Cream skimming and hospital transfers in a mixed public-private system

We find that patients with higher disease severity are more likely to be transferred from private to public hospitals whereas the opposite is true for patients transferred to private hospitals. We also find that patients transferred from private to public hospitals stayed longer and cost more than private-to-private transfer patients, after controlling for patients' observed health conditions and personal characteristics. Overall, the evidence is suggestive of the presence of cream skimming in the Victorian hospital system, although we cannot conclusively rule out other mechanisms that might influence hospital transfers.