ), existing researches on determinants of health expenditures are implemented
from the perspective of both macroeconomic indicators and inside professional
indicators for hospital. On the one hand, with different empirical data in different
countries, Matteo ( 2005 ) examines the determinants of real per capita health
expenditures with the impact of age distribution, income, and time; Hartwig ( 2008 )
empirically tests health expenditure is driven by wage increases in excess of
productivity growth; and Murthy and Okunade ( 2009 ) find out real per capita GDP
and real per capita foreign aid resources are two core determinants of real per capita
health expenditure. On the other hand, Yin et al. ( 2010 ) validate the dominating
factor in hospital expenditure is the pharmaceutical fee; Duarte ( 2012 ) presents that
at least one third of the price elasticity across a variety of health-care services is
explained by the number of visits; while the rest is explained by the intensity of
each visit.
Concerning existing literatures on determinants of medical expenditures in
China, Liu et al. ( 2009 ) illustrate the penetration of for-profit hospitals has lowered
average medical expenditures for both inpatient and outpatient services in public
general hospitals. Li ( 2012 ) analyzes average medical expenses of public hospitals
with descriptive statistics in Chifeng City of Inner Mongolia during 2001-2010.
However, existing literatures on determinants of medical expenditures fail to
synthesize all possible determinants from both macroeconomic indicators and inte-
rior professional indicators for hospital. The literatures on medical expenditures in
Chinese health sector neither confirm the determinants nor put forward practicable
measures to control medical expenditures only by some qualitative opinions for
regulation. Furthermore, parametric linear model is mostly employed for searching
determinants, while the potential relationships between average medical expenses
and all indexes considered are unknown.
To confirm which variables are effective determinants, which are decisive
variables and control variables that exert direct and indirect impacts on average
medical expense, respectively, is of crucial importance in policy decision; the
research establishes a semi-parametric regression approach with the bridge of local-
constant least-squares (LCLS) and local-linear least-squares (LLLS) techniques
( Henderson et al. 2011 ) to first confirm effective determinants with relevance and
further identify decisive and control variables of average medical expenses for
outpatients, which present significant policy implications for realistic reform pilot
for public hospitals.