How did market competition affect outpatient utilization under the diagnosis-related group-based payment system?

Objective: Although competition is known to affect quality of care, less is known about the effects of competition on outpatient health service utilization under the diagnosis-related group payment system. This study aimed to evaluate these effects and assess differences before and after hospitalization in South Korea.

Design: Population-based retrospective observational study.

Setting: We used two data set including outpatient data and hospitalization data from National Health Claim data from 2011 to 2014.

Participants: Participants who were admitted to the hospital for hemorrhoidectomy were included. A total of 804 884 hospitalizations were included in our analysis.

Main outcome measure(s): The outcome variables included the costs associated with outpatient examinations and the number of outpatient visits within 30 days before and after hospitalization.

Results: High-competition areas were associated with lower pre-surgery examination costs (rate ratio [RR]: 0.88, 95% confidence interval [CI]: 0.88-0.89) and fewer outpatient visits before hospitalization (RR: 0.98, 95% CI: 0.98-0.99) as well as after hospitalization compared with moderate-competition areas.

Conclusion: Our study reveals that outpatient health service utilization is affected by the degree of market competition. Future evaluations of hospital performance should consider external factors such as market structure and hospital location.