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D e m a n d fo r h e a lth services in C olom bia: T h e choice o f p ro v id e r


by w om en o f ch ild -rearin g age

Escobar, Maria Luisa, Ph.D.


Rice University, 1991

UMI
300 N. Zeeb Rd.
Ann Arbor, MI 48106

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RICE UNIVERSITY

DEMAND FOR HEALTH SERVICES IN COLOMBIA : THE CHOICE OF


PROVIDER BY WOMEN OF CHILD REARING AGE

by

MARIA LUISA ESCOBAR

A THESIS SUBMITTED
IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE DEGREE

DOCTOR OF PHILOSOPHY

APPROVED, THESIS COMMITTEE:

Dr. Robin C. Sickles, Professor of Economics & Stat.

Dr. Peter Mieszkowski, Cline Professor of Economics

:nzuela, Assistant Professor of Sociology

Houston, Texas
November, 1990

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ABSTRACT

DEMAND FOR HEALTH SERVICES IN COLOMBIA : THE CHOICE OF


PROVIDER BY WOMEN OF CHILD REARING AGE

by
MARIA LUISA ESCOBAR

This research analyzes the factors influencing choice and the determinants of
women's health services demand. Demand for health services in Colombia is practically
unexplored, and there appear to be no studies of demand for health services by women of
child rearing age in Colombia. The Colombian National Health Study of 1980 (Estudio
Nacional de Salud-1980) is the data base used, supplemented by hospital data from the
Ministry of Health. After a description of the Colombian Health System, the choice
between traditional and modem care is studied for prenatal care, and for child's delivery
assistance, emphasizing differences among insured and non-insured women. This first
part of the study estimates demand schedules through a logistic specification. The choice
of institutional setting for child's delivery assistance, conditional upon the prior decision of
using modem care, is studied through a nested multinomial logit specification for women in
different regions of the country and for urban and rural women as well. Expected prices
for a delivery are estimated for all choices women face.
Only few recent studies have found demand for modem health services to be price
elastic and dependent on income level; this is also the case in some of the regions of
Colombia. Moreover, demand for health services becomes less price elastic as income

increases. Demand for Private care is generally more price elastic than demand for other
types of care, and in some cases demand for Public care is significantly price elastic at
lower income levels. Lower income women rely on Public hospitals when they have
decided against traditional care. Then, price changes for Public care would have larger
welfare effects on lower income groups.

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Urban women of high income groups often use Public care, indicating that
government subsidies are favoring better-off sectors of the population. Meanwhile, rural
women rely heavily on home care, even at higher income levels.
A more rational price system for services at social security hospitals would not
reduce significantly women's welfare; higher prices would help to provide better quality
services and/or permit cost recovery for those institutions which very often find themselves

in financial trouble.

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ACKNOWLEDGMENTS
This project was only possible with the constant stimulation of several persons to
whom I would like to express my gratitude. Principally to my advisor, Professor Robin
Sickles who constantly encouraged and enlighten me. I am grateful to all my professors at
Rice who gave me the opportunity to work with them, and very especially to Professor
Peter Mieszkowski from whom I learnt to expand my horizons and at the same time gave
me the possibility of easing financial constraints. Without their help this project would
never been possible.
My special thanks to the people that worked in Colombia designing and collecting
the data in The National Health Study of 1980 since without their efforts this research
would have not been possible. I am certainly indebted to the persons in Colombia that very
generously gave me access to the information the data set contains.
Most special thanks to my mother, and brothers and sisters who not only
encouraged me always but very diligently provided me with any extra information I
requested. They played a very important role on making this project possible, serving as
the unconditional link between data sources in Colombia and myself in Houston. To them
and to the memory of my father I want to dedicate this effort.
To all my friends in Houston who one way or another helped me through the
difficult times, I owe more than I can express here. Very special thanks to Abdo Yazbeck
with whom I had long and enticing discussions about relevant aspects of this project.

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V
TABLE OF CONTENTS
-Tide Page
-Abstract

-Acknowledgments
-Table of Contents
-List of Tables
CHAPTER 1
Introduction
CHAPTER 2
REVIEW OF THE LITERATURE
2.1 Demand for Health Services in Developing Countries
2.1.1 Summary Table
CHAPTER 3
COLOMBIAS HEALTH SYSTEM
3.1 Introduction
3.2 Modem and Traditional Providers
3.3 Modem Health Sector

3.3.1 The Official or Public Sub-Sector


3.3.2 The Decentralized or Social Security Sub-Sector
3.3.3 The Private Sub-Sector
3.4 Health Care Facilities

3.5 International Comparisons


TABLES TO CHAPTER 3
CHAPTER 4

THEORETICAL MODEL

4.1 The Unconditional Problem


4.1.1 Functional Form

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4.1.1.1 The Budget Constraint
4.1.1.2 The Utility Function
4.2 Estimation Methodology

4.2.1 Distributional Assumptions


APPENDIX
CHAPTER 5
DATA DESCRIPTION
5.1 Introduction
5.2 The Data
5.3 Data Limitations
5.4 Prices
5.5 Sub-Sample of Pregnant Women
TABLES TO CHAPTER 5
CHAPTER 6
PREGNANT WOMEN'S DEMAND FOR HEALTH SERVICES
PART ONE.
THE CHOICE OF PRACTITIONER. Demand for Prenatal Care, Modem Prenatal Care

and the Choice of Child's Delivery Assistant


6.1 Introduction

6.1.1 Statistical Tests


6.1.2 Estimation Results. Prenatal Care and Physician's Prenatal Care
6.1.2.1 All Women
6.1.2.2 Insured and Non-Insured Women
6.1.3 Modem Delivery

6.1.3.1 All Women


6.1.3.2 Insured and Non-Insured Women
6.1.4 General Concluding Remarks

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PART TWO
THE CHOICE OF INSTITUTIONAL SETTING
6.2 Choice of Institutional Setting. Child's Delivery Assistance
6.2.1 Introduction
6.2.2 Nested-Multinomial Logit Results by Region
6.2.2.1 The Atlantic Region
6.2.2.2 The Oriental Region
6.2.2.3 Bogotd, D.E.
6.2.2.4 The Central Region
6.2.2.5 The Pacific Region
6.2.2.6 Urban Women

62.2.1 Rural Women


6.2.2.8 All Women

6.2.3 Concluding Comments


TABLES TO CHAPTER 6
BIBLIOGRAPHY

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LIST OF TABLES & FIGURES VI I I

Table 3.1 Number of Hospitals by Sub-Sector. Atlantic Region


Table 3.2 Number of Hospitals by Sub-Sector. Oriental Region
Table 3.3 Number of Hospitals by Sub-Sector. Bogotd, D.E.
Table 3.4 Number of Hospitals by Sub-Sector. Central Region
Table 3.5 Number of Hospitals by Sub-Sector. Pacific Region
Table 3.6 Number of Hospitals by Sub-Sector. National Territories
Table 3.7 Summary Table. Total Number of Hospitals by Type & Region
Table 3.8 Number of Hospital Beds by Sub-Sector. Atlantic Region
Table 3.9 Number of Hospital Beds by Sub-Sector. Oriental Region
Table 3.10 Number of Hospital Beds by Sub-Sector. Bogotd, D.E.
Table 3.11 Number of Hospital Beds by Sub-Sector. Central Region
Table 3.12 Number of Hospital Beds by Sub-Sector. Pacific Region
Table 3.13 Number of Hospital Beds by Sub-Sector. National Territories
Table 3.14 Summary Table. Total Number of Beds by Type & Region
Table 3.15 Number of Persons Served by Each Sub-Sector by Regions
Table 3.16 Population Served by Each Sub-Sector by Regions
Table 3.17 Sample Population Proportions Served by Each Sub-Sector
Table 3.18 Bed-Population Ratios per 1,000 by Region and Sub-Sector
Table 3.19 Bed-Population Ratios per 1,000 by Region. All Types Combined
Table 3.20 National Summary
Table 3.21 Health Personnel / Population Ratios per 10,000 pop. Various Countries
Table 3.22 Average Bed-Population Ratio in Various Countries
Table 3.23 Central Government Expenditures on Health. Various Countries
Table 5.0 Sample Statistics
Table 5.1 Income Distribution
Table 5.2 Sample Statistics by Region
Table 5.3 Sample Statistics, All Women, Insured, Non-Insured
Table 5.4 Age Composition of Pregnant Women
Table 5.5 Prenatal Care by Alternative Provider
Table 5.6 Number and % of Insured Women Who Sought Prenatal Care
Table 5.7 Number and % of Non-Insured Women Who Sought Prenatal Care
Table 5.8 Number of Delivery Cases Assisted by Provider Type
Table 5.9 Proportion of Delivery Cases Assisted by Provider Type
Table 5.10 Number of Deliveries by Location
Table 5.11 Proportion of Deliveries by Location
Table 5.12 Number of Deliveries by Hospital Type
Table 5.13 Percentage of Deliveries by Hospital Type
Table 5.14 Average Ex-Post Prices Per Night by Hospital Type
Table 5.15 Ex-Post Price Per Delivery by Hospital Type
Table 5.16 Hedonic Price Estimation. Ordinary Least Squares Price Estimation Results.
Delivery at Private Hospitals
Table 5.17 Hedonic Price Estimation. Ordinary Least Squares Price Estimation Results.
Delivery at Public Hospitals
Table 5.18 Ex-Ante Price per Delivery by Hospital Type. All Women
Table 5.19 Ex-Ante Price per Delivery by Hospital Type. Insured Women
Table 5.20 Ex-Ante Price per Delivery by Hospital Type. Non-Insured Women
Table 5.21 Ex-Ante Estimated Mean Price per Delivery by Hospital Type and Region
Table 5.22 Number of Deliveries by Type of Hospital and Region
Table 5.23 Percentage of Deliveries by Type of Hospital and Region
Table 5.24 Percentage of Deliveries by Type of Hospital Within Each Region
Table 5.25 Atlantic Region. Sample Statistics

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Table 5.26 Oriental Region. Sample Statistics
Table 5.27 Region of Bogoti, D.E. Sample Statistics
Table 5.28 Central Region. Sample Statistics
Table 5.29 Pacific Region. Sample Statistics
Table 5.30 Rural Women. Sample Statistics
Table 5.31 Urban Women. Sample Statistics
Table 6.1 The Choice of Practitioner. Dichotomous Dependent Variable Cases
Table 6.2 Prenatal Care. All Women, Logistic Regression Results
Table 6.3 Prenatal Care by a Physician. All Women, Logistic Regression Results
Table 6.4 Child's Delivery. Physician's Assistance. All Women
Logistic Regression Results
Table 6.5 Place for Child's Delivery. All Women. Logistic Regression Results
Table 6.6 Prenatal Care. Insured and Non-Insured Women, Logistic Regression Results
Table 6.7 Prenatal Care by a Physician. Insured and Non-Insured Women, Logistic
Regression Results
Table 6.8 Child's Delivery. Physician's Assistance. Insured and Non-Insured Women.
Logistic Regression Results
Table 6.9 Place for Child's Delivery. Insured and Non-Insured Women.
Logistic Regression Results
Table 6.10 Probability of y=l at Mean Values
Table 6.11 Probabilities at Different Income Levels
Table 6.12 Mean Income Elasticities for Each Case
Table 6.13 Income Elasticities at Different Income Levels. All Women
Table 6.14 Income Elasticities at Different Income Levels. Insured Women
Table 6.15 Income Elasticities at Different Income Levels. Non-Insured Women
Table 6.16 Simulation Results
Table 6.17 Atlantic Region. Nested Multinomial Logit Estimates
Table 6.18 Oriental Region. Nested Multinomial Logit Estimates
Table 6.19 Region of Bogotd, D.E. Nested Multinomial Logit Estimates
Table 6.20 Central Region. Nested Multinomial Logit Estimates
Table 6.21 Pacific Region. Nested Multinomial Logit Estimates
Table 6.22 Urban Women. Nested Multinomial Logit Estimates
Table 6.23 Rural Women. Nested Multinomial Logit Estimates
Table 6.24 Total Country. Nested Multinomial Logit Estimates
Table 6.25 Hospital and Home Care Probabilities by Region at Mean Values
Table 6.26 Summary Table. Hospital and Home Care Probabilities
Table 6.27 Atlantic Region. Hospital and Home Care Probabilities by Income Level
Table 6.28 Pacific Region. Hospital and Home Care Probabilities by Income Level
Table 6.29 Rural Women. Hospital and Home Care Probabilities by Income Level
Table 6.30 Urban Women. Hospital and Home Care Probabilities by Income Level
Table 6.31 Total Country. Hospital and Home Care Probabilities by Income Level
Table 6.32 Total Country. Hospital and Home Care Probabilities by Income Quartile
Table 6.33 Atlantic Region. Hospital and Home Care Probabilities by Income Quartile
Table 6.34 Oriental Region. Hospital and Home Care Probabilities by Income Quartile
Table 6.35 Bogotd, D.E.. Hospital and Home Care Probabilities by Income Quartile
Table 6.36 Pacific Region. Hospital and Home Care Probabilities by Income Quartile
Table 6.37 Urban Women. Hospital and Home Care Probabilities by Income Quartile
Table 6.38 Rural Women. Hospital and Home Care Probabilities by Income Quartile
Table 6.39 Own Price Elasticities by Region at Mean Income
Table 6.40 Total Country. Own Price Elasticities by Income Quartile
Table 6.41 Atlantic Region. Own Price Elasticities by Income Quartile
Table 6.42 Oriental Region. Own Price Elasticities by Income Quartile
Table 6.43 Bogotd, D.E. Own Price Elasticities by Income Quartile

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Table 6.44 Pacific Region. Own Price Elasticities by Income Quartile
Table 6.45 Urban Women. Own Price Elasticities by Income Quartile
Table 6.46 Rural Women. Own Price Elasticities by Income Quartile
Table 6.47 Asymptotic t-Statistics. Market Segmentation Test NMNL
Table 6.48 Adantic Region. Multinomial Logit Estimates
Table 6.49 Bogotti, D.E. Multinomial Logit Estimates
Table 6.50 Central Region. Multinomial Logit Estimates
Table 6.51 Pacific Region. Multinomial Logit Estimates
Table 6.52 Urban Women. Multinomial Logit Estimates
Table 6.53 Rural Women. Multinomial Logit Estimates
Table 6.54 Total Country. Multinomial Logit Estimates
Figure 1 Public Care Probabilities by Income Quartile. Urban Women.
Figure 2 Probabilities by Time to the Hospital. Rural Women.
Figure 3 Price Elasticities by Income Level. All Women.

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1
CHAPTER 1.

INTRODUCTION
This study concentrates on demand for health services in Colombia. Our efforts are
directed towards the exploration of demand for modem and traditional health care. In a
developing country like Colombia where modem health medicine coexists with legacies of
traditional care, it is very important to determine which are the factors influencing choice.
To determine the factors affecting demand for health services is of extreme relevance for
government officials who expect to create an effective and coherent health supply policy
that responds to current and future demand patterns.
We concentrate on the exploration of demand for prenatal care and child's delivery
assistance, stressing differences among insured and non-insured women, and among
women from different regions of the country. At present, studies on fertility in Colombia
are conducted by the World Bank using the survey data from Westinghouse1 but the choice
of practitioner for prenatal care and institutional choice for child's delivery assistance in
Colombia have not been explored in the past. Moreover, results presented here are based
on data from "The Colombian National Health Study, 1980" which has not been studied in
depth. Most of the existing studies on demand for health services in developing countries
use data which has not been collected for the specific purpose of the research. Then the
need for price estimation, quality proxies and clear assumptions with respect to consumer
behavior becomes present. However, to collect data for a specific study on health services
demand is a costly operation for researchers especially in the case of developing countries.

We are not exempt from these drawbacks when using "The Colombian National Health
Study, 1980" for this research, but the data offers ample information that permits to obtain
conclusions on how preferences are formed.

1 Encuesta de Demograffa y Salud. Instituto Para el Desarrollo de Recursos.

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2
Health services delivery is not socialized in Colombia, although there exists a large
net of institutions which belong to the Public sector, composed of government-owned
hospitals and clinics (public hospitals and clinics). Modem care is also available through a
system of hospitals and clinics which belong to the social security systems and other
individuals. There is a social security system for private employees, one for public
employees and several family compensation funds. Private insurance companies provide
health insurance to a small proportion of the population who can afford it. Individuals who

have access to services delivered through the social security system often buy private
insurance and prefer not to use the services of the social security system. At the same time
there exists a private health sector providing health care for the more affluent segment of the
population, which uses the latest technology.
Traditional care is delivered through an informal health sector which emphasizes
traditional beliefs and knowledge on healing practices is passed informally generation to
generation. Practitioners who deliver traditional care are diverse but have in common
unquestionable community acceptance and respect among its users.
There are discrepancies among authors concerning the effect of prices and income

on health services demand, and on the way prices are measured. Some believe the
expected price is the correct variable that determines demand behavior, while others use the
actual charged price for estimation. Total expenditures have also been used instead of
prices. The availability of precise price information in the case of developing countries has
always been a limitation for demand studies. Income is also considered in different ways

by different authors. Some use both monetary income and the value of land, livestock and
other assets. The latter is used especially in the case of not highly monetized economies.
In our case we impute ex-ante prices for child's delivery assistance by hospital type and we
use the information on household income instead of individual income.

Only a few studies on demand for health services in developing countries have
found demand to be responsive to economic variables like income and prices. Moreover,

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3
in countries like Colombia where the income distribution is highly skewed, we expect
differences on behavior across income levels. Being more precise, we anticipate demand
for health services to be more price elastic at low income levels than among individuals

from higher income groups. Moreover, we expect demand for Public care to be less elastic
than demand for Private care.
Differences on behavior among insured and non-insured individuals are hardly
explored in the case of developing economies. Insurance systems are not widely spread
and only a portion of the population can afford such luxury. We do anticipate differences
on behavior among insured and non-insured women Those are explored in the first part of
Chapter Six.
Quality of health services is also measured in different ways by different authors.
Discrepancy on quality measurement arises because of authors' quality definition; some
authors conceptually define it as the quality of the service when it is delivered, regardless of
the effect over an individual's health state. Others consider measuring quality as the effect
health services have over an individual's health state. We define quality of health services

according to the latter concept and for that, we compare the level of health attained when
using modem care compared to that when self-care is preferred.
Fertility and population growth are very important issues for the economic future of
developing nations. Among Latin American countries, Colombia is one of the few that has
responded quickly to population growth pressures by incorporating family planning and
contraceptive use into the traditional set of social values and family structure. Access to
and use of adequate prenatal care guarantees a reduction of risks during pregnancy and
early detection of possible difficulties. Furthermore, child's delivery assistance performed
by an educated individual, a physician or a trained midwife, ensures that delivery
complications can be handled in an appropriate manner, thus reducing the risk of death for
both mother and child. The notion of less but healthier children is replacing the one of
families with a large number of children who provide help for the economic sustenance of

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the family. Quality is becoming a more important issue than quantity of children as
countries develop and transform into more industrialized societies; moreover, the new
structures of the market define patterns which require skilled labor. Educational
opportunities become less tight for a family with fewer children; moreover, fewer and
healthier children are a better promise for future economic provision for the family than
more but weaker children who might also die at an earlier age.
Traditional or home care is very popular in Colombia, with a different degree of

acceptance in the urban and rural parts of the country. There are also differences among
regions of the country. Traditional health care is delivered by a wide variety of individuals
who are not health professionals. Traditional practitioners do not have the same
professional training as practitioners in the modem sector do, if they have any. Among
traditional practitioners there are pharmacists, health promoters, midwives and the more
traditional herbal doctor or "Tegua" .
In developing societies where traditional beliefs are still a very important part of
every day life, traditional healers play an important role in health care delivery. Demand for
traditional services instead of modem medical services is explained in terms of choice and

in terms of access. Traditional care is preferable for some individuals because traditions are
strong and acceptance to modem medicine is not complete, especially among less educated
groups. Traditional care is also used when there exist economic and geographic barriers of
access to modem care.
Traditional care is usually delivered by individuals who do not have enough medical
knowledge which is very important to prevent mother's death due to pregnancy
complications and especially to prevent tetanus neonatal. Low weight at birth is one of the
most common problems for newborns and it deters normal child's development; good
prenatal care can help to provide enough information to the mother in order to prevent this
from happening. For these reasons we consider important to concentrate on the

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5
determinants of mothers choice when choosing prenatal care provider, and, when deciding
on place and provider type for child's delivery assistance.
This study is divided in six chapters. After this introduction, Chapter Two contains
the review of the literature on demand for health services, with emphasis on demand
studies in developing countries.
Chapter Three describes the Health System in Colombia. A revision of both
modem and traditional health sectors is provided. Both providers and facilities are
discussed in the former case but unfortunately, there is not enough information on the
traditional health sector to infer solid conclusions. Payments for services are usually made
in kind; then, price estimation becomes an imprecise and blind exercise because of the lack
of information and the number of assumptions necessary to make. Moreover, traditional
healers are persons who deliver services in their own community, which strongly
determines the kind of payment received. Price arrangements with traditional practitioners
are particular to the specific characteristics of the community in question. It is almost a
barter system.
Chapter Four describes the theoretical model and the estimation methodology, while
Chapter Five contains a detailed description and discussion of the data used, including the
hedonic price estimation and the calculation of bed-population ratios. Following those,
comes Chapter Six which is divided in two parts. Part one contains estimation results and
conclusions from a dichotomous dependent variable model explaining modem versus

traditional care in the cases of demand for prenatal care and, the choice of provider and
place for child's delivery assistance. Logit estimates are obtained using the complete
sample, a sub-sample of insured women and another of only non-insured women,
anticipating differences of behavior according to insurance access. Regional market
segmentation is not used in the first part of the study since we are interested there in the
choice of modem versus traditional care emphasizing differences among insured and non
insured groups. This is the most unexplored issue in studies of demand for health services

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6
in developing countries. Using regional, and urban/rural market segmentation reduces
sample size enormously and clouds estimation results.
The second part concentrates on the choice of hospital type for child's delivery
assistance conditional upon the prior decision of using modem care. Here differences
among regions of the country are stressed and also between the urban and rural groups but
the insured/non-insured market segmentation criteria is not used. Although the proportion
of insured women varies across regions, these proportions are small and represent only a
few observations in each region. Moreover, it is of interest to explore different market
segmentation criteria when concentrating on the choice of institutional setting given that
modem care is preferred in the first place. Since the decision tree is nested, we decide on a
Nested Multinomial Logit specification for the model on demand for modem care by
hospital type. A two stage procedure is used for estimation.

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CHAPTER 2.
REVIEW OF THE LITERATURE
Studies on demand for health services were primarily concerned with developed
countries' health markets; however, demand for health services in developing nations has
become an important topic of research in the last decade. Economic theory has been
applied to the study of the health sector mosdy in the last two decades. It began with the
application of the theory of consumers behavior and later incorporated Beckers
Consumptioii-Production approach.
Simple consumption models assume the maximization of an individual utility
function subject to a full-income budget constraint; the models assume that individuals
derive utility from the consumption of medical services themselves independently of the
consumption of any other good.
Demand for health services using this approach has been examined by several
authors. Acton (1973,1975a and 1975b) developed a simple utility maximization model
based on Becker's (1965), which incorporated time costs associated with consumption into
the budget constraint Acton found that the elasticity of medical services with respect to the
total price (monetary plus time), was equal to the weighted sum of its price components'
elasticities; as a result the so called Acton's Law was derived. If w denotes wage, t time
used for consumption of medical services, p monetary price of health services, ewt is

the time price elasticity of demand for medical services and p is the monetary price

elasticity of demand for medical services, Acton's Law says:

if wt > p then e wt e
P

and
if wt < p then e wt < e
P

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8

that is, as money price tends to zero (but not time price), time price elasticity of demand
will exceed money price elasticity of demand.

Pure consumption models have been also used by Grossman (1972), Miners
(1979), Heller (1976,1982) and Akin et. al. (1985-1986).
Grossman develops a production-consumption model where the derived demand
for medical services is estimated after maximizing a utility function subject to a life cycle
budget constraint and a production function for health and other goods. Additions to an
original health stock are considered investments on health, and at the same time, health
enters directly into the utility function with the consumption of healthy days having a
positive marginal utility. Setting the pecuniary return to an investment in health equal to
zero, transforms Grossman's investment model into a pure consumption model.
Grossman showed how wage and non-wage income affected demand for medical services
in different ways.
Miners (1979) develops a consumption model similar to Acton's but using the
household instead of the individual as unit of analysis. Heller (1976 and 1982) uses the
consumption model to explain demand for health services in low income countries.
Differentiating between demand for discretionary and necessary care, treating them as
different goods, allows Heller to incorporate health needs into the model. He includes
environmental variables characteristic of less developed countries that directly affect health
status.

Akin etal. (1985) applied a pure consumption model including time prices ala
Acton. Their results concentrate on the determinants of the demand for medical services in
the Philippines and are discussed later.

Household consumption-production models have been used since the work of


Grossman (1972), who combined Becker's theory of household production with
Mushkin's work on human capital (1962). The utility maximization problem had as

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arguments health and a composite of all other goods. Medical care and education, used as a
proxy for human capital, constitute inputs in the production of health. Using education as
an indicator of human capital is based on the work of Michael (1972) on education and

efficiency in consumption. Grossman's model has been widely used.


Time costs affecting the demand for medical services have been studied by
Newhouse and Phelps (1974,1976,1980) and also Coffey (1982) following Grossman's
framework. Coffey studied demand for health services in Dallas Texas, using Beckers
consumption-production approach; this work develops reservation wage estimates based on
Heckman's reservation methodology in order to measure time costs of health care services
consumption for unemployed individuals in the sample.
The contribution of Newhouse, Phelps, Leibowitz and Manning lies on the
influence of insurance on demand for medical services; their results were obtained with data
from designed experiments (Kansas 1960 and The Health Insurance Study, Rand Co.).
To explain the demand for pediatric care, Leibowitz and Friedman (1979) used
Grossman's model adjusting it to a two-period horizon. In this case parents maximize their
utility from their own consumption and the endowment passed on to their children. The

constraints include a budget constraint, a parental production function for goods and
services and a production function for children's human capital.
Goldman and Grossman (1978) also studied the demand for pediatric care, but they
derived separate demand curves for quality and quantity of pediatric visits.
More recently, Grossman's model has been used for determining health status and
mortality, and to explain user fees. Examples are found in Behrman and Wolfe (1987),
Sickles and Taubman (1986) and in Gertler et. al. (1987).
The following section concentrates on demand for health services in developing
countries.
2.1 DEMAND FOR HEALTH SERVICES IN DEVELOPING COUNTRIES

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Models explaining demand for health and for medical services, originally
constructed to explain these phenomena in developed economies, can be modified
introducing health sectors characteristics in developing countries. Models of the sort are
achieved stressing the importance of variables relevant to demand for health services under
developing circumstances. Examples are found in the cases of Peninsular Malaysia,
(Heller, 1982), the Bicol region of the Philippines, (Akin et. al 1985 and 1988), rural
Mali, (Birdsall et. al., 1986), Peru, (Gertler, 1987), Ivory Coast, (Dor et. al., 1987),
Indonesia, (Ascobat, 1981), rural Zaire, (Dikassa et. al., 1986), rural Guatemala, (Fiedler,
1986), Kenya, (Mwabu, 1989), and Dominican Republic, (Bitrn, 1989). Related issues
are covered by Selowsky (1973 and 1979), Sorkin (1976). Malenbaum (1970),
Livingstone-Balbotin (1976), Merrick (1983), Weisbrod (1973), DeFerranti (1985), etc.
Research issues in health economics in developing countries vary, but research
objectives of most recent studies can be clustered around the importance of individual and
household characteristics, and price and income effects on health services demand.
Demand for health services under insurance and demand for health insurance have not been
deeply explored in developing countries. As health insurance systems become more
available these issues will become more important topics of research.

Most of the existing studies use data which has not been collected for the specific
purpose of the research; thus introducing the need for price estimation, quality proxies and
defined assumptions with respect to consumer behavior. However, to collect data for a

specific study in health services demand is a costly operation for researchers especially in
the case of developing countries.

There are discrepancies among authors concerning the effect of prices and income
on health services demand, and on the way prices are measured. Some believe the
expected price is the correct variable that determines demand behavior (Heller, 1982),
while others use the actual charged price for estimation (Akin et. al. 1985). Total

expenditures has also been used instead of prices. The availability of precise price

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11

information in the case of developing countries has always been a limitation for demand
studies. Income is also considered in different ways by different authors. Some use both
monetary income and the value of land, livestock and other assets. The latter is used
especially in the case of not highly monetized economies; examples are found in studies
concentrated on rural communities as Ascobat (1981) in rural Indonesia, Dikassa et. al.
(1986) in rural Zaire, Fiedler (1986) in rural Guatemala and Mwabu (1986) in rural Kenya.
Quality of health services is also measured in different ways. Akin e t al. considers

quality an exogenous variable to the consumer, Mwabu uses drug availability, medical
supplies and number of personnel to measure quality of a health services facility. Other
studies consider quality unobservable and a function of both provider and individual's
characteristics (Gertler et. al., Dor et. al., Bitrdn-Dikowsky). Discrepancy on quality
measurement arise because of authors' quality definition; some authors conceptually define
it as the quality of the service when it is delivered, regardless of the effect over an
individual's health state. Others consider measuring quality as the effect health services
have over an individual's health state. If the latter is the case, then it is agreeable that
quality should be a function of both provider's and individual's characteristics1.
A review of each of the mentioned studies follows. Heller uses a simple
consumption model to explain demand for health services in low income countries. He

adjusts the model to less developed countries characteristics when differentiating between
demand for discretionary and necessary care, treating them as different goods and including
environmental variables characteristic of less developed countries, which affect health
status directly. Using this approach the author incorporates health needs into the model.
Total medical demand is measured as total volume of outpatient and inpatient medical
services.

