Using Fees to Reduce Bed-Blocking: A Game between Hospitals and Care Providers

The Coordination Reform was introduced in Norway in 2012 including a fee for bed-blocking in hospitals. To study this, we introduce a Stackelberg game where the hospital is the leader and the care institution is the follower. The reform does not necessarily lead to less bed-blocking as this depends on the relative strength of the players' concern for income and patients' health, and the optimal discharge date before the reform. Testing the results with data, we find a large negative effect on bed-blocking and discharge date. Thus, financial incentives may count more than health incentives, or health effects of bed-blocking are insignificant.