Measuring the impact of Japanese local public hospital reform on national medical expenditure via panel data regression

- We investigate local public hospital (LPH) burden on the Japanese health care system.
- Hospital personnel and national medical expenditure decrease as LPH burden increases.
- Patients bearing heavy LPH burden tend to seek health care for light LPH burden.
- Equal accessibility of the health care system in Japan was compromised.

Local public hospitals (LPH) in Japan were established to secure equal accessibility and to improve quality for the health care system by providing policy-based medical services. Difficulties faced by the LPHs challenged the equal accessibility of the health care system and the improvement of their financial situation. We try to investigate the impact of LPH burden on the health care system and attempt to repair the problems confronting LPHs in order to attain the higher health care quality based upon the technology innovation. Panel data regression is used to analyze the effect of proportion of LPH beds and an indicator of LPH burden on hospital personnel numbers and also on estimated national medical expenditure (ENME) using the data from 2005 to 2010 for 47 prefectures in Japan. Hospital personnel, a major supply-side indicator, increased more in prefectures shouldering smaller burden of LPH beds. Prefectural ENME, an important demand-side indicator composing of medical expenditure based on the location of medical facilities, tends to decrease with increasing prefectural LPH burden. The results indicate that patients in the prefectures carrying more LPH burden tend to seek health care in the prefectures bearing less LPH burden during the research period. These imbalances substantially increase after the LPH reform.