1 It is well known that individual's characteristics like education, area of


residence, access to piped water, age, sex, etc., influence medical treatment's
success.

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The data used was obtained by a survey made by the Department of Statistics of
Peninsular Malaysia, including 640 urban and 825 rural households from all income levels.
Heller realizes the importance of the difference between actual and perceived prices on
demand for medical services, i.e. the difference between patient and provider-reported
prices. Ex-ante prices or perceived prices are assumed to be a function of actual prices in
the past; therefore past price experience is used as a proxy for perceived prices. Maximum
Likelihood estimation is used to derive estimates of demand functions for both curative and
preventive care, through a Logit model.
Heller finds total demand for medical services highly inelastic to the cash price, to
income, and to travel cost On the other hand, total medical demand is found very
responsive to relative prices of alternative sources of care; these findings are the result of
the specification of the utility function, as it is explained later by Gertler (1897). Heller
concludes that as income rises, households shift their demand away from traditional
practitioners toward sources of modem medical care, which is an important fact in most
developing countries where differences in quality of services are strong. Although
according to Heller's findings medical demand is not responsive to income, the following
assertion shows there is evidence of diverse behavior among individuals of different
income level: "Income is not a barrier to access, but clearly does influence the level and
structure of per capita medical consumption, particularly for discretionary medical
demand"2.

Demand for primary health services in the Philippines has been studied by Akin et
al. (1985,1986). The study is divided in five different sections according to the type of
medical services, since medical care is not a homogeneous good. Demand for adult
outpatient care, prenatal care, modem or traditional child's delivery, well-baby care and
immunizations are considered.

2 Heller. Peter. (1982) "Medical and Health Services in Peninsular Malaysia"


Page 280.

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The data used was collected through The Bicol Multipurpose Survey in 1978 on a
sample of 1,903 households with 12,000 individuals. This information is supplemented
with the 1978 and the 1981 surveys of medical practitioners which provide information on
the type of health services available and their prices. Akin et. al. assume that provider-
reported price is an accurate explanatory variable for estimation of demand decisions; this
assumption however, is only correct in the presence of perfect information, when
individuals know which prices are going to be charged before making their decision.

Generally this is not the case of health markets in developing countries. For both the adult
and child outpatient models the authors use a multinomial logit technique to explain
demand for government, private, traditional services, or self-care. Akin, et al. use a sample
of 589 pregnant women and a Tobit technique to estimate the number of prenatal care

visits. Tobit is used since the number of visits is truncated at zero. For the well-baby care
and for the immunizations cases Probit is used; sample sizes are 407 and 406 children
respectively.
In the cases of adult and child outpatient visits, results show that a serious illness
causes individuals to seek services from some provider rather than none, and it increases
the probability of choosing modem private practitioners. Urban residence has no

statistically significant effect over adults' preferences, but it increases significantly the

probability of children seeking modem care. In the case of the Philippines, higher
educational levels do not divert individuals from traditional care. The number of prenatal

care visits are significantly and negatively related to the monetary price of the visit and the
transportation time to the facility. Mothers age and education, current value of household
assets (income) and the urban residency location, are positively and significantly related to
the number of prenatal care visits while the number of living children relates negatively3.

3 Akin et. al. (1985) "The Demand for Primary Health Services in the Third
World" Page 222.

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14

Traditional visits are deleted and only the number of modem type of prenatal care visits is
explained.

For the choice of child's delivery attendant choices are among modem home
delivery, modem clinic delivery and traditional home delivery. Results show that economic
variables do not affect significantly the probability of using modem services, implying that
the choice of modem care is not made on economic grounds4. Neither insurance nor the
value of assets influence choice significantly; "Perhaps the most important finding - which
suggest an area for further investigation - is the apparent relative insensitivity of the choice
of delivery service to changes in prices and household income in our model"5. On the
other hand, non-economic variables affect significantly the probability of choosing modem
care; the education of the mother and urban status decrease the probability of having a home
delivery and thus increase the probability of the use of a modem clinic. Distance to a
provider does not seem to be of particular importance in the case of the Filipino sample,
with the exception of the choice of delivery type (modem, traditional). However, Akin et
al. recognizes an important concept of a distance threshold which in the case of the
Philippines seems to be quite higher than the recorded distance between the household and
providers: "If there is a threshold beyond which distance and travel time dictate medical
care choices for our Bicol sample, it appears to be outside the very large range of distances
observed"6. General results concerning economic variables are challenged by Gertler's
work where both income and monetary prices are significant variables affecting choices.
This point is discussed below.

Birdsall and Chuhan (1986) study the choice of health care treatment in rural Mali.
A multinomial logit model is constructed to estimate the probability of demanding different

4 Akin et. al. (1986) "The Demand for Primary Health Care Services in the Bicol
Region of the Philippines" Page 768.
5 Schwartz J., Akin et. al. (1988) "Price and Income Elasticities of Demand for
Modem Health Care: The Case of Infant Delivery in the Philippines" .
6 Akin et. al. (1986) Page 772.

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15

types of health services. Choices include modem-publicly provided care, private traditional
care, self-treatment and various combinations of the above. The data used is a 1981 survey

of 186 households with 2,430 individuals from the Kayes region on Mali, and is
supplemented with surveys of health facilities and other health groups interviews.
Estimation of household incidence of morbidity according to household characteristics is
preformed through a Tobit model. Higher income level is found associated with lower
levels of morbidity. The model includes both individual and providers' characteristics,
and quality of health services facilities is included using number of personnel and drug

availability as proxies.
Birdsall et al. find no particular pattern of choice of type of care by disease.
Although income transfers rise the probability of choosing modem over traditional care,
household income does not affect choice significantly. Similar results are found by Heller
(1982) and by Akin et al. (1985,1988). Distance and quality of health facilities are
significant determinants of treatment choice, and are used as "price" variables. The farther
the distance to the closest health facility, the higher the probability of using traditional care.

By the same token, drug availability increases the probability of demand for modem care.
They conclude that an increase in preventive care can be achieved without increasing the
number of existing facilities but expanding drug provision; thus, modem care would be
preferred.
Health and nutrition status in Kenya has been studied by Mwangi and Mwabu
(1986). A simultaneous equation model is constructed, where the interdependence between
nutritional and health status is combined with a vector of socio-economic variables. One of
the important assertions in this study refers to the need for health policy makers to shape
health policy towards illness prevention and away from curative care. This is one of the
most important issues regarding health policy in developing countries: "Health planners
should resist instituting curative health policies as palliative measures in response to public

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16

demands for them. In fact, historical data show a very weak relationship between
improvements in health status and provision of curative health services"7.
Demand for health services in Kenya has been studied by Mwabu (1986,1989),
using data collected through the household health survey in the Mari manti Rural Health
Unit in Meru district of eastern Kenya, between 1980 and 1981. An important feature of
this data is that follows a complete illness episode. Mwabu finds that the majority of
patients seek care outside the free government health care system. Contrary to Birdsall
findings, Mwabu finds the choice of provider related to the type of illness, although
different providers are chosen during the same illness episode. Traditional healers are most
commonly used in the cases of asthma, painful joints and body pain; meanwhile, a high
percentage of ailments are treated at mission clinics in Kenya.
The importance of seasonality on demand for health services is later introduced by
Mwabu (1989) using the Kenyan data. The effect of time price on household's health care
seeking decisions varies according to the wet and dry seasons. Household willingness to
spend time on demand for medical services is less during the wet season than the dry

season. The sample is composed by 24 villages with a total of 1,721 individuals to


estimate a multiplicative utility function using conditional logit. Providers include
government clinics, mission clinics, private clinics, government hospitals, pharmacies or
shops and traditional clinics. Income is a significant determinant of the choice of modem
care over traditional care and demand for health services is more responsive to monetary
price than to time costs. Moreover, as income increases, monetary price elasticity of
demand for health services declines and time price elasticity increases. Mwabu suggests
that measures should be taken to decrease the time costs of medical treatment to ensure

7 M wangi M . and M wabu, G. (1 9 8 6 ) "Econom ics o f Health and Nutrition in


Kenya". Page 778. Taken from Garcfa D . (1 9 8 4 ) "The E ffect o f Ownership and
Control o f H ealth S ystem s and the Concept o f Health.

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adequate demand for clinic's services, especially during the wet season when morbidity is
expected to increase.
Mwabu also explores welfare effects of user fees in government clinics in Kenya.
Using a conditional logit technique he estimates the probabilities of seeking care from each
alternative type of clinic. Imposing user fees in public health facilities would improve the
quality of services but these gains might involve equity trade-offs; therefore, the net welfare
effect is ambiguous. Moreover, if fees are imposed on all government facilities, conflict
might arise because of political and social controversy.
Health and economic consequences of high fertility in Pakistan are studied by
Cochrane et al. (1989). The data sets used are the Pakistan Institute of Development
Economics/International Food Policy Research Institute Survey and the National
Household Income Expenditure Survey. They comprehend information from 1,000 and
16,000 households respectively and were both collected in 1979. Authors find that high
fertility has detrimental effects over mother and child's health and survival; moreover,
female children have substantially higher mortality in Pakistan. The effect of children on
family labor supply, income, and savings are also discussed.
Health and nutrition related to fertility in the Candelaria region of Colombia has
been examined by Heller and Drake (1976). An econometric model is constructed to study
the nutritional and health status of pre-school children addressing the relationship between

nutritional status and morbidity risk, and the effects on a child's nutritional status of
nursing versus food expenditure. A simultaneous equation model is estimated with
nutritional status and health status as functions of food vectors and socio-economic
characteristics of the household. It is estimated with a sample of 1,200 pre-school children
who participated over a seven year period in a maternal-child program. Findings suggest
that severe diarrhea decreases substantially child's health status, malnourished children are
more susceptible to diarrhea, and that breast feeding practices are of primary importance to
child's development and nutritional status. Income level relates positively to nutritional

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18

status through nutrient intake, although breast-feeding time is reduced with higher incomes;
"Every additional hundred pesos of monthly income reduces the length of the nursing
period by 1.3 months"8. The net effect of income on nutritional status is positive and
quantitatively small but parents' education improves child's health and nutrition status
through nutrient intake. Moreover, family processes like parental discrimination across
children and competition for family resources influence children's health status.
Dor e t al. (1987) investigates the effect of travel time on health provider's choice.
Following Acton, the authors include travel time to a facility directly into the budget
constraint and permit interaction between prices and income. The purpose of the study is to
determine the role of time price on demand for health services when monetary price is zero,
anticipating that lower income individuals are more travel time elastic than their richer
counterparts, as opposed to what has been found in previous studies. The data used comes
from a multipurpose household survey, the Ivory Coast Living Standard Survey which
started to be conducted in 1985. After excluding non-farming and urban households, they
use a sample of 1,303 rural households.
Alternative choices of demand for primary health care are public hospitals, public
clinics and self-care, since there is no private health care in the Ivory Coast. Demand

functions are estimated using a nested multinomial logit technique by full information
maximum likelihood. As in Gertler, quality is considered to be a function of both provider
and individual's characteristics and the specification of the utility function ensures the
marginal rate of substitution between health and consumption of other goods to be a
function of income. Then, it is not restricted to be constant as in studies in the past
Results show travel time to be a significant determinant of provider choice;
education does not appear to have an important role on providers choice, but the authors
consider this result a consequence of little variation on education in the sample. Arc travel

8 H eller P. and Drake W . (1 9 7 6 ) "Malnutrition, Child M orbidity and the Fam ily
D e c isio n Process". P age 36.

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time elasticities by income quartile are calculated in order to assess the magnitude of the
income and travel time effects. Own travel time elasticities indicate that demand for health
services is more elastic at longer travel times and at lower income levels9. Net travel time
elasticities indicate that large numbers of individuals move out of the medical market and
rely on self care as travel time increases.
Gertler et al. (1987) investigates welfare implications of user fees in Peru. A
discrete choice model of demand for health care services is constructed from a theoretical
model which predicts behavioral differences between income groups. Higher income
individuals are expected to have less price elastic demands for health services than poorer
individuals. Individuals' alternative choices include self-care, public or government clinic,
public hospital, and private doctor. This work uses data from a Peruvian household survey
conducted in 1984, the "Encuesta Nacional de Nutricion y Salud". The sample of 3,412
individuals excludes rural regions because of lack of reliable income information for this
group. Price information is limited, as in many developing countries data sets, and prices
are estimated using the available information and correcting for selectivity bias. The
marginal rate of substitution between health and all other goods is not restricted to be

constant but a function of income level. A parsimonious and flexible form is used for the
utility function and demand for health services is estimated through a multinomial logit
technique by maximum likelihood10.
Their findings challenge the traditional belief that demand for health services does
not respond to price changes; as expected, price effects are not independent of income and

the price elasticity of demand decreases as income rises. Therefore user fees restrict access
to medical care for the poor more than for higher income individuals. Simulations show

9 Dor A., et. al. (1987) "Non-Price Rationing and the Choice of Medical Care
Providers in Rural Cote D'Ivoire". See Table 3, page 302.
10 A nested multinomial logit is also estimated but specification tests show the
data fits a multinomial logit as well. The hypothesis of the parameter estimate
of the inclusive value being equal to one is accepted at the 5% level. See
Gertler et. al. (1987). Page 79.

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20

that user fees can generate considerable revenue but imply welfare losses for the poor,
creating reductions in aggregate consumer welfare. Gertler et. al. conclude that the welfare
redistribution problem of user fees can be avoided with a price system which considers
ability to pay; a system of price discrimination of this nature can generate revenue and
reduce welfare losses unless administrative costs are not well handled.
Demand for health services in Santo Domingo, Dominican Republic is studied by
Bitrdn-Dikowsky (1989). Demand for outpatient care is analyzed with health data
specifically recorded for studying health demand in Santo Domingo in 1987. A model of
probabilistic choice is constructed to estimate demand for alternative providers, with no
care, SESPAS care, IDSS care and private care as choices1 As in Gertler et. a l . and in
Dor et. al. the functional form of the utility function allows price effects to depend on
income level. Although Bitrdn finds low income individuals more sensitive than higher
income patients to the prices charged for health services, he concludes that the effect of
higher prices would only be a slight reduction on utilization, even among low income
individuals. He concludes this result should also be analyzed in combination with the
strong preference that exists in Santo Domingo for private health services, across all

income levels.
Health care financing has been studied by Bitrdn-Dikowsky and Dulop (1989) in
Ethiopia. Using hospital expenditures as a proxy for hospital costs, the authors estimated a
translog cost function by ordinary least squares. Results show that output, i.e. number of
child deliveries, inpatient days and laboratoiy exams, has a positive and significant effect
on total cost Marginal costs exceed average incremental costs indicating that hospitals are
operating under constant returns to scale for the outputs mentioned above. The authors
acknowledge the need for more comprehensive information in order to extend the study to a
larger sample of hospitals and divide the study by hospital size.

11 SE SPA S is the State Secretariat o f Health and Social S ervices, and IDSS is the
D om inican Institute o f S o cia l S ecu rity. B trdn-D ikow sky, p age S.

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2.1.1 Summary Table

HEALTH DEMAND STUDIES IN DEVELOPING COUNTRIES

AUTHOR TOPIC FEATURES RESULTS

Heller Peninsular Malaysia -First to introduce -Logit estimates for curative


(1982) LDC's and preventive care.
characteristics. -Total demand for care
-Differentiates highly INELASTIC to
discretionary from prices.
necessary care. -Demand NOT responsive to
-Differences in ex- income. But finds income
ante and ex-post influencing level and
prices. Uses structure of per capita
expected prices as a medical consumption.
function of prices in -As income rises households
the past. shift from traditional care
towards modem care.
Akin et. al. The Bicol region of -Studies demand for -MNL, Probit and Tobit
(1985) the Philippines each service techniques.
separately since -Urban and a higher
health services are education do NOT divert
not a homogeneous individuals from traditional
good. care use.
-Data collected for -Only modem prenatal care
study purposes. is studied.
-Uses provider -Age, Education, Assets and
reported prices. being Urban rises the
Then assumes number of prenatal care
perfect information. visits.
-Economic variables do
NOT affect the probability
of using modem care.
Choice not made on
economic grounds.
-INSENSITIVITY of choice
of delivery to prices and
income.
-Education and being Urban
rises the probability of a
modem delivery but
DISTANCE si NOT
important

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Birdsall et. al. Rural Mali -Importance of -MNL and different types of
(1986) distance to medical services.
facility. -Finds no particular pattern
of choice of provider by
disease type.
-Income transfers increase
the probability of modem
over traditional care, but
-Household INCOME does
NOT affect choice
significantly.
-Larger travel distances to
medical facilities increase the
probability of traditional
care.
Gertler, et. al. Peru -Their findings -Lower income individuals
(1987) challenge tradidonal more price elastic than
beliefs on price and higher income counterparts.
income effects on -Price elasticity of demand
demand for care. decreases as income rises.
-Quality of care not -User-fees can generate
exogenous to the revenue but diminishing
individual. consumer welfare in lower
income groups.
Dor, et. al. Ivory Coast -Role of time price -NMNL estimates. Travel
(1987) when monetary time is a significant factor
price is zero. determining choice.
-Demand is MORE elastic at
LONGER travel times and
LOWER income levels.
-As travel time increases,
individuals move to
traditional care.
Ascobat Rural Indonesia -Includes values of -OLS for demand equation
(1981) ivestock and land of number of visits. (Akin
when measuring uses Tobit).
assets and income. -Income only affects
significantly demand for
traditional care.
-Education affects demand
for physician services.
Dikassa Rural Zaire -Includes values of -Education affects choice
(1986) ivestock, land and significantly.
even furniture when -Income does NOT affect
measuring assets choice.
and income.

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Mwabu Rural Kenya -Money income, -Majority of patients seek
(1989) land, livestock care out of the free
value and other government system.
assets are counted. Willingness to spend time
-Quality of care is on demand for health care is
exogenous to the less in the wet season.
individual. -Recommends to decrease
Measured by drug time costs of using medical
availability and care.
medical supplies.
-Introduces
importance of
seasonality.
Bitrn Dominican -Quality is -Strong preference for
(1989) Republic unobservable, then private services across all
a function of income levels.
individual and -Low income individuals are
provider more price sensitive than
characteristics. higher income patients.
-TTie effect of user fees only
a slight reduction in
utilization, even among low
income individuals.
Mwangi, et. al. Kenya -Relationship -Recommends to shape
(1986) between nutrition hea-'th policy towards illness
and health status. prevention and away from
curative care.
Heller, et. al. Candelaria region in -Health and -Income level positively
(1976) Colombia nutrition related to related to nutritional status.
fertility. Breast-feeding of extreme
-Relationship importance for child's
between nutritional health.
status and morbidity Breast-feeding decreases
risk in pre-school with income level.
children. -Net effect of income on
nutritional status is positive
but quantitatively small.
-Parents' education
increases child nutrition and
health status.

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CHAPTER 3.
COLOMBIA'S HEALTH SYSTEM
3.1 Introduction

We next turn to a description of Colombia's Health System. The health sector in


Colombia is a two-tier system where modem medicine and legacies of traditional care
coexist. Health services delivery is not socialized, although there exists a large net of
institutions which form the so called "Official Health Sub-Sector" composed of government
owned hospitals and clinics (public hospitals and clinics). Modem care is also available
through a system of hospitals and clinics which belong to the social security systems
designated "Decentralized" Sub-Sector1, and private hospitals and clinics. There is a
social security system for private employees, one for public employees and several family
compensation funds. Private insurance companies provide health insurance to a small
proportion of the population who can afford it. Individuals who have access to services
delivered through the social security system often buy private insurance and prefer not to
use the services of the social security system. At the same time there exists a private health
sector, which uses the latest technology, providing health care for the more affluent
segment of the population.

Traditional care is delivered through an informal health sector which emphasizes


traditional beliefs and knowledge on healing practices is passed informally generation to
generation. Practitioners who deliver traditional care are diverse but have in common
unquestionable community acceptance and respect among its users. More about the
traditional health sector is discussed below.
3.2 Modern and Traditional Providers

1 S ocia l S ecurity S ystem s in C olom bia provide health serv ices to their
b en eficia ries and in som e c a ses their fa m ilies, and also pay p en sion s to retired
c itiz e n s .

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Modem care is delivered through a system of hospitals, clinics, health centers and
posts. Those facilities are divided according to the sub-sector they belong to, official or
public if they belong to the government, private, and the ones that belong to social security
agencies. Providers in the modem health care sector are specialized physicians, medical
residents and interns, registered nurses and technical medical personnel.
Traditional health care is delivered by a wide variety of individuals who are not
health professionals. Traditional practitioners do not have the same professional training as
practitioners in the modem sector do, if they have any. Among traditional practitioners
there are pharmacists, health promoters2, midwives and the more traditional herbal doctor
o r "Tegua" .
Pharmacists in Colombia are not professionally trained, they are not required to
have a college degree and only receive technical instruction courses. Their duties are
restricted to fill prescriptions, sell medicines and in some cases give shots to costumers
who demand the service. There is a large number of medicines which can be bought
without prescription and in many cases the pharmacist recommends to the patient what
medicine to take.

Health promoters are persons specifically trained to teach ordinary hygiene, good
nutrition and preventive care to communities, through house visits in low income areas.
They are not required to have any formal health training. Midwives are persons who
develop their skills within the community and are well accepted by it. Because of their lack
of formal training, midwives belong to the traditional health sector, although at some point
the National Federation of Coffee Growers was putting together a midwifery training

program but only in the coffee growing departamentos 3. There is no formal training

2 H ealth Prom oters are included as part o f the traditional health sector
b eca u se o f their lim ited m ed ical training, although they are part o f the efforts
o f the governm ent to im prove health in u n a ccessib le areas o f the country. In
that se n se , sin c e they b e lo n g 1 to the o ffic ia l or public health su b -sector, they
are the "m ost formal" practitioners in the traditional health sector.
3 G eographical and p o litical d iv isio n s o f C olom bia

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26
program for midwives at the national level and they do not even appear in National
Statistics.
Traditions and beliefs play an important role in people's acceptance of health
treatments, in the correct follow-up of medical instructions, and therefore in the overall
result of health treatments. Thus, Pharmacists and Health Promoters offer an informal link
between modem medicine and traditional health methods. However, since their medical
knowledge is very limited they can not be categorized as part of the modem health care
sector.
In developing societies where traditional beliefs are still a very important part of
every day life, traditional healers play an important role in health care delivery. Demand for
traditional services instead of modem medical services is explained in terms of choice and
in terms of access. Traditional care is preferable for some individuals because traditions are
strong and acceptance to modem medicine is not complete, especially among less educated
groups. Traditional care is also used when there exist economic and geographic barriers of
access to modem care.
Unfortunately, there is not enough information on the traditional health sector to
infer solid conclusions. Payments for services are usually made in kind; then, price
estimation becomes an imprecise and blind exercise because of the lack of information and

the number of assumptions necessary to make. Moreover, traditional healers are persons
who deliver services in their own community, which strongly determines the kind of
payment received. Price arrangements with traditional practitioners are particular to the
specific characteristics of the community in question. It is almost a barter system.
We now turn into the discussion of the modem health sector and its facilities.
3.3 Modern Health Sector

3.3.1 The Official or Public Sub-Sector

The government provides health services through its system of public hospitals,
clinics and health posts whose number in a specific locality depends on administrative and

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27
political decisions. Public health services provided by the so called Official sub-sector are
targeted, or in theory should provide assistance, to approximate 78% of the Colombian
population4. The Official sub-sector is composed of the Ministry of Health (MS) with five
autonomous agencies, and the Regional Health Sectionals (SSS). The Ministry of Health
was created in 1913 and was established as it is today in 1953. The autonomous agencies
are: -The National Institute for Municipal Development (INSFOPAL), the National Institute
of Health (INS), the National Hospital Fund (FNH), the National Institute for Family
Welfare (ICBF) and the National Oncology Institute.
Administratively, public health services depend on the Ministry of Health and the
Regional Sectionals which are the entities responsible for budgeting and allocating
resources. The MS designs health policy in conjunction with the National Planning
Department (DNP), although most decisions concerning national health policy are taken at
the Ministry of Health level. The five autonomous agencies provide health services
according to the nature of the institution in question, supplementing MS's activities.
INSFOPAL's activities concentrate on designing environmental programs, drinking water
supply and sewerage systems for communities of more than 2,500 people. The INS
provides those services for communities of less than 2,500 people. Moreover, INS is on
charge of epidemiological research as well as production and distribution of vaccines5. In
the case of large cities the EMPRES AS provide water and sewerage services. The National

Hospital Fund (FNH) concentrates on construction, supply and maintenance of all public
hospitals. The Family Welfare Institute (ICBF) provides assistance to target population
groups, such as mothers and infants; it develops child nutrition programs and it is
responsible for the protection of children and adolescents.

The Regional Sectionals (SSS) develop programs for the provision of health care
services and environmental sanitation at the "state" (departamental) level. The SSS office

4 M inisterio de Salud.
5 M inisterio de Salud. "National Health Plan 1982-1986", page 261. Bogotd, D.E.

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28
adapts national health policy to the specific characteristics and health needs of the
population in the corresponding departamento.
A national network of public hospitals and health posts is organized and run by the
Ministry of Health and the Regional Sectionals. Hospitals are divided in three different
groups according to the type of health care they deliver, location and size. There are
University hospitals, which deliver tertiary type of care, are the largest of all and cany
more advanced equipment for more complicated medical treatments. Regional and Local
hospitals are second in size and deliver secondary type of care, while health posts and
health centers are facilities apt for primary health care delivery only. Specialty hospitals
only deliver medical care for specific types of illness or medical events; examples of those
are maternity hospitals, oncology hospitals and hospitals for the treatment of respiratory
diseases.

University hospitals assist more complicated cases and are concentrated on curative
rather than on preventive care; they are usually located in a large city and the medical staff
includes all medical specialties. Their size varies between 300 and 500 and more beds.
Regional and Local hospitals are smaller than University hospitals, with a bed count
between 50 and 100 or more. Not all medical specialties are present in Regional hospitals
since they only deliver secondary type of care; i.e. the only medical specialties available are
Obstetrics and Gynecology, Pediatrics, Pathology, Otolaryngology, Internal Medicine,
Orthopedics and Surgery. Local hospitals are even smaller than Regional ones and are

classified in two types: "A" type hospitals are small, with around 10 beds and do not
preform elective surgery; "B" type are larger, with 30 to 35 beds and do preform elective
surgery. Local hospitals are staffed with general practitioners, auxiliary nurses and nurse-
assistants but do not have medical specialists; therefore, inpatient services are restricted to
Internal Medicine, Pediatrics, Obstetrics and Gynecology and minor Surgery.
Health Centers and Posts concentrate on primary health care which is mostly
preventive care and assistance for small medical emergencies. Health Centers are allowed

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29
to assist normal child deliveries and preform minor surgery and two full-time physicians
are on charge of the activities; the health center has an ambulance, a pharmacy, nurse
auxiliaries and health promoters. Meanwhile, the Health Post does not have permanent
physicians and services are delivered by auxiliary nurses and health promoters. A
physician and a dentist visit the Post on a weekly basis.
Health services delivered by the public sector should cover 78% of the population,
who is the percentage of Colombians who do not belong to any social security system, can
not afford the private health system and do not have private health insurance. Although the
public health system does not have enough personnel nor supplies for delivering health
services to the 78% of the population, it is supposed to serve any Colombian citizen who
requests its services.
3.3.2 The Decentralized or (Social Security) Sub-Sector
The Decentralized sub-sector is composed of the Social Security Institute (ICSS)6,
The National Provision Fund (CAJANAL), the Municipal Public Enteiprises
(EMPRESAS) and smaller Family Compensation Funds like CAFAM and
COLSUBSIDIO7 created to provide services to the families of employees, extending the
coverage provided by other affiliations. There are several Provision Funds according to the
type of institution where the beneficiaiy is employed; i.e, there is a Provision Fund for the
Communications Company's employees, one for the Ministry of Justice, one for the
Ministry of Public Works, etc. The EMPRESAS which are the organizations providing
electrical power, water and sewerage in large cities, have their own social security system
which provides health services to their employees. Although there is a social security

6 N o w a days the acronym is ISS but w e keep the old one ICSS through this
docum ent sin ce w e u se ISS to refer to health services delivered by any social
s e c u r ity a g e n c y .
7 CAFAM is Caja de Com pensacidn Familiar and COLSUBSIDIO is Caja de Subsidio
F a m ilia r .

