Hospital pricing reform in the public health care system--an empirical case study from Finland.

Finland's 1993 state subsidy reform encouraged hospital districts to determine their services as products and change their pricing from bed-day to case-based and fee-for-service types. The economic incentive in hospital production was investigated by exploring how different price types affected the use of lumbar discectomies, and hip and knee replacements. Procedure rates, pricing, need, demand and supply variables in 1991-1998 were analysed using panel data methods. Case-based prices increased lumbar discectomies about 8%. In hip replacement the effect was opposite (-11%). Only for knee replacements (1995-1998) did mixed fee-for-service and bed-day prices significantly increase production (21%).