Private provider incentives in health care: The case of caesarean births

Abstract

Private doctors and hospitals face incentives to intervene in the process of childbirth because they are employed and paid differently from their public counterparts. While private obstetric care has been associated with higher rates of caesarean birth, it is unclear to what extent this is attributable to unobserved selection effects related to clinical need or patient preferences. Using administrative birth data on over 280,000 births in Australia between 2007 and 2012, we implement an instrumental variables framework to account for the endogeneity of choice of care. We also exploit Australia's institutional framework to examine the differences in doctor-level and hospital-level incentives. We find that giving birth in a private hospital leads to a 4 percentage point increase in the probability of having an unplanned caesarean birth. Over our study period, this equates to an additional 3241 caesarean births.

Keywords: Administrative data; Caesarean birth; Financial incentives; Instrumental variables; Maternal care; Microeconometrics.