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30
system for public employees and another one for private employes, the coverage is still
reduced when compared to the total population of the country.
The most important of the institutions in the Decentralized sub-sector is the Social
Security Institute (ICSS) created in 1949 and covering a portion of the population privately
employed. Second in importance is CAJANAL, created in 1948 and serving public
employees at the central8 level. Exceptions are employees of the Ministries of Public

Works, Communications and Defense. The National Police Force and the Armed Forces
have their own Provision Fund. There are also smaller provision funds at the
departamental level9 .
Health services delivered by the Decentralized sub-sector are targeted to a different
population than the covered by government services. The Social Security Institute (ICSS),
which is the largest and most important agency, was covering 10.32% of the total
population in 1980; that accounts for 2.7 million people. By the same token, Family
Compensation Funds cover almost 17% of the beneficiaries of the ICSS and only 3.23% of
the total population10. Although according to the law all private employees should be
covered by the ICSS, only a reduced percentage of the private labor force belongs to the
ICSS. The reasons relate to the following facts:
1.) Economic structure of the industrial sector. A large percentage of the industrial sector
is composed of small industries with less than ten employees who are not covered by the
ICSS.

2.) Workers of activities like agriculture, fishing and mineral extraction are seasonally

affected and usually belong to small firms in rural areas with dispersed population while
social security institutions are heavily concentrated in urban areas, and

8 Sim ilar to FEDERAL level in the United States.


9 Sim ilar to STATE level in the United States.
10 M inistry o f H ealth, N ational Institute o f H ealth, S o cia l Security Institute.
M S /IN S /ISS (1 9 8 6 ), "Seguridad S ocial en Colombia" Series o f S cien tific
Publications N o. 7. Bogotd. D.E.

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31
3.) Construction workers, transportation, commerce and service workers are not well
covered since they are usually paid by task, they arc under-employed and with a high turn
over ratio11.
Social Security beneficiaries arc not average Colombians in the sense of being more
educated than the average citizen and mostly urban. A study on Social Security assistance
in Colombia quotes : "... los beneficiarios del ICSS constituyen un grupo selecto de
Colombianos que parecerlan vivir en un pals moderno, altamente desarrollado en cuanto a

la asistencia social, en tanto que la mayoria de la poblacidn estd sumergida en el "sdlvese


quien pueda" de los problemas causados por razones de accesibilidad, fundamentalmente

econdmica" 12.
ISS health services are more curative than preventive in nature and are better
characterized as high-cost and highly specialized medical services. However, the ICSS is
introducing the delivery of preventive care services through the so called Local Units but
there is still a difference on the medical approach of the Decentralized and that of the
Official sub-sector.
3.3.3 The Private Sub-Sector
Hospitals and clinics owned and run by particulars compose the Private sub-sector.

Those usually use the most advanced technology, especially the ones located in large cities.
The Red Cross also plays a role in private health care delivery. Although the Decentralized

sub-sector uses their own hospitals and also hospitalize patients in both Private and Public
hospitals. Some public hospitals, especially University and Specialty hospitals, have a
number of beds who are used by patients belonging to the ISS or by private patients, and
receive care comparable to that in a private institution. Those beds are called "pensionado"

11 Ibid. Pages 40-42.


12 Ibid. P age 21. T his translates into English: ... ICSS beneficiaries constitute
a se le c t group o f C olom bians w ho seem to be liv in g in a m odem country,
h ig h ly d ev elo p ed w ith respect to so c ia l assistance; m ean w h ile m ost o f the
p op ulation is subm erged in the "save y o u rse lf i f you can" from the problem s
cau sed by lack o f a ccess to health services e sp ec ia lly for eco n o m ic reasons.

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32
and treatment's costs are covered by the social security system the patient belongs to, the
insurance company if any, or by the patient Although differences can be observed on the
type of health care delivered by the private and the public sector, it is difficult to clearly
associate quality of care received and type of facility. The organizational structure
mentioned above, makes it more difficult to assess a relationship between type of care and
type of facility.
3.4 Health Care Facilities
The number of hospitals belonging to each sub-sector varies according to the
geographical region of the country. (See Tables 3.1 to 3.6 and summary table 3.7 on
Number of hospitals by Region). Nationally, there were 470 local hospitals and 3,000
health centers and posts in 1980. A total of 871 hospitals with 44,924 beds were
distributed between the public and private sector, the former had 623 hospitals and 248
belong to the Private and the Decentralized group13. Table 3.20 summarizes hospital and
bed count nationally. According to the Ministry of Health there are 869 hospitals with a
total of 44,642 beds14. Public hospitals are the 70.4% of the total number in the country,

while 22.1% are private and 7.5% belong to social security agencies.
There are striking differences on the number of beds and health services facilities by
geographic region of the country and among departamentos within a region. Examining
Tables 3.1 to 3.9 we find that the differences between public and private sectors are strong
in all regions. Especially in the Atlantic region where bed-population ratios per 1,000

people15 are 0.93 and 6.34 for public and private hospitals respectively. See Table 3.18).
According to Tables 3.1 and 3.8 those private beds are concentrated on the three richer and
most urban departamentos of the region: Atldntico, Magdalena and Bolfvar. Cesar and

13 W orld H ealth O rganization/Pan A m erican H ealth O rganization (1 9 8 5 ),


"Program B udget, R egion o f the A m ericas 1986-1987", O fficia l D ocum ent # 199.
P ages 397 and 398. W ashington, D .C .
14 D o es not include National' Territories. W hen including those, the total
num ber o f beds increases to 4 5 ,0 8 3 .
15 S ee notes on calculation o f ratios on each table.

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33
Guajira should rely heavily on Public services with some help from the ISS, while
Cdrdoba and Sucre do not have ISS beds at all.
Differences in bed-population ratios are less sharp in the cases of the Oriental and
Pacific regions. Although there are more private beds than public or ISS per 1,000 people
in the Oriental region, here those ratios are closer to one another, 1.95 for public and 4.07
for private. See Table 3.18 on bed-population ratios). Cundinamarca and Santander being
relatively more urbanized have the largest number of public and private beds in the region.
(Table 3.9).
Bogotd, D.E. has 851 more private beds than public beds, but the proportion of its
population expected to seek care from the public sector is 71%; meanwhile, only 10%
affords private care16. Being the most populated city in the country with a large
concentration of public and private employees, the social security system has a great
importance on health care delivery. 27% of the population belongs to at least one social
security agency and is entitled to use its services. The bed-population ratio for ISS
hospitals is 2.4 in Bogotd according to Table 3.18.
Differences between public and private sectors are also important in both the Central
and the Pacific regions. The Central region is the coffee growing region of Colombia and it
also includes Antioquia, which is a large departamento both in population and industry

concentration. 87% of the population in the Central region are expected to use public
services while only 3.4% have private insurance17; the rest have to pay by themselves.
12.3% of the population belongs to at least one social security agency and can use their
services.

T h o se proportions are calculated with Data from T he N ational Health Study


o f 1980. S e e Tables 3 .1 5 and 3 .1 6 on population served by sub-sector and by
r e g io n .
17 Private and other (not so cia l security) insurance. If o n ly private
insurance is con sid ered the proportion is 0.8% .

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34
The Pacific region is in general a poor region with the exception of the Valle
departamento. Valle is a very fertile land where modem agriculture and agro-industry are
quite strong. For this reason, average bed-population ratios in the Pacific region (Table
3.18) are probably under-estimating Valle's situation while over-estimating bed-population
ratios in the poorer areas of Choc6, Narino and Cauca.
The National Territories18 are not recorded by The National Health Study of 1980;
however, Tables 3.6 and 3.13 show the number of hospitals and beds in this part of the
country. It is important to note that most of modem health services in the National
Territories are delivered through public hospitals and clinics. The ISS is not present and
the private sector only has 8 beds in the region. National Territories are the least urbanized
part of Colombia and traditional care should be still quite important because of traditions
maintained by existent indian communities. Population wise this group represents a very
low proportion of the country's population; 1.3% of 24.6 million19.
Bogotd, D.E. has the highest average bed-population ratio of the country for private
beds. When ratios are calculated for all types of beds combined, Bogoti still has the
highest ratio of all regions. If calculated this way, the average bed-population ratio per

1,000 people is 1.25 in the Atlantic region, 2.10 in the Oriental, 2.8 in Bogotd, 1.8 in the
Central region and 1.5 in the Pacific region. (See Table 3.19). The average bed-
population ratio per 1,000 people in the whole country is 1.81.
3.5 International Comparisons

Colombia is a middle income developing country according to the World Bank's


characterization. It is mostly urban and industrialized when compared to other developing
nations in Latin America. However, its health care delivery system is in disadvantage with

18 N ational Territories are C om isartas and I n te n d e n c ia s . G eographical and


p o litic a l d iv isio n s o f the country sim ilar to d e p a r ta m e n to s but w ith less
p o p u la tio n and w ith a d ifferen t ad m inistrative system .
19 From "The N ational H ealth Study, 1980", D iseh o de la M uestra y Confiabilidad
d e las E stim acion es by L uis C arlos Gdm ez. Instituto N acional de Salud, Bogotd,
DJE.

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those of other countries. According to health indicators in Tables 3.21 to 3.23 Colombia
has a low bed-population ratio; 1.7 in 1983 compared with 5.4 in Argentina, 3.6 in
Paraguay and Brazil and 2.7 in Venezuela. According to the World Health Organization
Colombia's bed-population ratio is lower than the average for Latin America (2.84), and
still below the average for the Andean region (2.73). Colombia's bed-population ratio is
equal to Bolivia's and it is only greater than in the cases of Nicaragua and Guatemala. See
Table 3.22.
Physician-population ratios by 10,000 people are presented in Table 3.21.
Colombia's physician-population ratio is comparable to Chile's and only greater than those
in El Salvador and Nicaragua. Personnel ratios in Colombia are similar to Chile's; both
countries have a large ratio for the number of nurse auxiliaries compared with registered
nurses, physicians, dentists and nutritionists. Venezuela, Argentina, Costa Rica and
Panamti are the countries with largest physician-population ratios in Latin America.
However, personnel ratios in Latin America are much lower than those in industrialized
countries. 21.4 physicians per 10,000 population in the U.S.A. and 19.6 in Canada, can't
compare with 8.4 in Colombia and 3.4 in El Salvador.

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36

TABLES
TO
CHAPTER 3

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TABLE 3.1
NUMBER OF HOSPITALS BY SUB-SECTOR AND DEPARTAM ENTO*
ATLANTIC REGION________________________

Sub-sector PUBLIC PRIVATE ISS TOTAL

Departamento HOSPITALS

AtMntico 20 15 4 39

Magdalena 17 10 1 28

Bolivar 23 8 2 33

Cesar 11 0 1 12

Guajira 8 0 1 9

Cdrdoba 10 2 0 12

Sucre 7 1 0 8

Total Region 96 36 9 141


Source: Ministry of Health. Sistema Nacional de Salud, Subsistema de Informacidn en Salud. Computer
Print-outs.
* Hospitals and Clinics of all sizes (from < 10 beds to > 500 beds).
Public hospitals include Local, Regional, University and Specialized.
ISS hospitals are all belonging to Social Security Agencies, i.e Decentralized Sub-Sector.

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TABLE 3.2 38
NUMBER OF HOSPITALS BY SUB-SECTOR AND D EPARTAM ENTO *
ORIENTAL REGION

Sub-sector PUBLIC PRIVATE ISS TOTAL

Departamento HOSPITALS

N. de Santander 21 4 1 26

Santander 46 13 2 61

Boyacd 33 4 5 42

Cundinamarca 40 5 2 47

Meta 13 5 4 22

Total Region 153 31 14 198

Print-outs.
* Hospitals and Clinics of all sizes (from < 10 beds to > 500 beds).
Public hospitals include Local, Regional, University and Specialized.
ISS hospitals are all belonging to Social Security Agencies, i.e., Decentralized Sub-Sector.

TABLE 3.3
NUMBER OF HOSPITALS BY SUB-SECTOR AND D E PA RTAM ENTO *
_______________BOGOTA, D.E.___________________________

Sub-sector PUBLIC PRIVATE ISS TOTAL

Region HOSPITALS

Bogotd, D.E. 28 65 6 99
Source: Ministry o f Health. Sistema Nacional de Salud, Subsistema de Informacidn en Salud. Computer
Print-outs.
* Hospitals and Clinics o f all sizes (from < 10 beds to > 500 beds).
Public hospitals include Local, Regional, University and Specialized.
ISS hospitals are all belonging to Social Security Agencies, i.e., Decentralized Sub-Sector.

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TABLE 3.4 39
NUMBER OF HOSPITALS BY SUB-SECTOR AND D EPARTAM ENTO *
CENTRAL REGION

Sub-sector PUBLIC PRIVATE ISS TOTAL


Departamento HOSPITALS

Antioquia 126 18 11 155


Caldas 23 3 2 28
Risaralda 17 6 4 27
Quindfo 14 2 3 19
Tolima 39 3 1 43
Huila 17 6 1 24
Total Region 236 38 22 296
Source: Ministry of Health. Sistema Nacional de Salud, Subsistema de Informacidn en Salud. Computer
Print-outs.
* Hospitals and Clinics of all sizes (from < 10 beds to > 500 beds).
Public hospitals include Local, Regional, University and Specialized.
ISS hospitals are all belonging to Social Security Agencies, i.e., Decentralized Sub-Sector.

TABLE 3.5
NUMBER OF HOSPITALS BY SUB-SECTOR AND D E PA RTAM ENTO *
PACIFIC REGION
Sub-sector PUBLIC PRIVATE ISS TOTAL
Departamento HOSPITALS

Valle 53 18 10 81
Choc6 11 1 0 12
Naririo 13 3 1 17
Cauca 22 0 3 25
Total Region 99 22 14 135
Source: Ministry o f Health. Sistema Nacional de Salud, Subsistema de Informacidn en Salud. Computer
Print-outs.
* Hospitals and Clinics of all sizes (from < 10 beds to > 500 beds).
Public hospitals include Local, Regional, University and Specialized.
ISS hospitals are all belonging to Social Security Agencies, i.e., Decentralized Sub-Sector.

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TABLE 3.6 40
NUMBER OF HOSPITALS BY SUB-SECTOR AND DEPARTAM ENTO *
NATIONAL TERRITORIES **
Sub-sector PUBLIC PRIVATE ISS TOTAL
Departamento HOSPITALS
Nat. Territories 56 1 0 57
Source: Ministry o f Health. Sistema Nacional de Salud, Subsistema de Informacidn en Salud. Computer
Print-outs.
* Hospitals and Clinics o f all sizes (from < 10 beds to > 500 beds).
Public hospitals include Local, Regional, University and Specialized.
ISS hospitals are all belonging to Social Security Agencies, i.e., Decentralized Sub-Sector
** National territories arelntendencias and Comisarlas net Departamentos.

TABLE 3.7
SUMMARY TABLE. TOTAL NUMBER OF HOSPITALS BY TYPE AND
BY REGION

Sub-Sector Public Private ISS TOTAL


Region Hospitals
Atlantic 96 36 9 141
Oriental 153 31 14 198
Bogota 28 65 6 99
Central 236 38 22 296
Pacific 99 22 14 135
N at Territories 56 1 0 57
Source: Ministry of Health. Sistema Nacional de Salud, Subsistema de Informacidn en Salud. Computer
Print-outs.
* Hospitals and Clinics of all sizes (from < 10 beds to > 500 beds).
Public hospitals include Local, Regional, University and Specialized.
ISS hospitals are all belonging to Social Security Agencies, i.e., Decentralized Sub-Sector
** National territories are Intendencias and Comisarlas not Departamentos.

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TABLE 3.8 41
NUMBER OF HOSPITAL BEDS BY SUB-SECTOR AND
D EPA RTAM E N TO *
ATLANTIC REGION
Sub-sector PUBLIC PRIVATE ISS TOTAL

Departamento BEDS

AtMntico 1020 681 366 2067


Magdalena 679 119 120 918
Bolivar 1032 315 197 1544
Cesar 395 0 110 505
Guajira 214 0 13 227
C6rdoba 639 50 0 689
Sucre 306 12 0 318
Total Region 4285 1177 806 6268
Source: Ministry o f Health. Sistema Nacional de Salud, Subsistema de Informacidn en Salud. Computer
Print-outs.
* Beds in Public hospitals include those in Local, Regional, University and Specialized hospitals.
ISS beds are all belonging to Social Security Agencies, i.e., Decentralized Sub-Sector.

TABLE 3.9
NUMBER OF HOSPITAL BEDS* BY SUB-SECTOR AND
DEPARTAM ENTO*
ORIENTAL REGION

Sub-sector PUBLIC PRIVATE ISS TOTAL


Departamento BEDS

N. de Santander 1206 156 125 1490


Santander 2629 496 180 3305
Boyacd 1137 124 229 1490
Cundinamarca 2718 235 130 3083
Meta 474 142 141 757
Total Region 8164 1156 805 10125
Source: Ministry o f Health. Sistema Nacional de Salud, Subsistema de Informacidn en Salud. Computer
Print-outs.
* Beds in Public hospitals include those in Local, Regional, University and Specialized hospitals.
ISS beds are all belonging to Social Security Agencies, i.e., Decentralized Sub-Sector.

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42

TABLE 3.10
NUMBER OF HOSPITAL BEDS BY SUB-SECTOR AND
D EPARTAM ENTO *
___________________ BOGOTA, D.E.___________________

Sub-sector PUBLIC PRIVATE ISS TOTAL


Region BEDS
Bogotd, D.E. 3103 3954 2155 9212
Source: Ministry of Health. Sistema Nacional de Salud, Subsistema de Informacidn en Salud. Computer
Print-outs.
* Beds in Public hospitals include those in Local, Regional, University and Specialized hospitals.
ISS beds are all belonging to Social Security Agencies, i.e., Decentralized Sub-Sector.

TABLE 3.11
NUMBER OF HOSPITAL BEDS BY SUB-SECTOR AND
DEPA RTAM E N TO *
CENTRAL REGION

Sub-sector PUBLIC PRIVATE ISS TOTAL


Departamento BEDS

Antioquia 3522 1054 963 5539


Caldas 1217 380 145 1742
Risaralda 770 100 209 1079
Quindio 111 51 175 999
Tolima 1311 144 116 1571
Huila 669 177 74 920
Total Region 8262 1906 1682 11850
Source: Ministry o f Health. Sistema Nacional de Salud, Subsistema de Informacidn en Salud. Computer
Print-outs.
* Beds in Public hospitals include those in Local, Regional, University and Specialized hospitals.
ISS beds are all belonging to Social Security Agencies, i.e., Decentralized Sub-Sector.

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TABLE 3.12 43
NUMBER OF HOSPITAL BEDS BY SUB-SECTOR AND
D E PA RTAM E NTO *
PACIFIC REGION
Sub-sector PUBLIC PRIVATE ISS TOTAL
Departamento BEDS

Valle 2584 657 1100 4341


Chocd 311 27 0 338
Narino 657 974 62 1693
Cauca 737 0 78 815
Total Region 4289 1658 1240 7187
Source: Ministry of Health. Sistema Nacional de Salud, Subsistema de Informacidn en Salud. Computer
Print-outs.
* Beds in Public hospitals include those in Local, Regional, University and Specialized hospitals.
ISS beds are all belonging to Social Security Agencies, i.e., Decentralized Sub-Sector.

TABLE 3.13
NUMBER OF HOSPITAL BEDS BY SUB-SECTOR AND
D EPARTAM ENTO*
NATIONAL TERRITORIES **

Sub-sector PUBLIC PRIVATE ISS TOTAL


Departamento BEDS

Nat. Territories 1110 8 0 1118


Source: Ministry of Health. Sistema Nacional de Salud, Subsistema de Informacidn en Salud. Computer
Print-outs.
* Public beds include those in Local, Regional, University and Specialized hospitals.
ISS beds are all belonging to Social Security Agencies, i.e., Decentralized Sub-Sector
** National Territories are Intendencias and Comisarlas not Departamentos.

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TABLE 3.14 44
SUMMARY TABLE. TOTAL NUMBER OF BEDS BY TYPE AND BY
REGION
Sub-Sector Public Private ISS TOTAL
Region Beds

Atlantic 4285 1177 806 6268


Oriental 8164 1156 805 10125
Bogotd 3103 3954 2155 9212
Central 8262 1906 1682 11850
Pacific 4289 1658 1240 7187
I N at Territories 1110 8 0 1118
Source: Ministry of Health. Sistema Nacional de Salud, Subsistema de Informacidn en Salud. Computer
Print-outs.
* Hospitals and Clinics of all sizes (from < 10 beds to > 500 beds).
Public hospitals include Local, Regional, University and Specialized.
ISS hospitals are all belonging to Social Security Agencies, i.e., Decentralized Sub-Sector
* National Territories are Intendencias and Comisarlas not Departamentos.

TABLE 3.15
NUMBER OF PERSONS SERVED BY EACH SUB-SECTOR BY
______________________ REGIONS, 1980______________________
Region ATLANTIC ORIENTAL BOGOTA CENTRAL PACIFIC
Sub-Sector
Total
5,019,979 4,810,811 3,321,275 6,747,468 4,762,017
Population

Sample Pop. 8091 8669 6024 12399 8499


PUBLIC* 7418 7531 4255 10826 7113
PRIVATE** 299 511 602 421 765
ISS*** 640 1004 1627 1521 1323
Population expected to use the public sector if not-insured and not a beneficiary of any ISS.
Population expected to use private services is calculated according to access to any kind of private
insurance and what is characterized as "other insurance" by the ENS-1980. It is important to note that the
figures are lower estimates, since access to the private sector is not necessarily limited by access to private
insurance.
Population expected to use ISS services if beneficiary of any of the social security agencies.
Source: Calculated with The National Health Study, 1980. Total pop. figures in: Luis Carlos Gdmez
(1980) "Disefio de la Muestra y Conflabilidad de las Estimaciones".

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TABLE 3.16
POPULATION SERVED BY EACH SUB-SECTOR BY REGIONS, 1980.
SAMPLE PROPORTIONS (All figures are %)
Region ATLANTIC ORIENTAL BOGOTA CENTRAL PACIFIC
Sub-Sector

Sample Pop. 100.0 100.0 100.0 100.0 100.0

PUBLIC* 92.0 87.0 71.0 87.0 84.0


PRIVATE** 3.7 5.9 10.0 3.4 9.0
ISS*** 7.9 11.6 27.0 12.3 15.6
NOTE: Proportions do not add up to 100 because o f double coverage.
'"Population expected to use the public sector if not-insured and not a beneficiary o f any ISS.
'""Population expected to use private services is calculated according to access to any kind of private
insurance and what is characterized as "other insurance" by the ENS-1980. If calculated with access to
private insurance only, the proportion o f population served is lower and bed-population ratios in for the
private sector much larger. (Table 3.17).
""""Population expected to use ISS services if beneficiary of any o f the social security agencies.
Source: Calculated with The National Health Study, 1980. Total pop. figures in: Luis Carlos Gdmez
(1980) "Diseflo de la Muestra y Confiabilidad de las Estimaciones".

TABLE 3 17
SAMPLE POPULATION PROPORTIONS SERVED BY EACH SUB
SECTOR. 1980
Region
ATLANTIC ORIENTAL BOGOTA CENTRAL PACIFIC
Sub-Sector

Sample Pop. 100 100 100 100 100

PUBLIC* 92 87 71 87 84
PRIVATE** 0.5 3.5 3.7 0.8 1.25
ISS*** 7.9 11.6 27 12.3 15.6
Note: Percentages do not add to 100 exacdy because o f double coverage between the private and the social
security sub-sectors.
"Population expected to use the public sector if not-insured and not a beneficiary of any ISS.
""Population expected to use private services is calculated according to access to any kind of private
insurance. It is important to note that the figures are a lower estimate, since access to the private sector is
not necessarily limited by access to private insurance.
"""Population expected to use ISS services if beneficiary of any of the social security agencies.
Source: Calculated with The Nadonal Health Study, 1980. Total pop. figures in: Luis Carlos Gdmez
(1980) "Diseflo de la Muestra y Confiabilidad de las Esdmaciones".

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TABLE 3.18 46

Region
ATLANTIC ORIENTAL BOGOTA CENTRAL PACIFIC TOTAL
Sub-
COUNTRY
Sector

Public 0.93 1.95 1.31 1.41 1.08 1.46


Private 6.34 4.07 11.9 8.31 3.9 6.66

ISS 2.03 1.44 2.40 2.03 1.67 1.69


Source: Calculated with Hospital and Beds Computer Printouts and population proportions using each type
o f services in Table 3.17 obtained from The National Health Study, 1980.
Total country population proportions are averages in Table 3.15

TABLE 3 19
BED POPULATION RATIOS per 1,000 BY REGION. ALL BEDS
COMBINED
Region ATLANTIC ORIENTAL BOGOTA CENTRAL PACIFIC TOTAL
COUNTRY
Bed/Pop 1.25 2.10 2.8 1.8 1.5 1.81
x 1,000
Source: Calculated with Hospital and Beds Computer Printouts and total population in each region. See
Table 3.15.

TABLE 3.20
NATIONAL SUMMARY
Sub-Sector HOSPITALS BEDS BED/POP POPULATION
RATIO x 1,000 SERVED
Public 612 28,103 1.46 78%
Private 192 9,851 6.66 6%
ISS 65 6,688 1.69 16%
TOTAL 869 44,642 1.81 100 %
Source: Calculations based on The National Health Study, 1980Ministry o f Health and Sistema Nacional
de Salud, Subsistema de Informacidn en Salud. Computer Print-outs.
* Hospitals and Clinics o f all sizes (from < 10 beds to > 500 beds).
Public hospitals include Local, Regional, University and Specialized.
ISS hospitals are all belonging to Social Security Agencies, i.e Decentralized Sub-Sector.

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TABLE 3.21
HEALTH PERSONNEL/POPULATION RATIOS VARIOUS COUNTRIES.
by 10 , )00 population 1984

Country Physician Nurses Auxiliaries Dentist Nutritionist


Colombia 8.4 3.5 12.4 3.6 0.8

Ecuador 11.5 3.1 12.3 4.5 0.1

Venezuela 14.3 5.3 3.7 2.6 N.A.

Argentina 27.0 4.7 5.6 2.2 0.2

Chile 8.0 2.8 23.8 2.6 N.A.

Brazil 9.3 5.0 6.4 1.3 0.1

Costa Rica 10.1 5.2 16.3 3.1 N.A.

El Salvador 3.4 3.4 6.9 1.2 0 .0 *

Nicaragua 6.9 4.3 15.0 0.8 N.A.

Panamti 10.4 10.4 15.8 2.0 N.A.

Mexico N.A. 4.6 6.5 0.4 N.A.


U.S.A. 21.4 83.0 54.2 5.9 3.0
Canada 19.6 N.A. 34.3 4.9 1.7
Source: World Health Organization, PAHO Sanitary _n___
Bureau. HTT.. Conditions in the
"Health tU n A fVinM/tno^
Americas".
Scientific Publication No. 427.
* 0.0 means less than 0.0S and N.A. is not available.

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48

TABLE 3.22
AVERAGE BED POPULATION RATIO IN VARIOUS COUNTRIES.
____________ by 1,000 population________________ 1983___________
Country Bed-Population Ratio
Argentina 5.4
Bolivia 1.7
Brazil 3.6
Colombia 1.7
Costa Rica 2.9
Cuba 6.1
Ecuador 1.9
El Salvador 1.7
Guatemala 1.6
Nicaragua 1.6
Paraguay 3.6
Peru 1.9
Uruguay 5.0
Venezuela 2.7
North America 5.9
Latin America 2.84
Andean Area 2.73
Southern Cone 4.41
Source: World Health Organization, PAHO Sanitary Bureau. "Hospitals in the Americas". Scientific
Publication No. 416.

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49

TABLE 3.23
CENTRAL GOVERNMENT EXPENDITURES ON HEALTH AS A % OF
CENTRAL BUDGET. 1982
Argentina 1.09
Bolivia 1.96
Brazil 7.82
Chile 6.80
Colombia* 3.80
Costa Rica 32.76
Dominican Republic 10.66
El Salvador 7.14
Panami 13.14
Paraguay 3.67
Uruguay 3.29
Source: International Monetary Fund. Government Finance Statistics. Yearbook 1984, Washington, D.C.
* Office o f the Comptroller and DANE.

