Unofficial payments for acute state hospital care in Kazakhstan. A model of physician behaviour with price discrimination and vertical service differentiation

Abstract

We consider a discriminatory pricing and service differentiation model where: a)state physicians exploit their monopoly position and adjust quality to the unofficial payment made, and b)patients, perceiving state provision as poor, pay unofficially to improve it. Applying OLS and probit analysis to survey data on patients discharged from Almaty City hospitals, and using admission wait, length of stay (LOS) and a subjective categorical variable as quality measures. Unofficial payments are positively associated with surgical admission wait and the subjective quality of care while negatively associated with hospital LOS. Evidence suggests that price discrimination and service differentiation takes place in Kazakhstan.transition economies, unofficial or informal payments for health care, length of stay, ordered probit and marginal effects