Is the quality of hospital care price sensitive? Regression kink estimates from a volume dependent price setting scheme

This paper estimates the price sensitivity of the quality of acute stroke care using a regression kink design. When Danish hospitals reach a production target, marginal taris for treating acute stroke patients falls by 50%{100%. This reimbursement scheme allow us to identify local average treatment ef- fects of reimbursement taris on the quality of hospital care. A rich data set of the process quality of stroke care allows us to detect minor changes in the quality of care that are important for the long term outcomes but do not lead to dead or readmission captured by commonly employed outcome indicators. Hospitals that were exposed to reductions in the marginal tari of less than 100% did not appear to respond in quality to reductions in taris. Hospital for which the marginal tari for acute stroke patients dropped to 0 responded to tari reductions by slightly decreasing the level of quality for acute stroke care patients. The estimated size of the eect is minor but robust to various tests of sensitivity, indicating that the estimated eect is not spurious.