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50
CHAPTER 4
THEORETICAL MODEL
Health care demand models were in the past, for the most part, a combination of
Beckers consumption-production theory and Michael's (1972) approach of the effect of
education on consumption. Models of this sort follow the careful exposition of demand for
health developed by Grossman. More recently, models of demand for health have applied
discrete choice models borrowed from theoretical representations of decision choice

behavior first used in Psychometrics; those were developed by Luce, Tversky and
Thurstone. The core of these models is the unmeasured psychological factors which
introduce a random element in choice decisions.
Thurstone used the Index Function model to produce models of choice among
discrete alternatives. Index Function models are based on the notion of discrete
endogenous variables generated by continuous latent variables crossing thresholds. Luce
model, also called "Strict Utility" model is limited to situations were alternatives are
assumed perfectly distinct and independent from one another. From the Luce model it is
developed the Multinomial Logit model; this specification's drawback is due to precisely
the mentioned characteristic of alternatives being completely independent of one another,
referred as the Independence of Irrelevant Alternatives axiom (DA); its consequences are
discussed later.
The choice of health services provider is a discrete type of decision. Therefore,
probabilistic choice models are appropriate for the study of factors determining use of
modem, traditional or self-provided type of care. Models of probabilistic choice are a
better theoretical representation for our model of choice of provider than marginal
consumer maximization theory because of the discrete nature of the decision1. Marginal

analysis uses the identical and representative consumer who maximizes a continuous

1 As McFadden (1981) writes: "Analysis of discrete choice behavior using conventional


marginalist consumer theory is quite awkward".

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51
decision variable. The problem with marginal analysis is that it takes an identical
representative consumer and maximizes a decision variable which is continuous; following
this strategy for our problem of choice of provider would provide a poor representation of
individual behavior, since we are modelling discrete choice. In our case, the discrete
choice is the provider to select and the continuous would be the number of office hours
(visits or number of units) to demand. The dependent variable is discrete in all the cases
studied here; for the choice of provider in both prenatal care and child's delivery
assistance, and in the case of the choice of place for child's delivery assistance.
Although the utility function is deterministic for the consumer, it contains variables
which are unobservable to us and influence choice; therefore, utilities are treated as random
variables. We assume that pregnant women maximize a random utility function which is
comprised of two parts: one which is known and observable for both the individual and the
researcher and a stochastic error which captures factors unobservable to the researcher but
influencing choice. As McFadden (1981,1984) shows, differences in tastes among
individuals influence aggregate demand and they should not be treated as a nuisance
eliminated from the model. Moreover, individuals' preferences influenced by unobserved
variables generate demands that follow a specific probability distribution among the
population. Then the utility function is composed of a stochastic part and a random
variable e containing unobserved variables and variations in tastes among individuals.

According to Random Utility Maximization denote Uj the individual's random

utility function given that the jth provider (or place) is chosen:

Uj = U ( H j .Xjjtej ,

where Hj is the level of health attained by being treated by the jth provider (or having a

delivery in the jth place); Xj are expenditures in all other goods given that the jth choice

was made; Ej is a random error capturing all unobserved variables unknown for the

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52
investigator but influencing individual's choices. These factors range from health and
individual's background variables to changes in policy decisions such as changes in social
security system coverage, government allocation of modem medical personnel and
resources to geographical areas, government or hospital's administration decisions on
restricting hospital working hours or on giving assistance only to patients with specific
types of illnesses, j has a different meaning according to the case in reference.
The consumer decides to demand provider's j care against self-care; conditional
on this decision, the individual chooses the provider who is expected to produce higher
satisfaction. Then the unconditional problem is:

(1) U*= max (UD, ... ,U j )

where j is the provider chosen2 {0 , 1,..., m} and Uj are conditional utility functions:

(2) U j = Uj (X j, H j , E, W, e) = V (Xj , H j ) + Ej

where E contains characteristics of individuals, W characteristics of alternatives, Hj and X

j are the choices. V (Xj , H j ) is the non-stochastic part of the utility function reflecting

"representative" tastes, followed by the stochastic part which is a random function that
contains the unobserved variables, e has a probability densitiy function f e ( j, ...,e m)

which induces a density on the utility function.

According to random utility maximization, the distribution of tastes generates a


probability choice system where two alternatives never bring the; same utility level. In other
words, there is a unique utility-maximizing choice of alternative provider, given
individual's characteristics. Then, the individual problem is one of obtaining the maximum
satisfaction or utility from the set of conditional utilities Uj on the kind of provider chosen

2 j is traditional or modem practitoner for the choice of practitioner estimated in the first
part of Chapter Six; and, j represents Home, Public, Private or Social Security Hospital
for the choice of institutional setting estimated in the second part of Chapter Six.

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as it is expressed by (1). A pregnant woman chooses the alternative that maximizes her
welfare or utility, which also reflects on the future health state of her child. She chooses
this alternative from a set of j 's , j e J ={ 0 ,1 ,..., m} where 0 is home care (self-care/no

care) and j = 1,..., m are the other choice alternatives. Provider j will only be chosen by
individual i only i f :

U ij Ufc j * k j, k e J

If the distribution of tastes in the population follows a probability distribution say


0, then given a vector E of individual's characteristics, a vector W of provider's

characteristics, and a set of alternative providers J = {0,1,..., m}, there will be a


probability choice system such that the probability of provider j to be chosen by individual
1, Pjj , is:

(3) P ( jj / J, E, W ) = G t f U / U y Uik j * k = 0, l,...,m } ]

Substituting (2) into (3):

(3) P <ij / J, E, W ) = 0 [{ U / V (Xj , H j ) + Ej ;> V ( X k , H k) + e k )

j * k e J )]

or:

(4 > P <ij / J, E, W ) = 0 [{ Efc - Ej <I V( Xj , H j ) - V ( X k , H k)J j * k e J )]

This means that, for example, the probability of a physician to be chosen to assist a childs
delivery from all other providers (modem care against traditional care) is:

PMD = P [UMD ^ U OTHEr ]

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54
=p V
MD
4- F
MD
> V
v OTHER
+ F
OTHER

= P [ VMD V OTHER ^ E O T H E R " e MD

or a Public hospital is chosen for a child's delivery if:

P PUB= P [ U P U B ^ U OTHERTYP e ]

P PUB = P ^ PUB + EPUB ^ ^ OT HE R T Y P E + 6 OTHER TYPE

PPUB = P VP U B " V OTHER TYPE ^ 6 OTHER TYPE 6 PUB

The budget constraint is:

(5) Y = Pj + Xj

where Pj is the total expenditure on health care for the jth provider, and Xj are other

consumption expenditures after demanding the jth type of care. Pj is composed of

monetary price and time price 3. By definition, Xj = Y - Pj and it can be directly

3 In reality Pj should be equal (P j + wTj ). If Y represents income then consumption

expenditures is by definition: Xj = Y - ( Pj + wTj ) where:

P j is the price of services rendered by provider j . (Price of a child's delivery); w is the

opportunity cost of time ( wages or reservation wages). Tj is the time spent traveling to
and with the j-th provider, i.e., non-monetary costs of access or time-price. Therefore, ( P
j + wTj ) is the total cost of services rendered by the j-th provider. The data available

does not provide information on time costs and although we acknowledge the importance
of time costs on health services demand, this study only deals with monetary prices for

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55
introduced into the conditional utility function in (2). The non-stochastic part of the
conditional utility function Uj has all the properties: it is quasi-concave in Hj and Xj and

a solution exists with Xj > 0 and Hj > 0. Then, the conditional indirect utility function

V j also exists and has all the properties: it is quasi-convex, decreasing in prices,

increasing in income and satisfies Roy's identity.

(6) Vj = Vj ( Pj *Y, E, W j , j )

As we said before, the conditional utilities are functions of the expected level of
health attained after demanding providers j type of care, Hj , and a composite of all other

goods:

(7) U j = V ( X j ,H j ) + j

where Xj is expenditure on all other goods the individual consumes conditional on

purchases of health services from the j-th provider and j is the random error which

represents unobservable variables that influence choice. Replacing (5) into (7), we get:

(8) Uj = V ( Hj , Y - Pj ) + e j where j =0,1,...., m types of alternative

choicesand, Hj is the level of health attained byusing provider (or place) j which is in

turn a function of both individual and provider's characteristics. This expected level of
health conditional on receiving jth type of services, or conditional on being treated at the jth
type of institution is a function:

child's delivery assistance in hospitals. For this reason we assume the total cost of care
equal to P j .

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56

(9) H j = H ( E i , W j ) + G)j

where, E j is a vector of individual characteristics like original state of health before the

child's delivery, human capital and other individual characteristics4. Wj is a vector which

contains market and provider's characteristics, or is a disturbance uncorrelated across

individuals which represents unobserved individual and provider's characteristics


influencing the health outcome Hj when choosing alternative 'ways' (practitioner/place)

for dealing with prenatal care and with child's delivery. We come back later to the specifics
of the health production function.
Solution for (1) provides a system of demand functions in the form of probabilities
of choosing the j-th provider, each demand function is the probability that the utility level
conditional on the provider chosen by individual i, Uy , is higher than from any other

alternative. The probability that the j-th provider is chosen is equal to the probability that

with this choice the individual attains the highest level of utility; therefore, demand
functions are the probabilities of choosing a provider from the rest
The form of demand functions depends on the form of the conditional utilities Uj

and specific assumptions regarding the distribution of errors. Moreover, from (4) we can
see that only differences in utility matter and if the difference in error terms is assumed to
have a Generalized Extreme Value distribution, the probability of choosing one provider

over the rest has the form of a Nested Multinomial Logit.


First, we must explore the functional form of the unconditional demand functions.
4.1 THE UNCONDITIONAL PROBLEM

4 The parameters in E can be allowed to vaiy by alternative when there is not enough
information on characteristics of alternatives. This method has been applied by other
authors. See Dor et al. (1987). We allow them to vary only by care, self-care alternatives
in the Nested Multinomial Logit estimating institutional choice for child's delivery
assistance.

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57
4.1.1 Functional Form
4.1.1.1 The Budget Constraint
There are two types of possibilities regarding the budget constraint, according to the
length of the budget period:
(a) A world with imperfect capital markets where unconstrained borrowing
and lending is not possible and only one period's income enters the budget constraint
(b) However, if people borrow against future income, we should consider
a measure for permanent income and an infinite horizon instead of a budget constraint with
only one period's income. We are assuming imperfect capital markets as in (a); the budget
constraint in this case is as we assumed in (5). In the case of (b) the budget constraint will
consist of the present value of the income stream
n y
PV = ------ with discount rate r and n as the length of the horizon.
i= l(l+ r)n

Although some studies have found correlation between health status and labor
productivity (Weisbrod 1973, Barlow 1967, Borkar 1957, Malenbaum 1970), and the
marginal productivity of health services is assumed to be positive, our conjecture is that the

change in health status as a result of the use of services from the provider of choice is not
able to affect the same period wage level. Effects of changes in health status over wages
through changes in productivity may not occur in the same period due to frictions in the
labor market; wages are not completely flexible and do not react as promptly to reflect very
recent changes in productivity. Although this is not under the scope of the present study it
constitutes an interesting topic for future research.

Only present period's prices and income are considered since we are working with
a static discrete choice model. Prices and income are assumed exogenous and independent

of individuals choices, since the choice of practitioner does not influence the price the
individual faces nor the level of income earned during this period.
4.1.1.2 The Utility Function

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58
The functional form of (7) is very important since results are strongly influenced by
i t Health studies in the past (Heller 1976 and 1982, Akin et al. 1985, Birsdall and
Chuhan 1986) have found that demand for health services is always inelastic with respect
to economic variables. For example in Akin et. al. (1985) results show:" ... the cash cost
of a visit, transportation dme, transportation cost, waiting time, and insurance coverage
have almost no power in explaining visit choices. ... The results for the delivery model
suggest that the choice of a modem or traditional birth attendant is also made on other than
economic grounds. ... We have found that this variable (waiting time) also does not seem
to deter visits"5. According to similar results obtained with a Filipino sample, the authors
conclude that policy efforts on providing free health services do not benefit the majority of
the population whose decision to demand modem health services is more influenced by
non-economic factors. Although these conclusions are in accordance with model results,
they seem to go against intuition when one thinks of economic circumstances in developing
countries.
Intuitively, demand for health services of higher income individuals should be less
price elastic than that of their poorer counterparts. Therefore, the decision to seek care as

well as the choice of provider conditional on that decision, has to be strongly influenced by
the level of income. This idea is supported by the work of Gertler and Locay (1987) and
shortly after by Dor et al. (1987). Gerlter found with a Peruvian sample results much
closer to intuition than anything found in the past for developing societies.
Following this idea, we are assuming that in a world with consumption choices
between Xj and Hj , the trade-off between them changes with income level. This implies

that the Marginal Rate of Substitution (MRS) between health and all other goods has to be a
function of income; therefore, the MRS is not constant For a given increase in the
consumption of health, lower income individuals give up a greater amount of the

5 Akin et. al. (1985) "Demand for Primary Services in the Philippines"

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59
consumption of all other goods than higher income individuals will do. This means that the
MRS between consuption and health decreases as we move from lower to higher income
groups 6; this implies that higher income individuals have a demand for health services less
price elastic than lower income individuals. This notion could be explained by the
existence of an income level considered as a "threshold" for survival consumption below
which, individuals can barely provide themselves the necessities of life like shelter, food
and clothing. At this income level health care constitutes less of a necessity than other
surviving needs. The trade-off between health and other goods for lower income

individuals can not be the same as the one for individuals with income levels above and
beyond the threshold. It is of greatest importance to keep this notion in mind, especially
for Colombia where differences in income levels are great.
According to this notion, the functional form chosen for (7) has to be such as to
allow price elasticities to vary with income. Then, it is necessary to provide a functional
form for the conditional utility function consistent with both utility maximization theory and
a decreasing MRS as income level increases, if health is considered a normal good. In
other words, it is necessary to have a flexible functional form capable of showing choices
as they are influenced by income7. Furthermore, and following the criteria given by Lau
(1986) for theoretical consistency8, the utility maximizing problem should lead to a

If a change in health is: (AH) and a change in consumption expenditures o f all other goods is: (A X),
then:

MRS rich < poor = MRS


rich poor

This is saying that for an equal increase in consumption o f health it is required a greater decrease in the
consumption expenditures of all other goods for lower income individuals than for higher income ones.

7 Results from past studies in developing countries, with the exception of Gertler and Locay (1987), are
directly determined by the restrictive functional form chosen. Misspecification in the functional form of the
utility function can produce misleading results, especially with respect to the role o f prices and income on
demand for health services.
8 See "Functional Forms in Econometric Model Building" in: Handbook of Econometrics, Z. Griliches and
M.D. Intrilligator Eds.

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60
summable system of demand equations, homogeneous of degree zero in prices and income,
and with a Jacobian that produces a negative semi-definite matrix.
Let's explore a linear functional form for (7), such as:

U j (H j , X j ) = a 0 [ Y - ( P j + wTj ) ] + 04 ( H j ) + \i.

where |ij is a disturbance uncorrelated across alternatives. Here, the MRS is constant

and income level has no effect on the choice of provider, which is of course precisely
contradicting what is stated earlier. Choices are independent of income in this case. Then,
a linear specification lacks flexibility and imposes price elasticities to be constant,
independent of income.
A multiplivative functional form like:

uj <hj . x j ) - hj x j + j

= Hj [ Y - ( Pj + wTj ) ) + Ej

is not appropriate either because restrics the MRS to be also constant, (the income
expansion path is a straight line) and, moreover, restricts cross price elasticities to be equal
to zero, own price elasticities to be equal to -1 and demand functions unitary income
elastic. This specification will not allow us to obtain any results regarding demand
behavior across different income levels.
A specification like:

U j (H j - x j ) = H j X j^+ ej

or its transformation into a log-linear form:

In Uj = a Q ln'Hj +<Xj lnXj + Ej

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= a Q In Hj + a j In [ Y - ( Pj + wTj ) ] + j

will generate demand functions with restrictions over its elasticities. Own price elasticities
are equal to - 1, cross price elasticities equal zero and the functions are also unitary income
elastic.

Anyone of the above specifications above does not allow income to have any
influence over choice, so none of them is useful for our purposes. For consistency, a
functional form where income enters in a quadratic form is needed and that is achieved by a
quadratic term for consumption expenditures. Remember that Xj = Y - Pj ; with a

quadratic form in Xj the MRS will be a function of income. Consider:

(10) Uj ( H j , Xj ) = p0 Hj + P i Xj + P 2 X j 2 + e j

replacing (5) into (10)9 :

(11) Uj ( Hj , X j ) = Pc Hj + P j ( Y - Pj ) + P 2 ( Y - Pj ) 2 + j

or

(12) l j = P H j + P ! Y - P 2 Pj + P 3 Y 2 - p 4 ( 2Y Pj ) + P 5 ( P j ) 2 + e j

The marginal rate of substitution of consumption expendiures for health is indeed a


function of income level in the utility function (10). The MRS is:

and

9 Remember that we assume Pj as the only price of services since we do not have time
costs. Then we leave out those from the notation from now on.

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Po
Then, the MRS = does decrease as income level increases
P j + 2 p 2 ( Y - Pj )

and in discrete choice this means that higher income women are less price elastic than lower
income counterparts.
We have defined Hj in (9) as the expected level of health attained after receiving

services from provider j; this expected level of health attained conditional on receiving j-th
type of services is measured relative to the level of health attained through self care HQ

(home care). The result from the comparison can be interpreted as the efficacy of provider
j's services relative to self-care, expressed as the difference between the expected health
improvement through the servicesof provider j and the expected level attained by self care.
Then efficacy or quality of services rendered by provider j is:
(13) K j = Hj - H 0 and

(13') H j = H 0 + Kj

Then, (13') is understood as a household health production function, where Kj should be

the marginal productivity of services rendered by provider j with respect to self care. Since

quality of care is unobserved, we measure it relative to self-care. Quality is a function of


the original state of health before using any providers services, inlcuding self-care, and a
function of human capital, provider and market structure characteristics. The original state
of health is proxied by age of the mother, since pregnancies in very young or very old
women are both riskier, the total number of persons in the household incdicates the
availability of resources per capita. Smaller households are expected to be better-off. The
use of prenatal care during pregnancy also determines the original state of health before
child's delivery. Human capital is measured by the number of years of schooling of the
mother, it is known that more educated mothers take better care of their pregnancy months,
are more informed and understand better medical directions. Provider and market structure

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characteristics include bed-population ratios by type of hospital and by the region of the
country where the woman lives. Travel time to the closest hospital is the other indicator of
access that characterize market structure. Therefore, Kj is a function like:

<14> K j = Yik H + Y2 Wj +

where k = {home, hospital) and j = {home, public, private, Iss hospital) and E is a vector
of individual characteristics (demographic and socioeconomic variables important to guide
health policy) like age, sex, education, employment status, household size, health
insurance, urban/rural, etc. Wj is a vector with provider and market structure

characteristics; dj is a disturbance uncorrelated across individuals, which represents

unobserved individual behavior or provider characteristics that may influence the expected
efficacy of provider's services relative to self care, might be correlated across the non

self care alternatives but not with the self-care alternative. Note that for the self care case H
Q, efficacy of providers services, KQis zero. Since the variables in E do not vary by

alternative, we let the coefficients on those to vary by the alternative choice of home or
hospital care. Then after estimation the coefficients on individual's characteristics indicate
how these variables influence the choice of modem versus traditional care, but are not
specific to the type of modem care, i.e, the type of hospital.

Replacing (13) into (12) we obtain the conditional utility function as:

(15) Uj = P 0 ( K j + H 0 ) + (i 1Y - P 2 Pj + p 3Y 2 + P 4 P j 2 - p 5 ( 2 Y P j ) + j

but when no provider is chosen, i.e., self-care is preferred so KQ = 0, IJj = 0 and TQ = 0,

(15) is reduced to:

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(16) UQ = Po H o + P 1Y + p 3Y 2+ e 0

As we can see from (11) and (12) there are variables that do not change by
alternative. According to Random Utility Maximization only differences in utility across
alternatives matter when explaining choice. Therefore, all variables that are constant across
alternatives can be deleted from now on since they do not influence choice. Those are pQ
2
H , P j Y and P2 Y . Therefore, (15) and (16) become respectively:

(17) Uj = P0 Kj - P , Pj + P2 P j 2 - P 3 (2 Y Pj ) + Ej

for j = 1, . . . , m. and,

(18) UQ = eQ for the self-care option.

Substituting (14) into (17) we obtain the reduced form conditional utility function
for alternative j; j * 0 :

(19) Uj = [ P 0 ( Y i k E + Y2 W j ) - P j P j + P2 P2 - P 3 (2 YPj )] + i>j + Ej

and if Rj is the term inside the square brackets [...] in (19):

(20) Uj = Rj + d j + Ej for j = 1,..., m alternatives

and for j = 0 :

(21) U 0 = R 0 + fl 0 + e 0 = e 0

As we mentioned earlier, the demand functions we are looking for are probabilities
of choosing one provider over the others; they are a result of the maximization of ( 1) where
the individual chooses the provider that maximizes her conditional utility, Uj in (7). The

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specific form of these demand functions (probabilities) is going to be explored in a later
section.

4.2. Estimation Methodology


Modeling the choice of provider has been done in the past by Coffey (1982) who
examined the demand for female health services with a sample from Dallas, Texas. She
applied limited dependent variables techniques, specifically Logit with public and private
services as alternative choices; also, uses Heckman's methodology to provide reservation
wage estimations. Akin e t al. (1985) also studied the choice of provider in the Bicol
region of the Philippines, applying a multivariate logit technique with the probability of
making a traditional, private or public medical visit as mutually exclusive outcomes.
More recently, Dor et.al. (1987) studied travel time rationing for medical services in
the Cote DIvoire. They used a Nested Multinomial Logit approach to model provider's
choice with a 1985 sample. Results show that travel time plays a very important role in
rationing health care. The estimation method used is Full Information Maximum
Likelihood.

Sloan and Bentkover (1979) used discriminant analysis to analyze the choice of
provider among general practitioner, specialist, out-patient services and emergency room
care. Their study is not targeted for a developing economy but for the U.S.A. which is
reflected in the alternative choices in the model, which would correspond only to the
'modem' health sector of less developed economies. This study finds individuals with
higher wages less likely to use emergency rooms than lower wage earners since waiting
time translates on higher time costs for the latter. Newhouse and Phelps (1974) controlled
for variations in the supply of medical resources across market areas, using a disaggregated

version of Grossman's model for specific medical care services. Allowing price
endogeneity and price differences among providers, Newhouse and Phelps estimate the
model using 2-Stage technique.

4.2.1. Distributional Assumptions

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As it was discussed earlier, demand schedules are represented by probabilities and
their form is determined by specific distributional assumptions of the error term Oj + Ej

in (20). We assume it follows a Generalized Extreme Value distribution (GEV).


Individuals unobservable demand for medical care is transformed into the observable
probability of choosing the j type of hospital services upon the decision of choosing
modem over traditional care. Then these probabilities follow a Nested Multinomial Logit
specification as it is shown by Me Fadden (1981).
The decision tree for the choice of institutional setting for child's delivery assistance
is:

WOMAN'S CHOICE

Care Chosen Home Care


I I
(Hospital/Clinic's Services) (Self-Care)

Public Private Belongs to Social Security

Then the top part of the tree has two k alternatives, k = {home/traditional care,
modem care), and the lower part of the tree indicates that conditional on the decision for
modem care, a woman chooses the type of hospital; j = {Public, Private, ISS).
In the cases of prenatal care, modem prenatal care and choice of child's delivery
assistant, the tree is not nested and the choice is always dichotomous. See Appendix for

any reference to distributional assumptions and estimation for those cases.


When distributional assumptions are decided in favor of a Weibull distribution for
the error term, these probabilities follow a Multinomial Logit specification. The MNL is a
more restricted case of the NMNL where the parameter estimate of the inclusive vaue in the
NMNL is assumed to be equal to one. This means that all alternative choices are perfectly
independent and distinct Their degree of similarity is zero. When alternatives are assumed

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as perfectly differentiated, the odds of choosing one alternative over the rest are completely
independent of the attributes or the availability of other alternatives. (Blue / Red bus
problem in McFadden, 1981). The consequences of the Independence of Irrelevant
Alternatives Axiom (HA) are the following: First, conditional utilities in (2) are not
correlated across alternatives, i.e, Ej can not be correlated across alternatives; second, all

cross elasticities are the same.


The DA can be tested when estimating both the NMNL and the MNL specifications
through a likelihood ratio test, or using a Wald test for the parameter estimate of the
inclusive value, and by comparing results from both specfications. The null hypothesis for
the Wald test is Ho: p = 1 for the MNL specification to be true.

In our case, using a NMNL specification, the probability of home care (no-care) is:

exp R D
(22) P0 = ------------------------------------------ S-------------------
exp R 0 + exp [ p log { ^ exp R s } ]
s=l

where s e J = {Public, Private, ISS}.

The probability of demanding care from the j type of hospital conditional on the decision of
using modem care in the first place is:

m
exp [ p lo g ( X exp R s }]
exp R j
(23) Pj = ---------------------------------- ----------------------------- m
exp R G + exp [ p log { exp R s } ] {^T exp R s }
s=l s=l

and j is any of the alternative hospital choices, j, s e J = { Public, Private, ISS}. Rj is

the term defined in (19). p is the parameter estimate of the inclusive value; 0< p < 1,

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and if p = 1 then the NMNL is equal to a MNL. p is equal to 1- the degree of similarity

between the hospital alternatives and the inclusive value I is:


m
I=Io g {^exp R s } which an exponentially weighted sum of utilities obtained from all
s=l
alternative hopital choices. The probability of modem care, I>^ is:
exp ( p i )

<24) Pcaie= exp R 0 + e x p ( p i )

and the probability of choosing hospital j conditional on the prior decision of using modem
care, Pj j care is.

exp Rj

W Pj / care exp ( I )

It is easily verifyable that what we are looking for is obtained from a combination of
equations (23) to (25). Pcare at j - P care * Pj / care

The NMNL is estimated by a two stage procedure since it is a sequence of MNLs.


Estimating a sequence of MNLs affects the standard errors after the first stage as it is

discussed by McFadden (1984); however, methods to correct this problem are given by

McFadden (1981) and Amemiya (1978). The estimation procedure is as follows: First, we
estimate the parameters B of the variables in (25) that change by both individual and
providers; these are the P's in (19). Here the inclusive value I is calulated. Secondly, the

parameters in (24) are estimated given the value of I. Those are the y parameters in (19).
After estimation probabilities are calculated and their values should follow the
following rules:

P care + Phome = anc^

P home + Ppublic + Pprivate + P ISS = 1

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APPENDIX
Observed values of the dependent latent variable y are:

1. Prenatal care use:


1 if care is demanded
y =
0 otherwise (self-care)
2 . Modem Prenatal Care:
1 if MD is chosen
y =
0 otherwise
3. Modem Child's Delivery Assistance:
1 if an MD is chosen
y =
0 otherwise
4. Place of Delivery:
1 if hospital or clinic is chosen
y =
0 otherwise (home).

5. Institutional Choice for Child's deliveiy assistance:


For the first stage of the decision process:

1 if hospital or clinic is chosen


y =
0 otherwise (home).

For the second stage, upon the decison of using modem care has been made:
1 if (TYPE of) hospital or clinic is chosen
y =
0 otherwise (ALL other types).

In this case y can also have a different label for each hospital type. Then y=l is Public,
y=2 is Private and y=3 is Social Security hospital. In reality either labeling system does
not matter when estimating demand schedules.

To estimate probabilities associated with the observable states in 1 to 4 above, it is


necessary to specify both the deterministic and the stochastic part of the model; for the
deterministic part as we saw before, only differences in utility matter. Then, all other

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variables whose parameters do not vary across alternatives can be dropped out or we can
estimate the difference between utilities V(Xj , H j ) - VfX^, H^) disregarding all other

parameters. We assume that the difference in random errors - e. ) = p. follow a

logistic distribution with cumulative distribution:

F (u.) = ---------------- ,where z is a constant assumed to


1 + 0

be equal to one and then the variance of |X is constant. Individual is unobservable demand

for physician services, as in cases 2 and 3, is transformed into the observable probability
that services from a medical doctor will be chosen over the rest and is expressed as:

P : = --------------------------- wherej = MD,k= other providers


J 1 + e (Vj - Vk )

Demand for modem health care (in prenatal care or in child's delivery assistance) is
expressed as the log odds of choosing a physician over other providers:

p
MD
MD - loS p
OTHERS

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CHAPTER 5.
DATA DESCRIPTION
5.1 INTRODUCTION
This chapter contains a description of the data used for this research and thorough
explanations of the assumptions made when creating new variables, merging information
or estimating prices.
The data used for this research is contained in The Colombian National Health
Study of 1980, (Estudio National de Salud, 1980) ENS-1980; it is supplemented by
information on health facilities obtained later from the National Institute of Health in
Colombia and The Ministry of Health. The ENS-1980 is the second major effort, after the
Erst one in 1966, for obtaining demographic, socioeconomic and health data at a national
level in Colombia. The survey was conducted between 1977 and 1980 but all economic
variables are carried out to 1980 for comparisons. It is cross-sectional and covers 52,000
individuals from a probabilistic sample that represents all the civil population. The military,
institutionalized population and the National Territories1 were excluded. The study covers
98% of the total population2. The country is divided in five regions, grouping the
departamentos 3 according to geographic, cultural and climatological similarities. There are

however, strong differences among departamentos within a region.


