Choice of Services by Providers in the Quasi-Market

Abstract

Polarization of business revenues has become an issue in the home-visit care business of the long-term care insurance system, resulting in competition among service providers under the official price. In this study, survey data from home care providers is analyzed to determine differences in behavior between non-profit and for-profit, as well as by legal entity status, in the provision of physical care services with high compensation rates and services with no travel costs, which are considered to be due to cream-skimming behavior in a qua-si-market. The results revealed the following. The cream-skimming behavior of providing profitable physical care and reducing travel costs is more prevalent among for-profits than non-profits and is more pronounced in the case of joint stock companies. However, the largest difference between for-profit and non-profit is in the social welfare councils and social welfare corporations, while medical corporations operate closer to for-profit status. In terms of the re-lationship between travel costs and the regions in which they operate, travel distances are longer and travel costs are greater in social welfare councils. The provision of such low-profit services is provided by non-profit companies, re-gardless of the small size of the business or the regional characteristics of de-populated areas. Even among for-profit companies, limited liability companies do not engage in cream-skimming behavior to the same extent as joint-stock companies. We can see that large corporations that are able to operate private nursing homes and other facilities adapt by selecting highly profitable services and win out in the competition among the providers.