Evaluating the Impact of COVID-19 on Hospital Profit Compensation Activities: A Difference-in-Differences Event Study Analysis in China

The impact of the 2019 coronavirus disease (COVID-19) pandemic is still being revealed, and little is known about the effect of COVID-19-induced outpatient and inpatient losses on hospital operations in many counties. Hence, we aimed to explore whether hospitals adopted profit compensation activities after the 2020 first-wave outbreak of COVID-19 in China. A total of 2,616,589 hospitalization records from 2018, 2019, and 2020 were extracted from 36 tertiary hospitals in a western province in China; we applied a difference-in-differences event study design to estimate the dynamic effect of COVID-19 on hospitalized patients’ total expenses before and after the last confirmed case. We found that average total expenses for each patient increased by 8.7% to 16.7% in the first 25 weeks after the city reopened and hospital admissions returned to normal. Our findings emphasize that the increase in total inpatient expenses was mainly covered by claiming expenses from health insurance and was largely driven by an increase in the expenses for laboratory tests and medical consumables. Our study documents that there were profit compensation activities in hospitals after the 2020 first-wave outbreak of COVID-19 in China, which was driven by the loss of hospitalization admissions during this wave outbreak.