The Atlantic region covers seven departamentos located in the northern part of
Colombia, on the Caribbean coast Three commercial and touristically important ports are

located in the Atlantic region; Barranquilla, Santa Marta and Cartagena are also the capital
cities for the Atl&itico, Magdalena and Bolfvar departamentos respectively. Economic
activities in the Atlantic region include livestock raising, coal mine's exploitation, salt and

1 In ten den cias an d C o m isa rla s conform N ational Territories. T hey represent
1.3% o f the total population o f the country.
2 S ee L uis Carlos G dm ez on sam ple construction. "Diseno de la M uestra y
C onflabilidad de las E stim aciones", B ogotd, D .E. 1986.
3 See footnote # 3 in Chapter 3.

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commercial crops like cotton. With 1980 population figures from the ENS, the Atlantic
region has 5.02 million people or 20% of the total population of 24.7 million4. Ethnically,
the Atlantic region has an important black component which translates in particular culture
and traditions distinctive of the region. The family structure is often characterized by single
mothers as heads of large households, while family ties are not especially strong and
illegitimacy is high5.
The Oriental region counts for 19.5% of the total population, 4.81 million people
from five departamentos 6 where petroleum extraction and agriculture are important
occupations. This region has two important areas of influence: Venezuela and Bogotd.
Boyacd and Cundinamarca have most of their population concentrated in a few urban
centers and migration to Bogotd from the rest of the departamental areas is quite high.
Bucaramanga and Barrancabermeja are industrial towns while Cucuta on the frontier with
Venezuela is of commercial importance.
Bogotd, D.E. is considered as a region by itself although geographically it is located
in one of the Oriental region's departamento. Bogotd is a city with people from all
different parts of the country and with a large proportion of its population working in
commerce and services. The plains surrounding the city are one of the most fertile lands of
the country, where cereals, vegetables and flowers are grown. The nuclear family as it is
known in large urban communities is characteristic of Bogotd.
The Central region is composed by six departamentos and it is also a fertile

mountainous land with a variety of climates. The most important economic activity in this
region is coffee growing, which is the primary export of Colombia. Antioquia is a large
departamento in the northwest part of the country with an important industrial center,
Medellin. Pereira and Manizales are important industrial cities in Risaralda and Caldas

4 S ee Table 3 .1 5 in chapter 3.
5 T his sp ecific issu e about fam ily structure is taken from INS "La M ortalidad
en Colombia". Bogotd, D.E. 1986 P age 17.
6 Norte de Santander, Boyacd, Cundinamarca y Meta.

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respectively. The Central region is the largest in population (27.4% of the total) and the
most urbanized of the country. Family structure is tight with the extended family system
being predominant and very low incidence of illegitimacy. Its population is fervently
Catholic.
The Pacific region shares the influence from the southern Andean area of Narino
and Cauca, with the fertile and industrious Valle and the less developed, mostly black and
well characterized as rain-forest area of Chocd. Its population represents 19.3% of the total
population of the country; Cali and Buenaventura are important cities in the region. The
former is one the largest cities in the country and the latter is the most important commercial
port on the Pacific coast.
5.2 DATA
After this brief discussion on Colombia's regions we now turn to the description of
the data. After data cleaning, we obtain a universal sample of 43,682 individuals. Table
5.0 shows sample statistics. It is important to note that the average age for the population
in the sample is quite young, 23 years with almost 63% of them being urban and living in
households of seven people on average. The average educational level attained is 3.2
years, which is only the third grade of elementary school. 15% of the sample belongs to at
least one social security agency, while 6% has private insurance7. Income distribution is
very skewed and it is depicted by Table 5.1. While 94% of the population makes under
$30 thousand pesos a month, or roughly $600 dollars8, 6% is making between $40
thousand and $1 million; in dollars this means, monthly earnings between $800 and
$20,000. Table 5.0 shows that the average monthly income is $16,900 pesos of 1980
($338 dollars). 31% of the sample is married or lives with a partner and while 33%
considered themselves ill at the moment of the interview, 74% of those ill considered

7 T he ex a ct proportions are 1.77% with private insurance and 4.3% with


so m e th in g c a lle d "other" in su ra n ce.
8 T h e exchange rate in 1980 is o f 5 0 p esos per US dollar.

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necessaiy to make a consultation. However, only 5318 did consult someone, i.e., 52% of
those who considered it necessaiy. 19% of the people who did not consult, reported

economic reasons for no consulting, while only 1.2% reported geographic access to health
facilities as a problem.
Regional differences are summarized in Table 5.2 through sample averages. The
most striking finding is the very low average educational level in all regions. None of the
five regions present an average educational level greater than the first year of high school.
Only Bogota's figure shows an average of elementaiy school completed, which is still low.
The worst situation in that respect occurs in the Atlantic region, with a population that on
average has only 2.32 years of schooling. This is below the national average of 3.24.
Only Bogotd and the Central region have an average annual income greater that the national

average of $202,808 pesos or $4,056 dollars. The Central region has the highest average
annual income, an equivalent to $5,479 dollars while the Atlantic region has an equivalent
of only $2,459 dollars a year. As expected, Bogotd is the region with the largest
proportion of insured9 population, 34%. This figure is more than double those in the other
regions, with the exception of the Pacific region with a 23% of insured population. The

average travel time to the closest hospital is lowest in the case of the Central region; on
average individuals from the Central region have to travel less than an hour (.72 of an hour
or 43 minutes) to the closest hospital. This can be the result of high urbanization which
characterizes the region or the Coffee Growers Association's influence on health care
delivery access. The ENS-1980 assumes travel time to the closest facility to be less than an
hour for urban individuals; this assumption can also bias the statistic for mean travel time in
the Central region which is highly urbanized.
5.3 DATA LIMITATIONS

9 Insured m eans w ith private insurance and or b elon gin g to any o f the social
s e c u r ity a g e n c ie s .

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There are limitations concerning information on travel time between the household
and the closest health facility. For urban areas this is not well recorded since it is assumed
it is always less than an hour. Then, all urban observations have the same travel time.
This is a restrictive assumption since not all urban individuals use the same means of
transportation and travel equal distances. Although travel time is an important determinant
of health services demand10, travel time is only used in this study to explain choice of
provider in the case of rural households due to the generalization made for urban

households.
Differences among types of transportation used should have been accounted for
since that remarkably changes travel costs. In rural areas patients would use bicycles,
horse back riding, buses, or would walk to a health facility while in urban areas patients
usually take buses, taxis, drive their own car, walk or a combination of the above.
More importantly, travel time is only recorded for modem providers excluding the
possibility of estimating travel time costs for traditional care. Travel time is only given for
the closest hospital11 but does not give information on the travel time to the facility actually
used. Moreover, travel time information does not specify the type of hospital (Public,
Private, ISS).

If one assumes that the closest facility is the one actually used by the patient, then
there is information on travel time to the provider (institution) used but there is no
information with respect to the other kind of facilities which are choices the individual faces
before making a decision.

The measurement of time costs also has its limitations when forgone earnings are
considered. To obtain estimates of forgone earnings related to travel time to a facility due
to waiting time and time of consultation, it is necessary to have reliable wage data.

10 A cton, J.P. (1 9 7 6 ) "Demand for Health A m ong the Urban Poor with Special
E m phasis in the R o le o f Time".
11 The word hospital is used for both hospitals and c lin ic s all through this
stu d y .

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Although the ENS-1980 has information on individual's occupation, there is no wage data;

only household income is recorded but without specifying sources. As a proxy for access
bed/population ratios are used by type of facility12.
Monetary price information is quite restricted. Out-of-pocket expenses are used to
estimate ex-ante prices, and the information only applies to modem health care. There is no
information on prices for traditional care and estimation of those is quite cumbersome since
often times traditional providers are paid in kind. There is no information on payments to
traditional practitioners, limiting enormously the specification of demand functions for
traditional providers against modem care. We will come back to this problem on prices
later on this chapter.
The data is originally organized in such a way that price information is collected for
hospitalizations due to pregnancy or pregnancy related events but does not specify child's
delivery. Then, it was necessary to merge the information on women that have a delivery,
miscarriage or abortion13 with those women that were hospitalized for pregnancy reasons

to obtain the data set with price information. The findings are the following:
-There are women who reported a home delivery and are also hospitalized during
the same month14; there is not enough information to clarify if the reason for

hospitalization is a complicated home delivery and the woman is hospitalized afterwards on


the same day. It is also not possible to know if the woman is hospitalized days after or
before the child's delivery for another reason different than the delivery; then it is
ambiguous to determine the place of delivery. In the last case, when the events are not
related, one can say that the delivery occurred at home but the information available does
not permit to identify the two events as independent The other reason for having women

12 S ee Table 3.18 in Chapter 3.


13 W hich w e have in a sam ple o f 2338 w om en obtained after data cleaning.
Sam ple statistics in Table 5.3.
14 The data does not have a com plete date o f delivery nor hospitalization. It
o n ly has m onth and year.

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with home deliveries and hospitalized during the same month might be simply dirty data;
women reporting home as the place of delivery and in another part of the questionnaire they
report a hospital delivery. For this reasons these 14 observations were deleted. Another
24 observations were deleted because women report "other place" as place of delivery. A
child's birth is an important event in a woman's life to not to be able to specify the place
where the delivery is assisted. Furthermore, data documentation does not provide
information on what does "other place" mean. Our guess is that it can be a friend's house,
a religious institution, etc. Because of its ambiguity those observations are also discarded.
Then, the sample size reduces further to 2300 for the analysis of place of delivery.
-Not all pregnant women are hospitalized in Colombia for child's delivery
assistance. A large portion of the sample15 who reported a hospital delivery do not appear
as hospitalized since they did not stay in the hospital overnight Therefore, there is no price
information on those deliveries. These women have their children in an outpatient basis
due to both hospital and individual's economic constraints. Women are released from the
hospital with their babies less than 24 hours after the delivery. Those observations are

assumed to be deliveries assisted at public hospitals, which are the ones that admit pregnant
women for a maximum of 24 hours.

-The other limitation of the data is more a complication of the health system in

Colombia. The type of hospital does not necessarily identify the quality of care received.
There are patients hospitalized in public facilities through social security agencies, who
receive almost "private" type of care. University hospitals have both public and private
beds but the private patient reports the type of institution as public, regardless of the "type"
of care which is in this case comparable to private. Therefore, this might be one of the
reasons the number of deliveries of insured women at public hospitals is large and
conclusions over public expenditure's burden have to be drawn carefully.

15 707 w om en or 30.7% o f the sam ple; 26% o f the sam ple are w om en w ho stay
h o sp ita lized m ore than 2 4 hours after a child's delivery.

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78
5.4 PRICES
As we mentioned earlier price information is limited to women who are hospitalized
and stay in the hospital more than 24 hours. Prices are neither reported for deliveries
assisted in an outpatient basis nor for home deliveries. Moreover, those out-of-pocket
expenses correspond to ex-post prices, or prices charged after the place of delivery has
been chosen. Expected prices, or ex-ante prices are necessary to be estimated since those
are to influence choice16. The data base provides an ex-post price only for the alternative
choice made but there is not any information on prices of other hospitals which are also
choices a woman face before making a decision. A hedonic approach is used to obtain
imputed prices.
Perfect price information does not exist in medical care markets in most
developing countries and Colombia is not an exception. Imperfect markets characterize the
medical care sector, for this reason, it is not accurate to use provider-reported prices for
estimation as it is done by Akin a t al. We have information on the prices charged after a
choice of provider is made, but as it is already recognized by other authors in health care
demand studies, the price information needed should reflect expected prices faced, not the
price of the service a woman has chosen. We are interested on finding the prices women
face before making a decision and not the prices of the services they have chosen. For
this reason, income is not included as an independent variable when estimating ex-ante
prices. When income is included quality differences are picked up and a selectivity bias
problem is created. It is common for lower income women to choose lower-quality/lower-

price services while higher income women tend to look for higher-quality/higher-price care.
Distortions are introduced by the Pensionado system described in Chapter 3, and by social
security beds offering high-quality but lower price services.

16 T his is already recogn ized sin c e Peter H eller's publication in 1982.

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79
There is a wide array of prices charged for childs delivery assistance by different
providers to different individuals. Tables 5.14 and 5.15 show these differences among
hospitals. Moreover, the price paid per night in public and private hospitals was higher in
the cases of abortion and miscarriage than for child's delivery. It is curious to note that this
was not the case for ISS hospitals where the average charge per night was only 44 cents in
the cases of abortion or miscarriage.
Estimated prices are obtained by ordinary least squares (OLS) regression of actual
prices on individual's and market characteristics by type of hospital. Those estimates are
then used to impute ex-ante or expected prices for all women and all choices faced. In the
case of home delivery price is assumed to be zero although we are aware of time costs
involved for family members and traditional practitioners charges which are not estimated
in this study. Parameter estimates for private and public hospitals and t-statistics are
presented in Tables 5.16 and 5.17 respectively. In the case of social security hospitals
(ISS)17 actual or ex-post prices are small, do not vary much among individuals and

regions of the country, and most importantly sample size is very small. Therefore, the
mean ex-post (actually charged) price of $282 per delivery is assumed as expected price in
ISS hospitals.
Independent variables used in OLS estimation are:
AGE of the mother, given in years.
URBAN is a 0-1 dummy; 1 for urban 0 otherwise.

REGION where child's delivery takes place; codes used go from 1 to 5. Atlantic is 1,
Oriental is 2, Bogota is 3, Central is 4 and Pacific is 5.
NIGHTS is number of nights hospitalized.
INSURANCE is a 0-1 dummy; 1 if the mother is insured18.

17 A ll th o se h osp itals that b elo n g to the D ecentralized su b -sector (social


secu rity) are referred as ISS h o sp itals in this study.
18 P rivately insured and or b elo n g s to any S ocial Security A gen cy.

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80
OPERATED is a 0-1 dummy; 1 if the mother is operated during hospitalization and 0
otherwise.
RESULT of pregnancy is a 0-1 dummy; 1 for alive or still birth and zero for abortion or
miscarriage.
PROVIDER is a 1-0 dummy; 1 for physician assisting delivery and zero for nurse or
hospital technician (auxiliary nurse)19.
Both price per hospitalization and price per night of hospitalization are estimated by
OLS. We decided however, in favor of price per hospitalization with the number of nights
as one of the independent variables, on the grounds of more sensible results and higher R-
square. As we explained above, household income was used as independent variable but
most probably income picks-up quality differences; higher income individuals are expected
to choose higher-quality and higher-price services than lower income individuals. Then,
income was later not used as independent variable and insurance was included.
Results from Tables 5.16 and 5.17 show that being operated in either a private or a
public hospital is a significant determinant of higher perceived prices for a delivery. Not
other variable affects expected prices in both public and private hospitals the same way.
While age, region and the number of nights hospitalized affect ex-ante prices in private

hospitals significantly, being urban, the type of provider and the result from pregnancy are
significant determinants of price in public facilities.
Results in Table 5.16 show that older women expect to pay higher prices in private
hospitals than younger mothers. Older mothers may need a longer hospital stay and more
care, or they are usually more economically stable, married and either in the labor force or
with a partner earning a salary. Private deliveries are expected to be more expensive in
Bogotd and in the Central and Pacific regions than in the other two. This is explained
through the relationship between urbanization and best specialized physicians concentrated

19 T h is variable is not included in the estim ation o f p rices in private hospitals


sin c e all d e liv e r ie s are a ssisted by p h ysician s.

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8 1
in the cities of Bogotd, Cali and the Central region who charge higher prices. The longer a
mother stays hospitalized in a private hospital after a delivery, the higher the price expected
to pay; and, if there is an operation involved, like a C-section20, the price expected is
higher. The result of the pregnancy, i.e., alive or still birth versus having a miscarriage or
abortion does not affect the price significantly; however, the parameter estimate is positive
for child's delivery. As expected, insured mothers expect lower prices but the negative
parameter estimate for insurance is not statistically significant.
Results in Table 5.17 show that not age, but being urban affects the price expected
to pay at Public hospitals significantly. Surprisingly enough, delivery prices tend to be
higher in rural areas, indicating either than urban health care is better subsidized by the
government and/or child's delivery assistance in outpatient basis is more frequent in urban
centers. The latter makes prices in urban areas tend to almost zero since very frequently
outpatient mothers do not pay anything for the use of hospital services. Being assisted by a
physician in a public hospital increases the ex-ante price; deliveries assisted by nurses and
auxiliary nurses are expected to be cheaper in public hospitals.

Tables 5.18 to 5.21 summarize results of price estimation for all types of hospitals.
Ex-ante prices for all women, insured women, non-insured, and by regions, indicate that

the price for a delivery is expected to be much lower in public than in private hospitals.
The difference between expected prices in public hospitals for insured and non-insured
women is not as large as the difference in expected price in private hospitals. On average,

the expected price of a delivery in a public hospital is only 84 Pesos higher for non-insured
than for insured women. Meanwhile, this difference on mean prices for private hospitals is
1,460 Pesos. Although insured women expect to pay on average less for a delivery in a
private hospital than non-insured women, the former expect a minimum and a maximum

Cesarean section.

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82
price always higher than non-insured women. Insured women can choose more expensive
private services.
Table 5.21 shows expected price of a delivery in both public and private hospitals
to be higher in rural than in urban areas. Since public hospitals in urban areas are usually
crowded, outpatient mothers are common in cities and expect to pay a veiy low price, very
often only 2 Pesos. Smaller hospitals in rural areas hospitalize their patients. Moreover,
price differences might be explained through differences on pregnancy complications; if
due to living conditions differences, rural pregnancies on the average present more
complications than those to urban women, it is expected that a delivery in rural areas costs
more. A more complicated pregnancy tends to need an operation at the time of delivery, it
needs more hospital time and /or results in a miscarriage. All these facts increase delivery
prices.
5.5 SUB-SAMPLE OF PREGNANT WOMEN
Examples on how individual's characteristics affect demand for traditional and
modem health care are described in the first part of the next chapter. Demand for traditional
versus modem care is explored for prenatal care and for practitioner's choice for child's
delivery assistance. This part of the study has the limitation of price information which is

overcome in the following section of the next chapter, when the choice of institutional
setting is explored. The data used is a sub-sample of 2338 pregnant women who deliver a
baby (normal birth or still child), had and abortion or miscarriage at any point of time
during the last six months prior to the day of the interview21.
Sample characteristics are described by Tables 5.4 to 5.13. Emphasis between
insured and non-insured women is now given. Regional differences are discussed later on
this chapter. Most of the pregnancies occurred to women between the ages of 20 and 34

years and a similar pattern holds for both insured and non-insured women. However, the

21 A s it is described earlier in this chapter, the sam ple size is reduced later to
2 3 0 0 for the c h o ic e o f institu tional settin g.

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83
number of pregnancies among non-insured women is more than threefold the insured
group at all ages. The number of insured pregnant women corresponds to 22% of the total
number of pregnant women while the non-insured represent 78% of the sample. More than
half of the women in the sample are urban (59%).
78% of the total sample (1833 women) used prenatal care at least once during
pregnancy while 22% of the pregnancies (505 women) never demanded prenatal care from
any of the alternative providers. A high proportion of pregnant women sought care from a
physician at least once during pregnancy, especially insured women.
Prenatal care is delivered by a physician most of the time, but nurses and midwives
also play a role. See Tables 5.5 to 5.7. 90% of the insured women visit a physician at
least once during pregnancy, while only 62% of the non-insured population do the same.
Nurses and midwives, are an important source of prenatal care for non-insured women
who are the group with the largest number of pregnancies.
For the case of child's delivery assistance almost 50% of the cases are assisted by
an M.D., and midwives in this case have even more importance as health providers than
they do in providing prenatal care. Nurses and midwives are providers widely used by
non-insured women, even more than physicians. Tables 5.8 and 5.9 show their relative
importance. 43% of the deliveries to non-insured women are assisted by nurses and

midwives, while 40% of the cases have a physician present In contrast, 13% of insured
women are assisted by nurses and midwives, and 84% of insured mothers have their
babies with the assistance of a physician. 17% of non-insured women choose to deliver
their babies with the assistance of a family member or a friend; this is the type of provider
classified as 'other' by the National Health Study and to which we refer as part of
traditional care.
The places where women give birth, have a miscarriage or are assisted with an
abortion, are provided in Tables 5.10 through 5.13. More than half of the women in the
sample have a delivery in a hospital. Public hospitals play a very important role in

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84
delivering assistance for pregnant women in Colombia, even in the case of insured women;
only 5% of pregnant women choose to go to private and ISS hospitals. Most of the
assistance for insured women is delivered at hospitals and clinics. The figure represents
87% of the insured cases. Meanwhile, this proportion is much lower for non-insured
women, of whom 49% receive care at a hospital.
Assistance at home is chosen by 51% of non-insured women, while only 13% of
insured women do the same. It is very interesting to note that insured women choose

public hospitals 77% of the time. Less than one fourth of the women in the sample are
insured and only 5% of them choose private or social security hospitals. One can argue
that some women might prefer not to pay insurance deductible, not to pay part of the
payment not covered by insurance policies or that social security agencies restrict certain
services for their affiliates to beds in public hospitals. 79% of women who benefit from
ISS services have their babies at public hospitals while only 5% of them use ISS hospitals
(See Table 5.13). It is not possible to inquire the reason for this type of behavior but it is
clear that if insured women use public facilities there is more pressure on the public sector
to provide services for a larger portion of the population that have access to private
facilities22. If insured women were not allowed to use public facilities, resources would

be released to provide care for not insured women who most of the time use public
hospitals or have home deliveries.
Tables 5.22 to 5.24 show differences among regions. Most of the deliveries in the

sample occur to women in the Oriental and Central regions, those being a 47% of total
deliveries in the country. Meanwhile, 19% of total deliveries occur in the Atlantic region,

22 T h is m ight be a ca se w here public expenditures in C olom bia are b enefiting


m id dle and upper m iddle cla ss fam ilies. A study on in cid en ce o f public
expenditures can be found in : S elo w sk y , M arcelo (1 9 7 9 ) "Who B en efits From
G overnm ent Expenditures? A C ase Study o f Colom bia". The W orld Bank.
W ash in gton , D .C .

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85
20% in the Pacific and 14% in Bogotd; by the same token, 59% of total deliveries are urban
and 41% occur to rural women.

Deliveries in public hospitals concentrated on the Oriental and Central regions and
in Bogotd. Deliveries assisted in public hospitals in the Atlantic and Pacific regions
represent respectively only 13% and 18% of the total number of deliveries assisted in
public hospitals23. As expected, most of the deliveries in private hospitals occur in Bogotd
(48%) while those in the Pacific region are only 7% of the total number of deliveries in the
country. Deliveries in ISS hospitals in Bogotd and the in the Oriental region represent 66%
of the total deliveries assisted in social security hospitals in the country. Both Bogotd and
the Central region have the lowest proportion of home deliveries in the country; 3% and
22% of the total home deliveries occur in Bogotd and in the Central region respectively.
Meanwhile, the Atlantic and the Pacific regions have 52% of total home deliveries; each of
these regions have a larger proportion of home deliveries than that in the Central region and
in Bogotd combined.
When examining deliveiy type proportions within regions in Table 5.24 there are
two important findings to mention: all regions with the exception of Bogotd rely heavily on
home deliveries. However, both Bogotd and the Central region show instead strong
preference for public hospitals. Since Bogotd is completely urban and the Central region is
highly urbanized, it seems that urbanization is an important factor moving demand away
from home delivery towards modem care in public hospitals. The private and ISS sectors
have relative importance in assisting deliveries in Bogotd; 14% of those total deliveries in

Bogotd are assisted in private and ISS hospitals. Comparatively, less importance have
deliveries assisted in these type of hospitals in other regions.
Sample statistics by region and by urban/rural distinction are found in Tables 5.25
to 5.31. There are strong differences between urban and rural women. As Tables 5.30

23 S ee Table 5.23.

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86
and 5.31 indicate, rural women have on average only 2.3 years of education, while urban
women have more than twice that level. Urban women achieve on average more than 5
years of schooling. A large portion of urban women, 85% of them, use some type of
prenatal care at least once during pregnancy but only 70% of rural women do the same.
With respect to insurance coverage, only 5% of rural women have either private insurance
coverage and/or belong to a social security agency; 34% of urban women have that
privilege.

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87

TABLES
TO
CHAPTER 5

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TABLE 5.0
SAMPLE STATISTICS N=43,682
Variable Mean Standard Dev. Minimum Maximum
Age 23 18.5 0 98
Sex 0.48 0.5 0 1
Urban 0.63 0.48 0 1
Time to Hosp. 1.03 1.6 0 24
Annual Income* 202.8 1,011.8 1.2 23,117
Education 3.24 3.62 0 18
Total Persons 7 3 1 21
Insurance 0.19 0.39 0 1
Marital Status 0.31 0.46 0 1
* $4,056 dollars
Note: Age in years; Sex=l if male, 0 when female.; Urban=l, rural=0; Time to hospital in hours; Annual
Income in Thousands of 1980 Pesos; Education is maximum level attained in years; Total persons is
number o f household members; Insurances 1 if individual has private insurance and/or belongs to social
security agency; Marital status=l if married or living with a partner, 0 otherwise.
Source: The ENS.1980.

TABLE 5.1
INCOME DISTRIBUTION Monthly income in 1980
Monthly Income Percent Cumulative Percent
0 to < 10,000 67.3 67.3
10,000 to < 20,000 20.3 87.6
20,000 to < 30,000 6.0 93.6
30,000 to < 40,000 2.6 96.1
40,000 to < 50,000 1.1 97.3
50,000 to < 60,000 0.8 98.1
60,000 to < 70,000 0.3 98.4
70,000 to < 80,000 0.4 98.8
80,000 to < 90,000 0.1 98.9
90,000 to < 100,000 0.2 99.2
100,000 to < 150,000 0.2 99.4
150,000 to < 200,000 0.1 99.4
200,000 to < 1 million 0.0 99.4
1 million and more 0.6 100.0
Source: Constructed with The Colombian National Health Study, 1980. Complete Sample.
Income in Colombian Pesos of 1980.

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TABLE 5.2
SAMPLE STATISTICS BY REGION. N=43,682
Mean v a l u e s ____________ _
Region ATLANTIC ORIENTAL BOGOTA CENTRAL PACIFIC
Variable
Age 21.4 23.1 23.5 23.3 23.4
Sex 0.49 0.49 0.46 0.49 0.49
Urban 0.52 0.49 1.00 0.63 0.60
Time to Hospital 1.1 1.58 0.5 0.72 1.25
Annual Income* 122.9 184.8 210.4 273.9 188.0
Education 2.32 2.9 5.31 3.13 3.15
Insurance 0.11 0.15 0.34 0.15 0.23
Marital Status 0.30 0.31 0.33 0.30 0.31
Sample Size 8091 8669 6024 12399 8499
* in thousands of 1980 Pesos
Note: Age in years; Sex=l if male, 0 when female.; Urban=l, rural=0; Time to hospital in hours; Annual
Income in Thousands of 1980 Pesos; Education is maximum level attained in years; Total persons is
number of household members; Insurance=l if individual has private insurance and/or belongs to social
security agency; Marital status=l if married or living with a partner, 0 otherwise.
Source: The ENS.1980.

TABLE 5.3
SAMPLE STATISTICS. All Women N=2338
Variable Mean Minimum Maximum Standard Dev.

Education 4.12 0 18 3.41


Insurance 0.22 0 1 0.42
Marital 0.84 0 1 0.36
Urban 0.58 0 1 0.49
Age 27.03 14 50 6.77
Time Hosp. 1.15 0 24 1.66
Income* 103.88 2.65 1376.74 120.27
No. Persons 6.34 1 21 3.02
Risk 0.03 0 1 0.18
At Home 0.73 0 1 0.44
MDprenatal 0.68 0 1 0.46
* in thousands of Pesos of 1980.
Monthly income > 200,000 Pesos was deleted.

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TABLE 5.3 Continuation
SAMPLE STATISTICS. Insured Women Sub-sample N=519
Variable Mean Minimum Maximum Standard Dev.

Education 6.82 0 18 3.91


Marital 0.84 0 1 0.31
Urban 0.90 0 1 0.30
Age 27.50 16 48 6.16
Time Hosp. 0.53 0 7 0.46
Income* 159.60 11.40 1139 145.12
No. Persons 5.80 2 20 2.82
Risk 0.03 0 1 0.18
At Home 0.60 0 1 0.49
MDprenatal 0.90 0 1 0.30
* in thousands o f Pesos o f 1980.
Monthly incomes > 200,000 Pesos were deleted.

TABLE 5.3 Continuation


SAMPLE STATISTICS. N on-Insured Women Sub-sam pie N=1819
Variable Mean Minimum Maximum Standard Dev.

