Global budgets and excess demand for hospital care

Roger Feldman, Felix Lobo

Research output: Contribution to journalArticlepeer-review

15 Scopus citations


Excess demand is a pervasive feature of health care systems that use global budgets to pay for hospital care, regardless of the amount of money spent by those systems. This paper presents a theory that explains this feature of global budgets. The theory emphasizes that hospital administrators control the allocation of their budget, and that they choose quantity and resource intensity to maximize their own utility. The equilibrium quantity of care provided may be less than quantity demanded by consumers, leading to excess demand for admissions. An increase in the hospital's budget may even be associated with an increase in excess demand.

Original languageEnglish (US)
Pages (from-to)187-196
Number of pages10
JournalHealth Economics
Issue number2
StatePublished - Mar 1997


  • Global budgets
  • Hospital care


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