Education 3.35 0 18 2.81


Marital 0.83 0 1 0.38
Urban 0.49 0 1 0.50
Age 26.90 14 50 6.93
Time Hosp. 1.33 0 24 1.82
Income* 88.00 2.65 1376.7 107.03
No. Persons 6.50 1 21 3.06
Risk 0.03 0 1 0.18
At Home 0.76 0 1 0.42
MDprenatal 0.62 0 1 0.48
* in thousands of Pesos of 1980.
Monthly incomes > 200,000 Pesos were deleted.

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TABLE 5.4
AGE COMPOSITION OF PREGNANT WOMEN
All Women, Insured* Not Insured and % of Women's Sample
Age Number % Insured % Not %
Insured
14-19 274 12 37 1 237 13
20-34 1682 72 404 78 1278 70
35-50 382 16 78 15 304 17
Total 2338 100 519 100 1819 100
Insured if has access to care from any o f the Social Security Institutions or/and has private insurance.
Source: Constructed from original data.

TABLE 5.5
PRENATAL CARE BY ALTERNATIVE PROVIDER *
Number of Women
Provider All Women Insured Non-Insured
Cared by M.D. 1602 466 1136
Nurse 116 8 108
Midwife 213 20 193
Health Promoter 19 2 17
Other 79 11 6.2
*
At least one visit to the provider in question during pregnancy
Source: Constructed from original data.

TABLE 5.6
NUMBER AND % OF INSURED WOMEN WHO SOUGHT PRENATAL
CARE AT LEAST ONCE DURING PREGNANCY
Provider Number of Women Proportion
Physician 466 90
Nurse 8 1
Midwife 20 4
Health Promoter 2 0.4
Other 7 1
Source: Constructed from original data.

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TABLE 5.7
NUMBER AND % OF NON-INSURED WOMEN WHO SOUGHT
PRENATAL CARE AT LEAST ONCE DURING PREGNANCY
Provider Number of Women Proportion
Physician 1136 62
Nurse 108 6
Midwife 193 11
Health Promoter 17 0.9
Other 72 4
Source: Constructed from original data.

TABLE 5.8
NUMBER OF DELIVERY CASES ASSISTED BY PROVIDER TYPE
Provider All Women Insured Non-Insured
Physician 1157 436 721
Nurse 325 33 292
Midwife 528 36 492
Health Promoter 14 2 12
Pharmacist 0 0 0
Other 314 12 302
TOTAL 2338 519 1819
Source: Constructed from original data.

TABLE 5.9
PROPORTION OF DELIVERY CASES ASSISTED BY PROVIDER TYPE
____________________ (all figures are percentages)__________ ______________________
Provider All Women Insured Non-Insured
Physician 49 84 40
Nurse 14 6 16
Midwife 23 7 27
Health Promoter 1 0.4 1
Other 13 2 17
TOTAL* 100 100 100
* Totals sometimes do not add exactly because of rounding
Source: Constructed from original data.

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TABLE 5.10 93
NUMBER OF DELIVERIES BY LOCATION
Place All Women Insured Non-Insured
Hospital or Clinic 1317 448 869
Home 997 69 928
Other Place 24 2 22
TOTAL 2338 519 1819
Source: Constructed from original data.

TABLE 5.11
PROPORTION OF DELIVERIES BY LOCATION
____________(all figures are percentages)__________ ________
Place All Women Insured Non-Insured
Hospital or Clinic 57 87 48
Home 43 13 51
TOTAL 100 100 100
Source: Constructed from original data.

TABLE 5.12
NUMBER OF DELIVERIES BY TYPE OF HOSPITAL
Place All Women Insured Only Not Insured Belongs to ISS
Public Hospital 1210 397 813 334
Private Hosp. 86 30 56 24
ISS Hosp. 21 2.1 0 21
Home 983 67 916 41
Total 2300 515 1785 420
Source: Constructed from original data.
NOTE: Compared with Table 5.7 there are 38 observations that were deleted. 24 because of ambiguity of
place o f deliver which correspond to the "OTHER PLACE" category, and 14 from "HOME" because of
double reporting. 12 are not insured women and 2 insured. Sample size reduces to 2300 for the study of
institutional choice.

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TABLE 5.13
PERCENTAGE OF DELIVERIES BY TYPE OF HOSPITAL
All figures are % ____________
Place All Women Insured Only Not Insured Belongs to ISS
Public Hospital 52 77 46 79
Private Hosp. 4 6 3 6
ISS Hosp. 1 4 0 5
Home 43 13 51 10
Total 100 100 100 100
Source: Constructed from original data.
See NOTE in Table S. 12.

TABLE 5.14
AVERAGE EX-POST PRICES PER NIGHT BY HOSPITAL TYPE
Hospital Delivery Price Abortion/Miss # of deliveries # of
per night* Price per night* abortion/miss.
Public 449.00 752.00 451 66
Private 2567.00 3667.00 78 8
ISS 146.00 0.44 18 3
Source: Calculated from hospitalization's information.
* Pesos of 1980.

TABLE 5.15
EX-POST PRICE PER DELIVERY BY HOSPITAL TYPE.
_____________ Sample Statistics__________ _________
Hospital Mean Standard Minimum Maximum
Deviation
Public 1,070.9 1,953.5 2.00 19,000.00
Private 6,342.2 4,877.7 4.00 19,800.00
ISS 281.6 913.9 1.00 4,000.00
Source: From hospitalization's information. The National Health Study 1980..
* Pesos o f 1980.

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TABLE 5.16
ORDINARY LEAST SQUARES PRICE ESTIMATION RESULTS**
DELIVERY AT PRIVATE HOSPITALS
Independent Variable Parameter Estimate t- Statistic
Intercept -2213 -0.63
Age 179 2.02*
Urban -1380 -0.64
Region 774 1.79*
Nights 427 2.00*
Insurance -1095 -1.08
Operated 5325 3.93*
Result of Pregnancy 1321 0.81
** Explanation o f variables in text.
Includes private hospitals and clinics.
* Significant at 0.10

TABLE 5.17
HEDONIC PRICE ESTIMATION
ORDINARY LEAST SQUARES RESULTS**
DELIVERY AT PUBLIC HOSPITALS
Independent Variable Parameter Estimate t- Statistic
Intercept 1648.4 3.23*
Age -5.2 -0.41
Urban -356.1 -2.01*
Region -69.0 -1.07
Nights 9.5 0.42
Insurance -113.0 -0.37
Operated 1339.7 5.37*
Result of Pregnancy -651.0 -2.60*
Provider 470.2 2.34*
** Explanation o f variables in text.
Includes public hospitals all sizes.
* Significant at 0.10

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TABLE 5.18
EX-ANTE ESTIMATED PRICE PER DELIVERY* BY HOSPITAL TYPE.
Samp e Statistics. All Women
Hospital Mean Price per Standard Minimum Maximum
delivery Deviation
Public 776.00 450.60 2.00 3,200.00
Private 5,625.00 2,528.90 225.00 29,072.00
ISS 281.60 0.00 281.60 281.60
Source: Estimated with hospitalization's information. The National Health Study 1980.
* Pesos o f 1980.

TABLE 5.19
EX-ANTE ESTIMATED PRICE PER DELIVERY* BY HOSPITAL TYPE.
Sample Statistics. Insured Women Only
Hospital Mean Price per Standard Minimum Maximum
delivery Deviation
Public 711.00 398.60 2.00 2,970.10
Private 4,491.73 2,433.52 441.30 29,072.20
ISS 281.60 0.00 281.60 281.60
Source: Estimated with hospitalization's information. The National Health Study 1980.
* Pesos of 1980.

TABLE 5.20
EX-ANTE ESTIMATED PRICE PER DELIVERY* BY HOSPITAL TYPE.
Sample Statistics. Non-Insured Women Only
Hospital Mean Price per Standard Minimum Maximum
delivery Deviation
Public 794.97 462.90 83.98 3,200.00
Private 5,952.20 2,461.27 225.42 27,462.00
ISS 281.60 0.00 281.60 281.60
Source: Estimated with hospitalization's information. The National Health Study 1980.
* Pesos o f 1980.

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TABLE 5.21
EX-ANTE ESTIMATED MEAN PRICE PER DELIVERY* BY HOSPITAL
TYPE AND REGIONS
Hospital Atlantic Oriental Bogota Central Pacific Urban Rural
Public 850 830 712 636 506 630 814
Private 4,323 5,368 5,061 6,439 7,293 5,147 6,645
ISS 282 282 282 282 282 282 282
Source: Estimated with hospitalization's information. The National Health Study 1980.
* Pesos of 1980. All figures are mean values.

TABLE 5.22
NUMBER OF DELIVERIES BY TYPE OF HOSPITAL AND REGION
PLACE ATLANTIC ORIENTAL BOGOTA CENTRAL PACIFIC TOTAL
COUNTRY
Public 157 290 257 295 211 1210
Private 15 15 41 9 6 86
ISS 2 7 7 2 3 21
Home 254 231 30 215 253 983
Total
Region 428 543 335 521 473 2300
Source: Calculated from The National Health Study, 1980.

TABLE 5.23
PERCENTAGE OF DELIVERIES BY TYPE OF HOSPITAL AND REGION.

PLACE ATLANTIC ORIENTAL BOGOTA CENTRAL PACIFIC TOTAL


COUNTRY
Public 13 24 21 24 18 100
Private 17 17 48 11 7 100
ISS 10 33 33 10 14 100
Home 26 23 3 22 26 100
Total
19 24 14 23 20 100
Region
Source: Calculated from The National Health Study, 1980.

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TABLE 5.24
PERCENTAGE OF DELIVERIES BY TYPE OF HOSPITAL WITHIN EACH

PLACE ATLANT. ORIENT. BOGOTA CENTRAL PACIFIC URBAN RURAL

Public 37.0 53.0 77.0 56.0 45.0 24.9 31.0


Private 3.5 3.0 12.0 2.0 1.0 6.1 0.7
ISS* 0.5 1.0 2.0 0.4 1.0 15.6 0.2
Home 59.0 43.0 9.0 41.0 53.0 25.0 68.0
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Region
Source: Calculated from The National Health Study, 1980.
* Deliveries covered by social security agencies should be underestimated since ISS has beds in other
hospitals not counted as soial security beds.

TABLE 5.25

Variable Mean Minimum Maximum Standard Dev.

Age 26.7 15 48 6.7


Urban 0.44 0 1 0.5
Time Hospital 1.35 0.5 8 0.36
Annual Income* 89.12 4.0 1376 122.1
Education 2.95 0.0 18 3.06
Prenatal Care 0.78 0 1 0.41
At Home 0.82 0.0 1 0.38
Insurance 0.11 0 1 0.32
Marital Status 0.85 0 1 0.35
* Is household income in thousands o f Pesos o f 1980

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TABLE 5.26

Variable Mean Minimum Maximum Standard Dev.

Age 27.5 15 50 6.8


Urban 0.48 0 1 0.5
Time Hospital 1.62 0.5 24 2.2
Annual Income* 103.10 3.8 909.1 97.5
Education 4.1 0.0 18 3.3
Prenatal Care 0.78 0 1 0.4
At Home 0.70 0.0 1 0.5
Insurance 0.20 0 1 0.4
Marital Status 0.84 0 1 0.4
* Is household income in thousands of Pesos of 1980

TABLE 5.27
REGION OF BOGOTA, D.E. SAMPLE STATISTICS. N=335
Variable Mean Minimum Maximum Standard Dev.

Age 26.3 16 48 5.8


Urban 1 1 1 0.0
Time HospitalA 0.5 0.5 0.5 0.0
Annual Income* 156.2 15.8 1137 184.4
Education 6.34 0 18 3.7
Prenatal Care 0.83 0 1 0.38
At Home 0.62 0.0 1 0.48
Insurance 0.44 0 1 0.50
Marital Status 0.86 0 1 0.34
* Is household income in thousands of Pesos of 1980
A It is assumed that the closest distance to a hsopital in urban areas is 30 minutes.

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TABLE 5.28
CENTRAL REGION. SAMPLE STATISTICS. N=521
Variable Mean Minimum Maximum Standard Dev.

Age 26.6 14 48 6.9


Urban 0.57 0 1 0.49
Time Hospital 0.83 0.5 6 0.88
Annual Income* 98.7 2.6 1007.6 112.7
Education 4.13 0 18 3.2
Prenatal Care 0.77 0 1 0.42
At Home 0.81 0.0 1 0.39
Insurance 0.20 0 1 0.40
Marital Status 0.85 0 1 0.36
Is household income in thousands o f Pesos of 1980

TABLE 5 29
PACIFIC REGION. SAMPLE STATISTICS. N=473
Variable Mean Minimum Maximum Standard Dev.

Age 27.5 15 50 7.1


Urban 0.55 0 1 0.5
Time Hospital 1.52 0.5 15 2.0
Annual Income* 87.70 6.32 518 81.1
Education 3.7 0 13 3.2
Prenatal Care 0.77 0 1 0.42
At Home 0.67 0.0 1 0.47
Insurance 0.22 0 1 0.42
Marital Status 0.82 0 1 0.39
* Is household income in thousands o f Pesos o f 1980

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TABLE 5.30
RURAL WOMEN 0 NLY. SAMPLE STATISTICS. N=953
Variable Mean Minimum Maximum Standard Dev.

Age 27.5 14 50 7.3


Urban 0 0 0 0
Time Hospital 2.21 0.5 24 2.2
Annual Income* 62.11 3.8 848.5 57.3
Education 2.3 0 15 2.2
Prenatal Care 0.70 0 1 0.46
At Home 0.82 0.0 1 0.38
Insurance 0.05 0 1 0.22
Marital Status 0.87 0 1 0.33
* Is household income in thousands of Pesos of 1980

TABLE 5.31
URBA N WOMEN ONLY. SAMPLE STATISTICS. N=1347
Variable Mean Minimum Maximum Standard Dev.

Age 26.6 15 48 6.4


Urban 1 1 1 0.0
Time Hospital 0.5 0.5 0.5 0.0
Annual Income* 133.7 2.65 1376.7 143.6
Education 5.4 0 18 3.5
Prenatal Care 0.85 0 1 0.4
At Home 0.66 0.0 1 0.47
Insurance 0.34 0 1 0.47
Marital Status 0.82 0 1 0.38
* Is household income ill thousands of Pesos o f 1980

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102
CHAPTER 6 .

PREGNANT WOMEN'S DEMAND FOR HEALTH SERVICES


This chapter deals with the interpretation of estimation results and conclusions.

Chapter six is divided into two sections, one dealing with the choice of traditional versus
modem health provider and the other refers to the choice of hospital care, given that
modem care is preferred in the first place. The first part, concentrates on the choice of
practitioner for both prenatal care and child's delivery assistance with a dichotomous
dependent variable. Differences among insured and non-insured women are emphasized.
Table 6.1 summarizes the cases studied and the definition of the dependent variable for
each case studied in the first part of this chapter.
The second part concentrates on the choice of hospital type for child's delivery
assistance. The probability of seeking modem care by hospital type is estimated by Nested
Multinomial Logit (NMNL), where the decision of seeking modem care in a specific
hospital is made upon the prior decision for seeking modem care against traditional care
(home delivery). The MNL does not consider a decision tree structure, but suffers from
the consequences of the Independence of Irrelevant Alternatives axiom (HA). All choice

alternatives are considered perfectly independent of one another and distinct. The
specification of the NMNL model is tested for each region through a Wald test on the
parameter estimate of the inclusive value. When the asymptotic t-statistic indicates that the
parameter estimate is significant and different from one, the NMNL specification fits the

data better than the MNL, where this parameter is restricted to be equal to one1. A
Likelihood Ratio test comparing the restricted (the MNL) with the unrestricted model (the
NMNL), is another way of testing the specification of the model or in other words the IIA
axiom. This statistic is distributed as a %2 with (K - N) degrees of freedom. K are the

1 S in ce this parameter is equal to: 1 - the degree o f sim ilarity o f the ch oices.
In the M N L c h o ic e s are p erfectly distinct; therefore the param eter estim ate o f
th e in c lu siv e valu e m ust be one.

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103
degrees of freedom in the unrestricted model and N are degrees of freedom in the restricted
model.
The choice of institutional setting is studied in each of the five regions of the
country and for the whole country, where urban/rural market segmentation is also used.
The first part of this study emphasizes differences among insured and non-insured women,
which is an almost unexplored issue in developing countries. Neither urban/rural market
segmentation nor regional differences are emphasized at that point since sample size is
strongly reduced. By the same token, the second part of the study emphasizes urban/rural
and regional differences but uses insurance coverage as an independent variable instead of
as a market segmentation criteria. If we do so sample size in each region is drastically
reduced.
It has been suggested that instead of obtaining regional estimates, whole country

estimates might be obtained with dummy variables indicative of the different regions of the
country. This is the method used with the Peruvian data; when separating the sample by
regions and estimating demand schedules we are using only characteristics particular to
women and providers from the region in question. When income distribution is highly

skewed and socioeconomic and cultural differences among regions are strong, it is
important to obtain particular demand schedules for women in each region of the country.
Using the dummy variable technique and comparing results is one of the research projects
in the future agenda.
PART ONE.

THE CHOICE OF PRACTITIONER.


6.1 Demand for Prenatal Care, Modern Prenatal Care and the Choice of
Child's Delivery Assistant.

The first part of this chapter concentrates on the exploration of the demand for

prenatal care and provider's choice for child's delivery assistance. Specifically we
concentrate on the following issues: first, for prenatal care, what are the factors influencing

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1 04
the decision to demand care as opposed to not seeking care at all? Second, which factors
influence the decision to demand prenatal care from a physician and not from any other
provider?. For child's delivery assistance two cases are considered. First, we consider

which factors affect the demand for professional assistance (physician's care) versus
traditional care; then, we consider the choice of hospital/home setting for child's delivery.
The second part of this chapter explores more in depth the choice of institutional setting for
child's delivery assistance.

Logit estimates are obtained using the complete sample, a sub-sample of only
insured women and another of only non-insured women anticipating differences in
behavior according to insurance access. Establishing comparisons between the different
groups clarifies differences in the behavior of insured women from the average woman.
Furthermore, it is of interest to see if women who have access to services provided by

social security systems do indeed use them, or whether they prefer to demand services
from other providers, perhaps traditional care providers.
The following section discuss estimation results, statistical tests and concluding
remarks for the first part of this chapter.
As we saw in Chapter 5 most of the pregnancies occurred to women between the
ages of 20 and 34 years and a similar pattern holds for both insured and non-insured

women. However, the number of pregnancies among non-insured women is more than

threefold the insured group at all ages. The number of insured pregnant women
corresponds to 22% of the total number of pregnant women while the non-insured
represent 78% of the sample. See Table 5.4.
Tables 5.5 to 5.7 show that 78% of the total sample (1833 women) used prenatal
care at least once while 22% of the pregnancies (505 women) never demanded prenatal care
from any of the alternative providers. A high proportion of pregnant women sought care
from a physician at least once during pregnancy, especially insured women.

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105
Prenatal care is delivered by a physician most of the time, but nurses and midwives
also play a role. See Tables 5.8 to 5.9. 90% of the insured women visit a physician at
least once during pregnancy, while only 62% of the non-insured population do the same.
Nurses, midwives, are an important source of prenatal care for non-insured women who
are the group with the largest number of pregnancies.
For the case of child's delivery assistance almost 50% of the cases are assisted by
an M.D., and midwives in this case have even more importance as health providers than
they do in providing prenatal care. Nurses and midwives are providers widely used by
non-insured women, even more than physicians. Table 5.9 shows their relative
importance. 43% of the deliveries to non-insured women are assisted by nurses and
midwives, while 40% of the cases have a physician present. In contrast, 13% of insured
women are assisted by nurses and midwives, and 84% of insured mothers have their
babies with the assistance of a physician. 17% of non-insured women choose to deliver
their babies with the assistance of a family member or a friend; this is the type of provider
classified as 'other' by the National Health Study and to which we refer as part of
traditional care.

Most of the assistance for insured pregnant women is delivered at hospitals and
clinics. The figure represents 86% of the insured cases. Meanwhile, this proportion is
much lower for non-insured women, of whom 48% receive care at a hospital. Assistance
at home is chosen by 51% of non-insured women, while only 13% of insured women do
the same. See Table 5.11.

Unfortunately, the information on prices is scarce and income is reported as


household income instead of at an individual level. There is no information on monetary
prices for prenatal care visits and in the case of child's delivery assistance, the data base
provides information only on the event the woman is hospitalized for this reason. Often
times a pregnant woman must deliver her child on an outpatient basis; these women are not
hospitalized because of lack of resources in the hospital and are discharged from the

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106
institution several hours after the delivery. Moreover, there is no information on the price
paid for a traditional delivery, assisted by a midwife. In some instances, midwives accept
payment in kind which makes it even more difficult to estimate a market price. Because of
this limitation, studies in the first part of this chapter do not include price information.
We explore the choice of demanding prenatal care from any provider, demanding
modem prenatal care, and demanding modem assistance for child's delivery through a
dichotomous dependent variable model using no price information. The choice of
institutional setting in the second part of this chapter is studied as a nested type of decision,
conditional upon the decision of choosing a modem delivery versus a traditional home one.
At this stage we do use price information.
Now we turn into the explanation of independent variables. The dependent
variables explained above are summarized in Table 6.1. Independent variables used in the
model for the 4 cases are:
EDUC = is highest level of education attained by the mother, measured from 0 years of
schooling to a maximum of 18 or more. The average is still very low for women; 4
years of education indicates unfinished elementary school and 18 indicates at least
two years of Postgraduate school.
INSUR = is a 0,1 dummy indicating if a woman is a beneficiary of any of the social
security systems and/or is protected by private insurance.
MARITAL = is a 0,1 dummy; 1 if the woman is married or is living together with her

partner, 0 otherwise.
URBAN = is a 0,1 dummy; 1 for urban and zero for rural.
AGE = age of the mother in years. The average age for pregnant women in Colombia is 27
years with a standard deviation of almost 7 years.
AGE2 = AGE*AGE.

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107
THOSP = is the time of travel between the mother's household and the closest
hospital/clinic. Given in hours, with 0 for less than an hour and a maximum of 24.
The average is 1 hour and IS minutes.
INCOME = is annual household income in thousands of Colombian Pesos of 1980.
Approximate exchange rate in 1980 of 50 pesos for a dollar.
INCOME2 = INCOME*INCOME.

TPERS = is the total number of people living in the household with the mother 2
RISK = is a 0,1 dummy; 1 if there is a higher risk in the pregnancy using as proxies for
risk, being pregnant with the first child and/or having a clinical history of abortions
or miscarriages; 0 for a less risky pregnancy.
ATHOME = is a 0,1 dummy; 1 for being at home; 0 if the mother works or is looking for
a job, has a business of her own, and/or is attending school.
MDprenatal = is a 0,1 dummy; 1 if the woman received prenatal care one or more times
from a physician during pregnancy; 0 otherwise.3
6.1.1 STATISTICAL TESTS.

2 I am indebted to Prof. A n g ela V alenzuela for her com m ents upon the
im p lica tio n s o f the construction o f this variable. W e ack n o w led g e the
im portance o f in clu d in g m ore e x p lic itly and in a m ore d escrip tiv e w ay the
con figu ration o f the h ou seh old . Our co n clu sio n s w ith respect to the
im portance o f h o u seh o ld siz e on the probability o f c h o o sin g a traditional
d eliv ery m igh t b e overestim ated . T he age and dependency o f fam ily m em bers
is certa in ly a very im portant factor.
D ue to the extended fam ily system , a large num ber o f adults in the
h ou seh old m igh t help a w om an w ith a traditional d elivery but i f th ose adults
are old persons w ho depend on the w om an, this m ight not be the case. On the
other hand, a large num ber o f children in the h ou seh old represents for a
w om an m ore resp o n sib ilities at hom e. A lthough they m ight not be able to
h elp d irectly w ith a hom e d eliv ery , they represent a reason for a w om an to
ch o o se a traditional d elivery and n ot to leave the household. T his is one o f the
ca se s w e co n sid er as an explanation o f our results.
3 W e con sid ered prenatal as a m inim um o f on e v isit to a ph ysician during
pregnancy w hich in reality it is to o little to be considered as good prenatal
care. H ow ever, there is still controversy i f nine and m ore v isits are really
n eed ed in a norm al pregnancy. T he purpose here is to se e i f a wom an ch ooses
to se e a p h ysician instead o f oth er provider.

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108
The Likelihood Ratio (LR) Test is used to conduct significance test in all four
cases. LR statistics are reported at the end of corresponding tables. As a goodness of fit
2
measure we use McFadden's R defined as:

R2= 1 -
Loglj

where Loglf and Loglj are respectively the Loglikelihood for the full model and for the
2
model with the intercept only. The adjusted R statistics are also reported at the end of each

corresponding table.
We preformed market segmentation based on access to insurance. For this reason
the model is estimated in the four cases, for the pooled model, the insured and the non
insured segments of the population separately. Following Ben-Aldva and Lerman we test
for differences in parameters across segments.4 The null hypothesis of no variation
between the insured and non-insured segments is:

H o : P in s = P N on-Ins = P Pooled

w h ere p In s an d P N on-Ins are th e v ecto rs o f param eters estim a tes fo r the insured

and non-insured segments of the population respectively. The test statistic is:
-21nLR = -2 [Logl^ - (LogLJns + LogLNon_Ins)]

and this statistic is distributed % with {(K Ins + K^on-Ins) - Kpo()led} degrees of freedom

(number of restrictions). LogLR is the log Likelihood for the pooled model. Likelihood

ratios (LR) for prenatal care, physicians prenatal care, physician's assistance for delivery
and place, are as follow:

4 Discrete Choice Analysis. Chapter 7.

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109
Market Segmentation Test Insured and Non Insured segments.
MODEL LR degrees of freedom x2
Prenatal 68.74 10 18.3
MDprenatal 155.48 10 18.3
MDdeliveiy 325.53 11 19.7
Place 251.44 9 16.9

Based on these results, we can reject the hypothesis of equality of the coefficients
across the insurance segments. However, further exploration of the significant differences
among market segments is suggested. It is useful to know if the rejection of the null
hypothesis is due to differences in particular coefficients or not. For this reason, we now
compare individual coefficients between the insured and the non-insured segments. The
asymptotic t statistic of equality of coefficients across market segments is:

^ In s ^ N o n -In s

(Var p T + Var BM T ) 1/2


v K In s v N o n -In s'

Results of the application of this test for models in Tables 6.6 to 6.9 follow:
_________ Market Segmentation Test For Individual Parameters_________
Model/Variable Prenatal Care MDprenatal MDdelivery Place
Intercept 0.84 0.99 -0.71 1 99 **
Education 1.58 1.09 -0.70 -0.76
Marital -0.41 -0.66 -0.39 0.28
Urban -0.43 -0.08 -0.39 1.03
Age -0.64 -0.77 1.48 -1.92**
Time Hospital 1.06 1.10 1.05 1.10
Income -1.41 -0.10 0.92 0.03
Income2 0.24 -0.50

Tot. Persons 0.70 0.02 -2.08* -1.45


Risk 1.62 -0.66 -1.28 -2 . 12*
At home 0.13 0.69 0.03 -0.43

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110
Age2 0.60 0.64 - 1.68 ** N.A.
MDprenatal N.A. N.A. 2.16* 1.80**
* Significant at the 0.05 level ** Significant at the 0.10 level
Two Tail test

6.1.2 ESTIMATION RESULTS


Since demand for health services behavior is usually different for insured and non
insured individuals, we decide to also obtain separate results for each of these groups
dividing the sample by insurance access. Tables 6.6 to 6.9 display these results. Tables
6.2 to 6.5 show estimates for the basic model which includes all women.

Prenatal Care and Physician's Prenatal Care.


6.1.2.1 All Women
As expected, the probability that prenatal care is demanded from any provider
instead of self-care increases with the education of the mother, access to insurance and with
staying at home. More educated women are expected to understand better the importance
of prenatal care in both their own well-being and their child's. On the other hand, one
might think more educated women do participate more in the labor force and as the
coefficient for ATHOME indicates, those women who work outside the home or go to
school have a lower probability of demanding prenatal care. It is reasonable to assume
these women have more trouble or less incentives to leave their activities in order to use
prenatal care. This is certainly true for women who run their own small retail business
which they can not operate when absent.
Being married increases the probability of demanding prenatal care since married
women can be more confident of losing hours from work, and therefore earnings, since
there often exists another source of income in the household. Risk decreases the
probability of demanding prenatal care, although the riskier the pregnancy the higher the
need for receiving prenatal care. This contradictory result might be an effect of the way the

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111
variable RISK is constructed5 since as the section on variable description points out, being
pregnant with the first child is one of the risk components and since the probability of
demanding prenatal care increases with age, younger women expecting their first child are
less prone to demand care. On the other hand, a second risk component is the history of
abortions which often reflects a woman's choice to not to be pregnant. Would a woman
who does not desire to have a family or increase its size be motivated to provide medical

care to her unborn child?.


The quadratic form for household income and for age reveals interesting results; the
use of prenatal care increases with age, but as expected, older women at the end of their
reproductive years have more experience with past pregnancies and would tend not to use
prenatal care as much as before. This is however, a dangerous practice since older women
are at higher risk. This inverted 'U' type of relationship holds also for the household
income level; the probability of demanding prenatal care increases with household income
at a decreasing rate. After achieving a level of income which guarantees the family to be
well-off, further increases in the income level do not increase the probability of seeking
care.
Although not statistically significant, being urban and having a smaller household
increase the probability of demanding prenatal care. A larger family represents more
responsibility for the mother in terms of time and budget.

Similar conclusions are obtained when we analyze demand for physician's prenatal
care (second case, Table 6.3). The size of the effects do vary, however. Having

5 It has b een su ggested to construct this variable in clu d in g the age factor,
sin c e p regnan cies at early and late stages o f a w om an's reproductive life are
m ed ica lly riskier than at other tim es. W hen risk is d efined this w ay, the risk
param eter estim a te in both the c h o ice o f prenatal care and prenatal care by a
p h y sicia n is p o sitiv e , very sm all and N O T sign ifican t. T h ese estim ates are
respectively 0 .2 5 w ith a t-statistic o f 1.3 and 0 .1 8 with a t-statistic o f 0 .7 3 . In
the ca se o f p la ce o f d elivery in section 6 .1 .3 .1 , w hen R ISK is defined w ith the
ag e com p on en t, results sh o w a still n eg a tiv e but sm aller param eter estim ate
and again, not significan t. T his estim ate is equal to -0 .2 6 w ith a t-statistic o f
0 .3 6 .

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112
insurance increases the probability of using physician's care by 0.82 while increasing the
odds of avoiding self-care by 0.58.
6.1.2.2 Insured and Non-Insured Women.
Table 6.6 displays prenatal care use estimates in the cases of insured and non
insured women. For non-insured mothers receiving more education, being married, urban
and at home increase the probability of seeking care. Quadratic forms on income and age
show the expected and significant results similar to those obtained from the sample with all
women. The greater the distance between the household and the closest hospital, the less
likely the demand for prenatal care by non-insured women. Again, the risk factor is
significant and negative as in the pooled model; see comments on construction of the risk
factor in reference No. 5 above. The largest effect on the probability of seeking care is
being married or living together with a partner. The odds of demanding prenatal care
increase by 0.55.
Results obtained from the insured sub-sample seem more striking at first glance.
The probability of seeking prenatal care is significantly affected, in statistical terms, only by
the level of education and the risk factor. The former increases the probability by 0.251
and the latter decreases it by 1.4. No other factors are significant in determining an insured
women's demand for prenatal care. Moreover, the signs of some of the estimated
coefficients are opposite to those from regressions with the whole sample and the non
insured sub-sample.
Although not significant, estimates indicate that being urban and closer to the
nearest hospital decrease the probability of using prenatal care, indicating that for insured
women distance is not an important factor when there is insurance coverage. These women

may travel longer distances if they have to, in order to use the kind of prenatal care they
want This effect would be more clearly seen in a model which differentiates care from
different providers. The negative urban coefficient might be misleading, however. It could
be a result of the construction of the dependent variable which considers care from all

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providers together against self-care. Later we see what occurs when medical services are
considered as a separate alternative from services provided by other practitioners. The non
significant coefficients for the quadratic form in age and income indicate that the probability
of seeking prenatal care decreases with age at an increasing rate. Insured women either
belong to higher income groups if they are privately insured, or they belong to the
employed labor force and for this reason have access to services provided by social security
systems. In general these women have a higher opportunity cost of time which might
interfere with the willingness for demanding prenatal care. Moreover, this effect of income
on prenatal care by any provider could also be a result of considering prenatal care services
from all different providers together in one group.
Table 6.7 displays estimation results for modem prenatal care, i.e. care delivered by
a physician. They are similar to those discussed above with the exception of the urban
factor whose coefficient changes sign in the case of insured women. For non-insured
women it is still the case that there is a positive relationship between urban status and the
probability of seeking care, but it is not significant. Further research is necessary to
understand why urban status does not affect significantly the probability of demanding
modem care in the case of non-insured women. For insured women however, being urban
affects positively the probability of seeking prenatal care. The coefficient for time to the
nearest hospital continues to be positive and, combining its effect with the urban effect, we
can deduce that insured women "can afford to shop around" for the most qualified
physicians, usually concentrated in the cities. Insured women dont mind traveling longer
distances to be treated by the physician of their choice. However, non-insured women are
in general discouraged by large distances to hospitals, (mostly public hospitals, see Chapter
3), because transportation costs and travel time increase the cost of care.
6.1.3. Modern Delivery: physician's assistance in a hospital/clinic
setting.
6.I.3.I. All Women.

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Tables 6.4 and 6.5 contain regression results for modem delivery. As in the case
of prenatal care, the education level attained by the mother, being insured and being closer
to a hospital increases the probability of having a modem deliveiy. Insurance increases the
probability of using physician's services by 1.07 and the probability of having a baby in a
hospital setting by 0.88. Marital status, age, and staying at home do not affect the odds of
having a modem delivery significantly, as opposed to the effect of those variables on
demand for prenatal care. Living in a city increases the probability of modem delivery
which was not a significant factor for prenatal care demand. This could be a reflection of
geographical allocation of health posts and hospitals. Prenatal care can also be delivered
outside the hospital setting in health posts or even infirmaries, without reducing the quality
of care significantly. This is not the case for medical assistance needed in a deliveiy.
Therefore, women do not necessarily need to be close to a hospital to receive prenatal care,
but rather to have a modem delivery.

Higher income also increases the probability of demanding a modem delivery while
increasing the number of persons in the household decreases i t 6. The larger the size of the
family the more difficult it is for the mother to be absent from the household due to
increased responsibilities at home. Another explanation might come from the structure of
the family. If there are a large number of adults in the household who could assist the

mother in delivering her child, and there is no opposition to traditional care, this would be
preferred to modem care.

6.I.3.2. Insured and Non-insured Women.


Tables 6.8 and 6.9 display results for modem delivery according to mothers
insurance coverage. As in the pooled model, the level of mother's education, living in a

6 The num ber o f children or dependents has tw o e ffec ts on the probability o f


d em an ding care. O ne in creases the probability o f c h o o sin g a traditional
d eliv e r y b eca u se a larger h o u seh o ld s iz e represents m ore hom e
resp o n sib ilities. An op p o site e ffe c t e x ists b ecause y ou n g children can not
help in a hom e delivery. S ee footnote # 2 above.

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115
city, having received prenatal care from a physician, and a smaller household size increase
the probability of choosing a modem delivery for both insured and non-insured women.
The age variable generates significant estimates for both physician's delivery assistance and
hospital use only in the case of insured women. The quadratic form in age indicates that as
age increases the odds of choosing a modem delivery increase at a decreasing rate. As
income increases, the probability of modem care increases for both insured and non
insured women. It is important to note that for insured women the estimator of the
household income level indicates there is not a significant effect on the probability of
choosing prenatal care or demanding hospital services, but there is a significant one for
demanding physician's delivery assistance. Further research regarding insurance coverage
for child's delivery is necessary to explain these phenomena. If insurance policies and
social security systems have higher coverage for the use of the hospital than for physician's

services, the statistical significance of one estimate and lack of it for the other, have an
explanation. As expected, in the case of non-insured women, the income level effect is
statistically significant for both physician services and the choice of institutional setting.
An important issue is the significance of the positive coefficient for the RISK
variable for non-insured women choosing physician's services for child's delivery (not
necessarily a hospital setting). This indicates that non-insured women decide to seek for
modem care when they don't have experience with past pregnancies or they have lost their
babies before. In the case of insured women, the riskier the pregnancy the less they decide
to go to a hospital. This might be due to cultural reasons.

Mean probabilities and probabilities by income level for the four cases are presented
in Tables 6.10 and 6.11 respectively7. According to what we have discussed above, the

7 The incom e elasticity w ith a quadratic term in incom e is a function o f


in co m e Y and the corresponding p robability P m easured at the ch osen incom e

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116
probability of demanding modem care by a non-insured woman is lower than that in the
case of insured women. The difference is striking in both type of delivery assistance and
place of delivery. While for an insured woman the probability of having a delivery with the
assistance of a physician is 0.88, it is only 0.36 for non-insured women. Moreover, in the
case of insured women, the probability of having a baby in a hospital setting is twice as
large as that for non-insured women. For insured women the probability of using modem
care is not only higher than those for other women, but increases with income. At all
income levels the probability of having a delivery with a physician's assistance is always
greater than that for non-insured women. Furthermore, for income levels below 300 Pesos
(in thousands) it is twice as large as the probability for non-insured women.
Tables 6.12 to 6.13 display income elasticities for each case at mean values and also
by income level. Income elasdcides are small although differences among the insured and
non-insured cases do agree with our findings. With a one percent increase on mean income
of non-insured women, the probability of demanding a modem delivery increases by 0.159
and increases 0.091 in the case of women covered by insurance. An income increase also
increases the probability of demanding prenatal care by a physician in both groups.
However, the probability increase is greater for non-insured women which indicates that in
the case of insured women demand for physician's prenatal care does not respond as much
to income changes. This is understood since insurance coverage diminishes any economic
problem of access and therefore the impact of income changes on demand for care.

Comparing results in Table 6.14, we find that income elasticities for physician's delivery
assistance indicate that the probability of using this service changes more with income than
the probability of using a hospital. This fact might be a reflection of insurance coverage

Y dP
le v e l. W e calculate them here at m ean incom e, p ^ = (1-P)Y . (B j + 2 B 2 Y )

w here B j and B 2 are the c o e ffic ie n ts o f Incom e and Incom e squared.

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117
because if physician's services are not covered as much as hospital services, changes in
income will be reflected on demand for services with less coverage. The same pattern
follows when comparing income elasticities of demand for physician's services and for
hospital services in the case of non-insured women, displayed by Table 6.15. However,
here, both the probability for using physician's services and of using hospital services react
to income changes more than in the case of insured women.
Table 6.16 contains some simulation results. If non-insured women increase their
mean educational level from 3.35 years to 5, achieving completion of elementary school,
the probability of having a delivery with the assistance of a physician increases by 11%
over the mean probability. By the same token, the probability of demanding hospital

services increases by 9%. The importance of having at least over 1 and a half more years
of schooling would be reflected on the health of the mother and of her child.
In the case of non-insured women, reducing mean travel time between the
household and the closest hospital from one and a half hours to one hour, increases the
probability of physician's assistance by 5% and the probability of using a hospital by
almost 7%. Meanwhile, in the case of all women, the half an hour decrease in travel time

increases these probabilities by 8.7% and 8.6 % respectively. However, health policy
officials would influence these probabilities faster, more directly and probably less costly
than increasing the national average educational level, through the creation of a program to
qualify midwives. Thus, these traditional providers would be able to deliver higher quality

care achieving as good health results as an increase in demand for physician's (or hospital)
services. Further studies regarding costs and benefits of either program are necessary to
determine which strategy to follow. They are, however, out of the scope of this research.
6.1.4 GENERAL CONCLUDING REMARKS.

To study demand for prenatal care and child's delivery assistance grouping
providers in only two categories, i.e., physician as one category and all other providers
together in the other category, hides important effects of independent variables on women's

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118
choices for each different type of provider. It is of importance to study prenatal care
demand delivered by nurses, or midwives1delivery assistance in order to expose the
factors affecting the demand for these services. Creating educational programs to train
nurses and midwives specifically for delivering prenatal and child's delivery assistance, can
improve quality of care and substitute physician's care in non complicated pregnancies.
On the other hand, that is a way to expand access to better quality health care for women
who usually demand services from nurses and midwives, either for cultural, monetary or
geographical location reasons.
Finally, a Nested Multinomial Logit specification for the choice of health services in
Colombia allows for differentiation among each alternative provider, considering each of
them as a separate alternative. With this specification, we avoid the problem created in the

Multinomial Logit by the Independence of Irrelevant Alternatives. Market segmentation by


other criteria is also of interest Segmentation by geographical regions and by urban/rural
reveals interesting results. Focus on this issues follows in the next section of this chapter,
with the study of the choice of institutional setting for child's delivery assistance.

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119
PART TWO.
THE CHOICE OF INSTITUTIONAL SETTING.
6.2 Choice of Institutional Setting. Child's Delivery Assistance.
6.2.1 Introduction
We now turn into the exploration of institutional choice for child delivery
assistance. Demand schedules are estimated through a NMNL specification, for the five
regions of the country, the whole country and the urban and rural groups separately. The

NMNL has the advantage of not being constrained by the Independence of Irrelevant
Alternatives Axiom8 (HA) and therefore, does not compromise cross price elasticities to be
constant as in the case of the MNL. However, in the NMNL case it is necessary to
determine in advance how the decision process is made. A tree structure has to be assumed
and results depend on how the choice tree is constructed9 and assumptions made.
Moreover, on econometric grounds, one of the problems of the NMNL is that the
estimation of the second stage can get contaminated with any problems or errors generated
at the first estimation stage. Parameter estimates for the variables influencing the choice of
hospital type are obtained first and the inclusive value is then calculated. On the second

stage, the inclusive value is used as an independent variable for estimation of the rest of
parameters influencing the decision between home and hospital care.
In our case, women who have a delivery in a hospital but stay in the hospital less
than 24 hours are assumed to be using Public hospitals. Although this is a very strong
possibility since this "outpatient" delivery practice does not exist in Private or ISS
hospitals, the data does not provide the necessary information to corroborate our
assumptions. The decision tree in the NMNL is assuming that a pregnant woman first

8 B lue bus/R ed bus problem in Me Fadden. S ee M e Fadden (1 9 7 8 ) "M odelling


the C h oice o f R esidential Location" in : Spatial Interaction T heory and and
P lanning M odels. A . K arlqvist, et. al. Eds.
9 E x cellen t d escriptive exam p les on the subject are found in B en -A k iva and
L erm an, Chapter 10, P ages 3 1 0 -3 1 9 .

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d ecid es b etw een a m o d em d elivery in a hospital, or a traditional o n e at hom e. U pon the

d e c isio n o f usin g m o d em care, sh e then d ecid es on the type o f hospital to u se.

Because of the configuration of Colombia's Health System, and as it is explained in


Chapter 3, it is not clear that a delivery in a Public hospital necessarily implies lower quality
of services received, than for example those received in social security hospitals. Public
care seems not necessarily to imply lower quality/lower price services. This anomaly is
introduced by the fact that Public hospitals have beds with lower prices attached than
others. A portion of public beds is used by patients belonging to social security agencies,
receiving good care and paying low fees, or by private patients paying higher fees and
receiving care comparable to social security patients. By the same token, social security
patients might be hospitalized in private hospitals, receiving quality of care comparable to
private patients but paying very low fees. We believe that this complication introduces
distortion into the model and explains in part results in some of the regions of the country.
But in general, private care is rated as higher-priced and higher-quality care than services in
a public setting.
Political decisions also influence choice and are not possible to be introduced in the
model. In large cities like Bogotd, Public hospitals have been forced in several occasions
to close part of its services to the public due to financial constraints, lack of equipment or
personnel. Patients who arrive demanding health care are remitted to a different institution
which is not the woman's first choice.
Keeping in mind these constraints and limitations, estimation results are obtained
for five regions of the country, the whole country and for the urban and rural groups
separately. Probability results are obtained through the estimation of a Nested-Multinomial
Logit (NMNL) specification. Maximum likelihood estimates are obtained for the Nested
Multinomial Logit model correcting standard errors with Haussman McFadden correction.
Although in some cases the parameter estimate of the inclusive value falls out of the 0-1
range indicating misspecification of the model, and a Likelihood ratio test indicates that a

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Multinomial Logit specification could be more appropriate, results from the NMNL are
more sensible.
Tables 6.17 to 6.24 show parameter estimates and t-statistics for NMNL estimation
by regions, all country and the urban and rural groups. Goodness of fit measures are
presented at the end of each table. Results show that everywhere in the country being more
educated, being insured, living in a small household and having used prenatal care during
pregnancy increases the probability of choosing a modem delivery against a traditional one.
We now examine these results by regions.
6.2.2 Nested-Multinomial Logit Results by Regions
6.2.2.1 The Atlantic Region
Table 6.17 shows that in the Atlantic region being educated, having used prenatal

care during pregnancy and being insured increase the probability of choosing a modem
delivery as opposed to be assisted at home. In this case the parameter estimate of the
inclusive value does fall between the 0-1 range but it is not significant. A MNL
specification is also estimated and although the goodness of fit measures are larger for the
MNL (See MNL results in tables at the end of the Tables section), results continue to be
more sensible in the case of the NMNL. Then, the NMNL specification seems more
appropriate than the MNL.
The choice of hospital type is negatively related to the expected price of a delivery,
and significant at the 0.10 level. (See Table 6.17 for asymptotic t-statistics). The
probability of consumption of modem health services decreases as ex-ante prices increase
at a decreasing rate, but this last effect is not statistically significant. The interaction

between income and prices is significant and indicates that the probability of using modem
care increases as both income and prices rise; this reflects the fact that higher income

women would tend to have a higher probability of using modem care against self-care.
This effect can be clarified with probabilities by income level in Tables 6.27 and 6.33.

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At mean income, results indicate that the average pregnant woman from the Adandc
region has a probability of demanding hospital care of 52%. By the same token, there is a
23% probability of using Public hospitals and a 22% probability of using ISS hospital
services. Calculated by income quardle, we observe that the importance of Public hospitals
decrease very slowly while the probability of using Private hospitals increase rapidly as we
move from the first to the fourth income quartile. Public hospitals are an important source
of care in the Atlantic region; women up to the third income quartile have a 23% probability
of choosing them. In the fourth income quartile this probability reduces to 18%.
However, results from the first and second income quartile represent the 89% of the
women in the Atlantic region. Therefore, those are considered as more representative from
women in the region. The probability of choosing ISS services decreases after the second
income quartile, indicating that higher income women prefer Private hospitals over Public
and ISS.
The extremely skewed income distribution in Colombia introduces large differences
in behavior between income groups. In the Atlantic region, women with the minimum
level of income have a 5.6% probability of using Private care and 23% chance of using

Public care. Meanwhile, women in the other extreme of the income distribution have a
51% probability of using Private care, and only 3% probability of using a Public hospital.
See Table 6.27.
Price elasticities by income quartile are presented in Table 6.41. As usual in health

care demand studies these elasticities are small but it is important to keep in mind these are
point elasticities indicating a percentage change in probability with a percentage change in
price of a delivery, which might be a very small price increase in absolute terms. Arc
elasticities could be more representative.

There are however, two very important findings: first, price elasticities do change
with income level, indicating that health care demand is less price elastic at higher income
levels than among poorer women. Secondly, demand for Public care is the least price

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123
elastic when compared with Private and ISS services at any income level. Price elasticities
calculated at the fourth income quartile have their signs reversed; we think there is a
high/price-high/quality relationship at those very high income levels which make demand
for modem care appear as demand for a Giffen good The effect is stronger for Private and
ISS services than for Public services. The higher the price in Private services more Private
care is demanded. These high income women at the extreme of the income distribution, are
quality (or amenities) seekers regardless of price level since they identify more amenities
with higher prices. However, these distorted demand schedules only occur in the fourth
income quartile which is not representative of the Atlantic women at all.
6.2.2.2 The Oriental Region
Table 6.18 shows NMNL estimates for the Oriental region. In this case estimation
is done weighing observations with the observed choice sample weights. Results indicate
that the probability of having a modem delivery increases with education, the use of
prenatal care during pregnancy, insurance access and a higher bed-population ratio. Being
at home and living in a large household10 decreases the probability of using hospital
services. Women with large number of household members may find more comfortable to
have a home delivery with the assistance of family members and not having to go to a
hospital permits the woman to continue handling household affairs closely.
The parameter estimate of the inclusive value is equal to 0.5 and very significant A
Wald test on this parameter being equal to one rejects the null hypothesis; then the MNL

does not offer a better fit. Therefore, the NMNL specification seems to be appropriate for
choices in the Oriental region.
Table 6.25 shows that the probability of having a modem delivery at the mean is
69%. There is a 31% probability of using home care in the Oriental region. Upon the
decision of using modem care, an average woman from the Oriental region has a higher

10 For m ore on household siz e e ffe c ts see references tw o and six in this
C h a p te r .

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12 4
probability of using ISS services than Private care, but Public hospital are preferred most
of the time.
Table 6.34 shows how these probabilities change by income quartile. As income
increases, the probability of using modem care increases, and the importance of home care
continues to decrease until reaching an 18% for women in the highest income quardle. The
probability of using Public care increases with income and the same occurs for Private care
hospitals. The changes in the probability of ISS use are smaller, although at any income
level there is always a higher probability of using social security hospitals than Private
ones.
The importance of ISS care relative to Private care might be explained through
patient's perceived quality of care; if ISS hospitals offer in the Oriental region, good quality
of care and their prices are lower than in Private hospitals (which is a fact) it is
understandable why it is always more probable that women in the Oriental region choose
ISS care over Private care. Unfortunately, The Health National Health Study of 1980 does
not provide measures of patients perceived quality of health services. To obtain specific
information on perceived quality of hospital care by women in the Oriental region can help
to understand their behavior. Further data collection would be granted in order to
determine with clarity such issue.
Price elasticities by income level in Table 6.42 indicate that the demand for Public
hospital care is less elastic than the demand for Private care. Moreover, the price elasticity
of demand for both Private and Public care decreases with income. Then, higher income
women are less price elastic than lower income mothers are when demanding either Public
or Private care. Demand schedules for social security care are distorted and show a
positive slope. Again we believe that there is a factor of quality involved that the model can
not grasp well. Women in the Oriental region would be willing to pay a higher price for
services in ISS hospitals if they receive better care. This distortion in the model might also
be a result of the very small price charged at ISS hospitals; we use the mean ex-post or

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125
actually charged fee in ISS hospitals, of $282 Pesos of 1980. If this price is the charge for
the standard delivery at ISS hospitals, mothers prefer to pay a higher fee for obtaining more
amenities; e.g. a private room or a longer stay in the hospital.
6.2.2.3 Bogota, D.E. 11
Table 6.19 shows results NMNL estimates for pregnant women in Bogotd. Having
used prenatal care during pregnancy and older age increase the probability of having a
modem delivery. Those are the only individual characteristics with statistically significant
effect over modem care. Other things constant, a higher bed-population ratio rises the
probability of demanding modem care, while price increases diminish it, at a decreasing
rate. The interaction between prices and income, affect significantly and positively the
probability of demanding modem care.
For the region of Bogotd, NMNL estimation gives a probability of 84% for the
average woman in Bogotd to have a home delivery. This seems quite high. Table 6.25
shows that there is a 15% probability that a woman chooses to deliver her baby in a Private

E stim ation results for B ogotd and the Central region overestim ate the
probability o f hom e care. A lthough the reasons why a N M N L sp ecification is
n o t appropriate w hen estim a tin g dem and sch ed u les in th ese tw o region s are
s till ob scu re, other sp ecifica tio n s did not clarify our results. Several different
fu n ctio n a l form s for the co n d itio n a l u tility function w ere con sid ered and
n on e o f th o se provided better results than the on es presented here. E xam ples
o f th o se are a sim p le u tility function linear in both consum ption expenditures
and health, a sem i-logarith m ic sp e c ific a tio n , both a linear and a quadratic
form in consum ption expend itu res w ith prices relative to in co m e instead o f
p rices per d e liv e r y , am ong oth ers.
A M ultinom ial L o g it sp ecifica tio n w as also estim ated, im p lyin g that
c h o ic e s are p erfectly distin ct and the param eter estim ate o f the in clu siv e
v a lu e is equal to one. Then the degree o f sim ilarity betw een alternatives must
b e zero. R esults are presented in T ables 6 .4 9 and 6 .5 0 for B ogotd and the
Central region resp ectiv ely . Price e ffe cts are distorted and results do not
exp la in c h o ic e any better than the N M N L.
W hen estim ating a N M N L sp ecification it is necessary to assum e how
c h o ices are made; then the form o f the ch o ice tree is assum ed. T his m ight be
o n e o f the prob lem s source in the cases o f B ogotd and the Central region.
Further research is n ecessary to obtain enough inform ation on h o w c h o ic e s
are m ade and w hat other constraints are in volved in the d ec isio n p rocess that
th e m odel can not grasp w ell.
M ore on p o ssib le explanations o f results obtained for B ogotd and the
Central region are found in this and the next section s.

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hospital, while probabilities for Public and ISS hospitals show slim. This result however,
might be biased towards Private care because of the importance of bed-population ratios in
determining these probabilities. The bed-population ratio for Private hospitals in the case
of Bogota is quite high compared with those in Public and ISS hospitals; 11.9 compared
with 1.31 and 2.4 respectively.
Probabilities at mean values indicate a very high probability of home care. When
calculated at different income quartile, it still shows a very high probability of home care.
Price elasticities are very small for all types of care, but Public care is more elastic than the
other two and its price elasticity diminishes with income12.
Results for Bogoti indicate that further research is necessary to understand the
distortions introduced into the model when assuming the preference tree structure we are
using, or if on the other hand preferences in Bogotd are better explained by an expenditure
system, or simply preferences are formulated with respect to different parameters we do not
include in this study.
In the case of Bogota it might be more appropriate to study the choice of type of
hospital without those home deliveries which represent a small portion of the observed
number of deliveries in the city. In that case we might have sample selection problems and
choice can not be nested. Also the number of deliveries in ISS hospitals is very small in
the observed data. It might be reasonable to include those as Private deliveries and study
the choice between Public and Private hospitals only.
6.2.2.4 The Central Region

Table 6.25 shows probability results for women in the Central region. The
probability of having a hospital delivery against a home delivery increases with age,

educational level, and prenatal care use. This probability tends to decrease in large size
households as it happens in the Oriental region. Surprisingly, and contrary to what

12 S ee notes at the bottom o f corresponding table.

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127
happens in the Atlantic and the Oriental regions, higher bed-population ratios decrease the
use of hospital services in the Central region. We believe this is an artifact created by the
difference between the bed-population ratio in Private and Public hospitals. On the other

hand, it is important to realize that geographic access measured by travel time to the facility,
is not being considered as a factor influencing the choice of modem versus traditional
delivery. Travel time to the hospital should be a very important factor whose effect over
modem care demand combines with that from bed-population ratios. Therefore the
parameter estimate for bed-population ratios should be interpreted with care.
Estimated probabilities at mean values for the Central region are very small for
modem care as Table 6.25 shows13. NMNL results show that at mean values the
probability of home care is close to one, indicating a high preference for traditional
deliveries. Although the Central region have a high number of home deliveries these
results are over estimating true probabilities, since this is a highly urbanized region of the
country. Moreover, the Coffee Growers Association has implemented programs to
improve health care delivery in the Central region. The preference for a home delivery

diminishes as income rises and the preference for higher-price/higher-quality services


increases.

A nested specification for preferences in the Central region does not seem to be
extremely conclusive. Although we can determine that the probability of using modem care
increases with education of the mother and with prenatal care use during pregnancy, the
parameter estimate for the inclusive value is significant and much greater than one14.
A Wald test with null hypothesis Ho: B = 1 for the parameter estimate of the
inclusive value can't reject the null. Then, a MNL estimation becomes more appropriate;

13 S ee reference # 1 1 above.
14 A ccording to M cFadden this v io la te s the G eneralized Extrem e V alue
distribution's assu m ptions and is e v id en ce o f m issp ec ific a tio n o f the m odel.
T hen for the Central region, prob ab ilities at m ean va lu es are not further
d iscu ssed and by in com e lev el are not presented.

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results however are not more enticing. This the only region where results show the
parameter estimate of the inclusive value much larger than one and statistically significant.
Then, demand schedules are definitely not explained in the Central region by a NMNL
characterization. Although the MNL specification seemed to be more appropriate according
to the Likelihood ratio test for HA, and goodness of fit measures, MNL results do not
show any improvement over those from the NMNL since demand schedules are not
theoretically consistent. See MNL estimation results in the tables at the end of the Tables
section of this chapter. MNL results indicate that child's delivery assistance behaves as a
Giffen good across all income levels in the Central region. Preferences are distorted in this
case.
Further investigation is necessary to understand what are the distortions introduced
in the health market in the Central region. Several different functional forms were
evaluated and results did not improve. A linear specification of the utility function, a
quadratic form with a logarithmic transformation on consumption and even one where
prices relative to income were used instead of ex-ante prices, were some of the options.
Scaling observations with sample proportions for each choice was also done. None of the
above show any light on how preferences are formed in the Central region and results were
no better than those presented in Table 6.20 from the NMNL estimation of a quadratic
function on consumption. The preference tree structure could also be the source of the
problem and then it must be revised.

6.2.2.S The Pacific Region


Table 6.21 has Nested Multinomial Logit results for the Pacific region. As in the
Atlantic region, here being more educated, insured and having used prenatal care during
pregnancy increases the probability of choosing hospital care against home care. None of

the other individual characteristics explains choice with statistical significance. Price effects
are negative and indicate that the probability of using modem care decreases with price at a
decreasing rate. However, parameter estimates are not significant which indicates that the

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129
choice of hospital setting is made on other than economic grounds. The parameter estimate
of the inclusive value is negative in this case15 but not significant. Then, a MNL
specification is estimated for the Pacific region, where the parameter estimate for the

inclusive value is restricted to be equal to one. Although, the goodness of fit measures are
better in the case of the MNL model, results from the NMNL specification are more
sensible.
Probabilities at the mean indicate that a woman in the Pacific region has a 38%
probability of using Public services and an even higher of 51% of using ISS services. The
probability for Private care is very small; see Table 6.25. When calculated at different
income quartile, the probabilities of using Public and ISS services decrease when income
increases but both maintain their relative importance. The probability of using Private care

increases with income but continues very small along the income distribution. Even in the
fourth quartile, women in the Pacific region have a 35% probability of using Public
hospitals. (Table 6.36). It is important to note that in the Pacific region there is a high
probability of choosing "subsidized" care, in the form of Public care or employer
subsidized care in the ISS hospitals. Moreover, it seems that even high income individuals
take advantage of those services.

Interesting ideas are brought by results in Table 6.44. Public care is very elastic at
low income levels in the Pacific region. For the 82.4% of the women, the price elasticity
of Public care is greater than one in absolute terms. 63% of the women in the Pacific
region, who belong to the first income quartile, have a price elasticity of Public care of -
3.52. This finding has very important repercussions on public health policy and price
policy (if there is ever any), since women in this region rely heavily on Public care. The

15 According to Me Fadden (1981) this means that the model violates


property(ies) of the GEV distribution globally. Then, it is not appropriate to
use our model for forecasting. See "Econometric Models of Probabilistic
Choice" in: Structural Analysis of Discrete Data with Econometric Applications.
Manski and McFadden Eds.

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13 0
other important finding is that as income increases, the price elasticity of both Public and
ISS care diminishes. Then demand for care is less elastic at higher income levels.
6.2.2.6 Urban Women
As for urban women only, being more educated, having used prenatal care, being
insured and living in an area with a high bed-population ratio increases the probability of
using hospital services. Unfortunately, there is no information available for this study on
number of urban beds; then, the bed-population ratios are calculated without the rural/urban
distinction. The average country bed-population ratios are used for both the rural and
urban cases. We acknowledge the importance and limitation of this assumption.
Table 6.22 show that the greatest effect on the probability of using modem care is
introduced by being insured and by bed-population ratios. The price effect is very
statistically significant and negative while the interaction between income and prices is
positive and also significant. The choice of modem delivery decreases as prices rise and
increase as the interaction of income and prices rise. Thus, if prices are kept constant and
income increases, the probability of using modem care increases. Table 6.26 indicates that
the average urban woman has an 88% probability of having a hospital delivery and a 12%
chance of having a delivery at home. Upon the decision of choosing a hospital delivery,
there is a 61% probability of using Public services and a 26% chance of using ISS
hospitals. Private care has a very low probability of being chosen when income and prices
considered are at their mean values.

Tables 6.30 and 6.37 show how probabilities change with income level. As we
move from lower to higher income groups, the probabilities of using Public care and ISS
care diminish very slowly. The probability of using Private care is always small although it
increases with income. Even at the fourth income quartile there is a high probability that a
woman chooses to use a Public hospital for a delivery and the same is true for ISS
hospitals. Then, government provided services are being used by women in the highest
income quartile. Unless we assume that those deliveries to high income women in Public

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131
hospitals are those occurring in the "pensionado"16 section of the hospital, we must
conclude that the government is subsidizing health care for upper income groups in the
urban areas of Colombia. This finding agrees with Selowsky's17 conclusions on the
population groups getting benefits from government subsidies in Colombia. Urban women
rely heavily on public and ISS hospitals. See Fig. 1.
Table 6.45 shows price elasticities by income levels. Women in the first income
quartile, who represent 42.2% of the urban sample, have an elastic demand for Public care.
Price changes in Public medical attention will affect more the probability of using Public
hospitals in the lower income groups than anywhere else in the income distribution. ISS
services have always a very small price elasticity, although it diminishes with income.
Private care demand becomes less price elastic as income increases. At the highest extreme
of the income distribution, demand schedules become again distorted for Public and ISS
care. Price elasticities of demand become positive, making medical assistance at Public and
ISS hospitals to appear as Giffen goods. We believe, this distortion is introduced because
high price/high quality effects. Women in this income group are quality seekers and look
for the highest possible price among Public and ISS care. When the price diminishes the
probability of using Public or ISS hospitals diminishes for those women since a lower
price means, lower quality or less amenities.
6.2.2.7 Rural Women
Table 6.23 shows NMNL estimates and t-statistics for rural women. The
probability of choice of modem child's delivery assistance is strongly influenced by the
level of education attained by a rural mother, prenatal care use during pregnancy and a

small size of the household. In rural areas where traditions and beliefs are still an important
part of every day life, home deliveries are very common. Furthermore, large household
size makes it more probable that a pregnant woman has a support system at home to assist

16 S ee Chapter 3 for the description o f what "pensionado" m eans.


17 S ee N ote # 22 in Chapter 5.

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132
her with her child's delivery18. The parameter estimate for travel time between the
household and the closest hospital indicate that the probability of choosing a modem
delivery in the rural areas decreases with reduced access to facilities. Larger distances
between the household and the closest health facility reinforce rural women preference for
home deliveries. See Fig. 2 for probabilities of modem and home care when travel time is
changed.
The parameter estimate of the inclusive value falls between the 0-1 range and it is
significant. Since it is almost equal to one, which makes the MNL appropriate, the latter
specification is estimated but results obtained from the NMNL are much more sensible.
According to the NMNL estimates, the average rural woman has a 17% probability
of having a delivery in a hospital. Traditional deliveries are common and have a probability
of occurrence of 83%. When hospital care is used, Public hospitals are usually the ones
chosen by rural women. The probability of seeking for care in a Public hospital given that
the decision for having a modem delivery was previously made, is of 16%. ISS hospitals
have almost a 1% chance of being used by a rural woman, while Private hospitals have a

negligible probability of being used. See Table 6.26.


Table 6.47 shows results from a market segmentation test Asymptotic t-statistics
are calculated for testing differences across parameter estimates in the urban and the rural
market segments. Difference on age, access to facilities, prices and the income-price
interaction are significant

There are striking differences between urban and rural women. Rural women have
a very high probability of using home care, while urban women rely on hospital care.
Moreover, as Tables 6.29 and 6.30 show, the probability of using modem care increases
from 16% at minimum income to 54% at maximum rural income; meanwhile this change is

18 S ee reference # 2 above.

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133
not as drastic for urban women. When probabilities are calculated by income quartile19 in
Table 6.38, we find that for rural women the probability of using modem care increases
with income up to the third income quartile or 99.5% of the rural sample. However, rural
\yomen rely heavily on home care and changes on Private or ISS care are almost non
existent The probability of using home care becomes small only for rural women in the
fourth income quartile; there is only a 9% chance of using traditional care. At the highest
income level, Public care is most probably chosen for a delivery, when it has been decided
against traditional care. Overall, and in short, rural women of almost all income levels rely
heavily on home care.
Price elasticities by income level in Table 6.46 indicate that Private care is less price
elastic than Public or ISS care at any income level. Also, as expected, price elasticities
decrease as income increases, indicating that lower income women are more price elastic
than their higher income counterparts. Public care is more price elastic than Private or ISS
care at any point on the income distribution.
6.2.2.8 All Women

Table 6.24 shows NMNL estimation results. As in the other cases, being more
educated, insured, having used prenatal care during pregnancy and having a smaller
household size, increases the probability of using modem care versus having a delivery at
home. Bed-population ratios, our proxy for access, show that the larger the number of
beds available in the region the more probable a woman will choose modem care. Price

effects are negative and significant, indicating that the probability of modem care decreases
at a decreasing rate when price increases. The parameter estimate for the inclusive value is
negative and significant indicating as we already have seen in other cases, some problem of
misspecification. The fact that we do not include time costs in the estimation of demand

19 N o t on ly incom e lev el ch anges but also prices and individual


ch aracteristics according to incom e quartile. In T able 6 .2 9 o n ly incom e is
changing.

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134
schedules might be introducing such distortions. If this parameter estimate is assumed to
be equal to one and the degree of similarity between alternatives is zero, a MNL
specification is more appropriate.
We did estimate demand for child's delivery assistance for all women, using a
MNL. Although goodness of fit measures are better in the case of the MNL, results are
much more conclusive using the NMNL specification. Moreover goodness of fit measures
in these type of models and using cross sectional data are usually small and have to be
interpreted with care.
Probabilities calculated with NMNL estimates at mean values (see Table 6.26)
indicate that the average Colombian woman has a 71% chance of using a hospital for being
assisted with her child's delivery. A 30% probability of using home care contrasts very

strongly with the rural picture just discussed. The average rural woman has only a 17%
probability of using modem care. NMNL results show that Private hospitals are more
likely chosen for a modem delivery than either Public or ISS care. This result is quite
striking and controversial since we would expect that Private hospitals are most probably

chosen among women of upper and middle income groups, but it's use is not as likely
among poorer women. When we study demand for health care in the whole country, we
are aggregating women from very different socioeconomic and cultural backgrounds. This
is the reason to support the importance of using urban/rural market segmentation and of
finding probability estimates by regions.
The probability of using modem care is significantly influenced by bed/population
ratios as Table 6.24 shows. The bed/population ratio for private hospitals is much larger
than for any other type; 6.7 compared with 1.5 for public hospitals. This might be one of

the reasons why the probability of using Private care for the average Colombian woman is
overestimated in Table 6.26. (See third column).
When probabilities are calculated at different income level, see Tables 6.31 and
6.32, we observe an increase in the probability of using Private care, at least in the larger

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135
portion of the sample population. As income increases, both the probability of using
Public and ISS hospitals decrease. Therefore as we move from lower to higher income
segments of the population, Private care becomes relatively more important and absorbs
ISS patients. This is expected since higher income women would tend to choose higher
cost care which in general means higher quality of services.
The extremely skewed income distribution introduces large distortions into the
model; the probability of using hospital care is lower when calculated at the maximum
income level, than that at mean or minimum income levels. This is quite striking unless
there are very high income women who can afford a modem delivery at home. The data
does not support any evidence of such modem home deliveries and if this is the case we are
facing a very different kind of home delivery. Certainly not the traditional one we are
referring to in this study.
Own price elasticities by income quartile are presented in Table 6.40. As expected,
Private care is highly price elastic among the first and second income quartile, i.e., for 83%
of the sample population. As income increases, Private and Public care become less

elastic. ISS care is less elastic than Public or Private care in the first and second income
quartile. Distortions are introduced in the fourth quartile which represents only 5% of the
sample population; demand for both Public and ISS services becomes positively sloped as
if child's delivery assistance is behaving like a Giffen good. We insist that this distortions
are introduced by the correspondence between high price and high-quality (or more
amenities) services chosen at those income levels. Women would believe that the higher
the price they pay the higher the quality of services received or the more amenities they can
have. Then, they seek for the highest priced option in Public and ISS hospitals. Thus,
price increases would increase probabilities of care in Public and ISS hospitals only for
those high income women who are seeking extra benefits. Lower prices would decrease
their probability of using that type of care because it means they are getting assistance with
less amenities. Figure 3 shows price elasticities by income level.

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6.2.3 CONCLUDING COMMENTS
Findings show that both the probability of using different hospital's services and
the price elasticity change with income level. In general, demand for hospital care among
higher income women is less price elastic than for lower income groups. Demand for
Private care is usually more elastic than for Public or ISS care and also becomes less price
elastic as income rises.
Public hospitals are in general a very important source of care for child's delivery
assistance. Women in the Pacific, the Atlantic, and the Oriental regions who decide to use
modem care, rely heavily on Public services. The same is true for both the urban and the
rural groups. In general, the price elasticity of demand for Public care in the first and
second income quartile is larger than in the rest; in the case of the Pacific region these
differences show very strongly. Therefore, price increases in the public health sector would
affect more lower income groups in the Pacific region, who are the ones relying on Public
care for modem health services. This is also the case for 42% of the urban women who
conforms the lowest income quartile. Price increases in the Public health sector will
produce larger welfare loses among lower income than higher income women.
In the urban areas it is interesting to find that high income women have a high
probability of using Public care. The same is true to a lower degree for ISS care. Then,
government subsidies are providing care for women who could afford to pay higher prices.
Unless we assume that those deliveries to high income women in Public hospitals are those

occurring in the "Pensionado" section of the hospital, we must conclude that the
government is subsidizing health care for upper income groups in the urban areas of
Colombia. This finding agrees with Selowsky's findings on upper and middle income
groups receiving benefits from government subsidies in Colombia.
In general, ISS care has very small price elasticities at any income level. Fees at
ISS hospitals are low and care is almost all paid by social security agencies which are
financed through payroll taxes and employer donations. Care in ISS institutions is

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137
comparable to Private care, maybe with less amenities than what a high-price/private-choice
would offer. A more sensible price policy for ISS services can improve the financial
situation of some of the social security agencies which often times are in financial trouble.
Demand for its services would not be reduced sharply since price elasticities are always
very small. Through a better designed price policy, services at social security institutions
would be able to improve in terms of cost recovery and even on the provision of better
care.
There are striking differences among urban and rural women. Rural women have a
very high probability of using home care, while urban women rely mostly on modem care.
Surprisingly, price elasticities for rural women are small although they do change as
expected with income level. Demand for Public care is more price elastic than Private or
ISS care. Home care is very important among rural women, even at higher income levels;
then, there is a strong indication that the decision between modem and traditional care is
heavily influenced by the characteristics of "the rural life".
The NMNL has the advantage of not being constrained by the Independence of
Irrelevant Alternatives Axiom (HA) and therefore, does not compromise cross price
elasticities to be constant as in the case of the MNL. However, since in the NMNL case it
is necessary to determine in advance how the decision process is made, a decision tree

structure has to be assumed and results depend on how the choice tree is constructed and
assumptions are made. Moreover, on econometric grounds, one of the problems of the
NMNL is that the estimation of the second stage can get contaminated with any problems or
errors generated at the first stage. These might be some of the reasons introducing
distortions for the Central region and BogotiL Those are discussed in their respective
sections and at the beginning of this chapter.

According to econometric guidelines for model specification, the data from some of
the regions would fit better a non-'nested model; however, differences on results obtained
from each specification help us to make a decision in favor of the NMNL specification.

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138
Although the parameter estimate for the inclusive value is in some cases less than zero, and
a Wald test for Ho:B = 1 where the MNL specification would be more appropriate, can not
reject the null hypothesis, results obtained from the NMNL are more sensible.
The study of pregnant womens demand for health services when all women from
the country are combined hides important results appropriate of demand schedules in each
region. Combining women from very different socioeconomic and cultural backgrounds
and sometimes facing markets that have a high degree of dissimilarity (like the number of

available beds), definitely can not reveal important findings that characterize womens
behavior. Moreover, the skewed income distribution makes demand for health services to
vary strongly across segments of the population. These are the reasons granting the study
of demand for health services in Colombia by regions, using urban/rural market
segmentation and stressing the importance of income level. In countries were contrasts are
so strong as in Colombia, generalizations from results obtained with all the population
combined are omitting important realities.

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139

TABLES
TO
CHAPTER 6

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140
PART ONE. THE CHOICE OF PRACTITIONER

TABLE 6.1
Demand for Health Services by Pregnant Women in Colombia
Cases Studied, Dependent Variables and Sample Size

Model Explaining Dependent Variable Meaning of Sample Size


Dependent Variable Each Case
Prenatal Care Use YES =1 if demanded care All Women
from any provider, N=2338
Prenatal at least once during Insured Only
pregnancy. N=519
NO = 0 No Care (Self-Care) Non-Insured
N=1819
Physician's Prenatal YES =1 if demanded care All Women
Care (modem care) from an MD, at least N=2338
MDPrenatal once during Insured Only
pregnancy. N=519
NO = 0 Otherwise (other Non-Insured
providers) N=1819
Physician's Deliveiy YES =1 if a physician All Women
Assistance (modem MDdelivery assisted child's N=2338
care) delivery. Insured Only
NO = 0 Otherwise (other N=519
providers) Non-Insured
N=1819
Place for Delivery YES = 1 if a hospital or clinic All Women
Place is chosen for child's N=2300
delivery. Insured Only
N=506
NO = 0 if home deliveiy. Non-Insured
N=1794

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TABLE 6.2
PRENATAL CARE. All Women
Logistic Regression Results
Independent Dependent Prenatal = 1 N = 2338
Variables Variable: =0

Beta t statistic Std Error


Intercept -1.280 1.60** 0.800
Education 0.157 6.44* 0.024
Insurance 0.584 3.20* 0.182
Marital 0.524 3.60* 0.146
Urban 0.151 1.15 0.131
Age 0.088 1.61** 0.055
Age2 -0.0015 1.68* 0.001
Time Hosp. -0.079 2.53* 0.031
Income 0.003 2.61* 0.001
Income2 -0.000003 1.68* 0.000
No.Persons -0.008 0.44 0.019
Risk -1.041 3.84* 0.271
At Home 0.256 1.97* 0.130
Significant at 0.05 ** Significant at 0.10. N-k d.f.; k=number of parameters
LR = 239.8
McFadden's R2 = 0.0983
Adjusted R2 = 0.103

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TABLE 6.3
PRENATAL CARE BY A PHYSICIAN. All Women
Logistic Regression Results
Independent Dependent MDprenatal=l N = 2338
Variables Variable: =0

Beta t statistic Std Error


Intercept -1.546 2.01* 0.768
Education 0.174 7.77* 0.022
Insurance 0.817 4.87* 0.167
Marital 0.419 2.97* 0.141
Urban 0.111 0.90 0.123
Age 0.073 1.38** 0.053
Age2 -0.001 1.34** 0.001
Time Hosp. -0.251 6.55* 0.038
Income CThous) 0.004 3.55* 0.001
Income2 -0.000003 1.97* 0.000
Total Persons -0.022 1.20 0.018
Risk -0.850 3.10* 0.274
At home 0.374 3.06* 0.122
* Significant at 0.05 """Significant at 0.10. N-k d.f.; k=number of parameters
LR = 472.78
McFadden'sR2 = 0.162
Adjusted R2 = 0.1664

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TABLE 6.4
CHILD'S DELIVERY. PHYSICIAN'S ASSISTANCE All Women
Logistic Regression Results
Independent Dependent MDdeliver = 1 N = 2338
Variables Variable: =0

Beta t statistic Std Error


Intercept -2.365 2.93* 0.806
Education 0.112 5.33* 0.021
Insurance 1.068 7.40* 0.144
Marital 0.098 0.67 0.147
Urban 0.826 6.85* 0.120
Age 0.055 0.99 0.056
Age2 -0.001 0.81 0.001
Time Hosp. -0.255 4.67* 0.055
Income (Thous) 0.003 2.83* 0.001
Income2 -0.000001 0.87 0.000
Total Persons -0.048 2.60* 0.018
Risk 0.428 1.48** 0.288
MDprenatal 0.817 7.11* 0.115
At Home -0.126 1.03 0.122
* Significant at 0.05 ** Significant at 0.10. N-k d.f.; k=number o f parameters
LR = 831.09
McFaddensR 2 = 0.256
Adjusted R2 = 0.260

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1 44
TABLE 6.5
PLACE FOR CHILD'S DELIVERY All Women
_________ Logistic Regression Results_______
Independent Dependent Place = 1 N = 2300
Variables Variable: =0

Beta t statistic Std Error


Intercept -0.790 2.67* 0.800
Education 0.106 4.93* 0.024
Insurance 0.876 5.65* 0.182
Marital 0.153 1.04 0.146
Urban 0.781 6.45* 0.131
Age -0.009 1.12 0.055
Time Hosp. -0.329 6.24* 0.031
Income (Thous) 0.002 2.61* 0.001
MDprenatal 0.978 8.71* 0.000
Total Persons -0.055 2.99* 0.019
Risk -0.374 1.30 0.271
At Home 0.011 0.10 0.130
* Significant at 0.05. N-k d.f.; k=number o f parameters
LR = 822.46
McFadden's = 0.2604
Adjusted = 0.264

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145
TABLE 6.6
PRENATAL CARE.
Logistic Regressions Results for Insured and NON-Insured Samples
Independent Dependent Prenatal = 1 Insured N = 519
Variables Variable: =0 Uninsured N = 1819
INSl1RED UNINSURED
Beta t statistic Beta t statistic
Intercept 1.396 0.44 -1.349 1.62**
Education 0.251 3.71* 0.137 5.15*
Marital 0.321 0.59 0.550 3.60*
Urban -0.036 0.10 0.184 1.34**
Age -0.040 0.20 0.097 1.70*
Age2 0.0004 0.14 -0.002 1.75*
Time Hosp. 0.474 0.90 -0.085 2.69*
Income (Thous) -0.014 1.15 0.003 2.38*
Income2 0.00006 -0.000004
1.70*
Total Persons 0.040 0.57 -0.011 0.54
Risk -1.408 1.87* -0.988 3.40
At Home 0.441 1.17 0.253 1.82*

LR 41.42 129.64
McFadden R2 0.1371 0.0629
Adjusted R2 0.1772 0.069
* Significant at 0.05. N-k d.f.; k=number of parameters

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146
TABLE 6.7
PRENATAL CARE BY A PHYSICIAN.
Logistic Regressions Results for Insured and NON-Insured Samples
Independent Dependent MDprenatal=l Insured N = 519
Variables Variable: =0 Uninsured N = 1819
INSURED UNINSURED
Beta t statistic Beta t statistic
Intercept 1.346 0.46 -1.694 2.11*
Education 0.232 3.74* 0.159 6.51*
Marital 0.103 0.20 0.449 3.05*
Urban 0.089 0.20 0.128 0.99
Age -0.071 0.36 0.084 1.54**
Age2 0.001 0.24 -0.001 1.46**
Time Hosp. 0.146 0.40 -0.261 6.68*
Income 0.004 0.63 0.004 3.30*
Income2 0.0000002 0.00 -0.000003 1.91*
Total Persons -0.020 0.35 -0.021 1.12
Risk -1.302 1.76* -0.779 2.64*
At Home 0.614 1.76* 0.359 2.72*

LR 46.29 271.01
McFadden R2 0.135 0.1126
Adjusted R2 0.167 0.117
* Significant at 0.05. ** Significant at 0.10. N-k d.f.; k=number o f parameters

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TABLE 6.8
CHILD'S DELIVERY. PHYSICIAN'S ASSISTANCE
Logistic Regressions Results for Insured and Uninsured Samples
Independent Dependent MDdeliver = 1 Insured N = 519
Variables Variable: =0 Uninsured N = 1819
INSURED UNINSURED
Beta t statistic Beta t statistic

Intercept -3.722 1.61 -1.966 2.30*


Education 0.072 1.44** 0.111 4.72*
Marital -0.072 0.17 0.114 0.73
Urban 0.691 1.76* 0.852 6.63*
Age 0.261 1.71* 0.019 0.33
Age2 -0.005 1.85* -0.00008 0.10
MDprenatal 1.457 4.27* 0.736 6.03*
Time Hosp. -0.004 0.00 -0.281 4.84*
Income (Thous) 0.006 1.78* 0.003 2.35*
Income2 -0.000004 0.71 -0.000001 0.69
Total Persons -0.144 2.94* -0.034 1.71*
Risk -0.474 0.64 0.545 1.77*
At Home -0.098 0.32 -0.108 0.63

LR 76.93 430.63
McFadden R2 0.169 0.1763
Adjusted R2 0.195 0.1812
* Significant at 0.0S
** Significant at 0.10. N-k d.f.; k=number of parameters

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148
TABLE 6.9
PLACE FOR CHILD'S DELIVERY
Logistic Regressions Results for Insured and Uninsured Samples
Independent Dependent Place =1 Insured N = 506
Variables Variable: =0 Uninsured N = 1794
INSURED UNINSURED
Beta t statistic Beta t statistic
Intercept 1.000 1.09 -0.938 2.96*
Education 0.065 1.22 0.109 4.50*
Marital 0.286 0.59 0.144 0.93
Urban 1.168 2.92* 0.731 5.74*
Age -0.050 2.20* -0.003 0.37
Time Hosp. -0.087 0.37 -0.353 6.37*
Income (Thous) 0.002 1.25 0.002 3.04*
MDprenatal 1.585 4.45* 0.911 7.72*
Total Persons -0.127 2.48* -0.048 2.39*
Risk -1.649 2.52* -0.117 0.37
At Home -0.128 0.39 0.027 0.20

LR 75.24 495.78
McFadden 0.185 0.199
Adjusted 0.210 0.203
* Significant at 0.05. N-k d.f.; k=number o f parameters

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149
TABLE 6.10
PROBABILITY OF y s 1 AT MEAN VALUES*

MODEL All Women Insured Women Non-Insured


Prenatal 0.83 0.93 0.76
MDprenatal 0.77 0.94 0.66
Delivery 0.46 0.88 0.36
Place 0.58 0.90 0.45
* Calculated at mean values of independent variables

TABLE 6.11
PROBABILITIES AT DIFFERENT INCOME LEVELS*
Prenatal Care and Physician's Prenatal Care

ALL V/OMEN INSURED NON-IN SURED


Annual
Income Prenatal MDprenatal Prenatal MDprenatal Prenatal MDprenatal
(thousands)
20 0.80 0.71 0.95 0.91 0.70 0.60
100 0.83 0.77 0.92 0.93 0.74 0.67
300 0.87 0.85 0.99 0.97 0.79 0.78
600 0.88 0.89 1 0.99 0.99 0.76 0.84
900 0.83 0.88 0.99 0.99 0.56 0.82
1200 0.65 0.79 1 0.99 0.99 0.20 0.78
* All other variables at mean values

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150
TABLE 6.11 Continuation
PROBABILITIES AT DIFFERENT INCOME LEVELS*
Child's Delivery Assistance and Place of Delivery

ALL WOMEN INSURED NON-INSURED


Annual
Income MDdelivery Place MDdelivery Place MDdelivery Place
(thousands)
20 0.40 0.54 0.78 0.87 0.32 0.42
100 0.45 0.58 0.84 0.89 0.37 0.46
300 0.58 0.67 0.93 0.92 0.49 0.55
600 0.72 0.79 0.96 0.96 0.65 0.69
900 0.80 0.87 0.96 0.97 0.74 0.81
1200 0.84 0.92 0.93 0.99 0.79 0.88
* All other variables at mean values

TABLE 6.12
MEAN INCOME ELASTICITIES FOR EACH CASE
MODEL All Women Insured Women Non-Insured
Prenatal 0.041 0.060 0.053
MDprenatal 0.080 0.036 0.105
Delivery 0.157 0.091 0.159
Place 0.087 0.032 0.097

TABLE 6.13
INCOME ELASTICITIES AT DIFFERENT INCOME LEVELS
ALL W O M E N ________________
Annual Income Prenatal MDprenatal MDdeliver Place
(thousands)
2.65* 0.002 0.003 0.005 0.002
16.47 0.010 0.019 0.029 0.015
50.00 0.025 0.049 0.084 0.045
103.88** 0.041 0.080 0.157 0.087
150.00 0.048 0.095 0.207 0.119
224.15*** 0.051 0.102 0.265 0.163
Inflexion Point Income = 500 Income = 667 Income = 1500
* Minimum Income. ** Mean Income. *** Mean + One Standard Dev.

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151
TABLE 6.14
INCOME ELASTICITIES AT DIFFERENT INCOME LEVELS
INSURED WOMEN
Annual Income Prenatal MDprenatal MDdeliver Place
(thousands)
11.4* -0.006 0.004 0.016 0.003
14.5*** -0.008 0.005 0.019 0.004
50.00 -0.025 0.017 0.054 0.012
100.00 -0.016 0.028 0.081 0.022
159.60** 0.060 0.036 0.091 0.032
171.00 0.077 0.037 0.091 0.033
304.72*** 0.072 0.039 0.076 0.045
Inflexion Point Income = 117 Income = 750
* Minimum Income. ** Mean Income. *** Mean - / + One Standard Dev.

TABLE 6.15
INCOME ELASTICITIES AT DIFFERENT INCOME LEVELS
NON-INSURED WOMEN
Annual Income Prenatal MDprenatal MDdeliver Place
(thousands)
2.65* 0.002 0.004 0.005 0.003
50.00 0.037 0.069 0.096 0.057
88.00** 0.053 0.105 0.159 0.097
100.00 0.057 0.113 0.177 0.109
195.03*** 0.063 0.150 0.291 0.194
302.06 0.037 0.146 0.365 0.268
Inflexion Point Income = 375 Income = 667 Income = 1500
* Minimum Income. ** Mean Income. *** Mean - / + One Standard Dev.

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152

TABLE 6.16
SIMULATION RESULTS
NON-INSURED ALL WOMEN
Probability M Ddeliver Place M Ddeliver Place
when:
Mean education 0.40 0.49 | 0.48 0.60
level is 5 years* is a 11% is a 9% increase 1 is a 4% increase is a 3% increase
increase
Mean Insurance 0.64 0.53
is 0.50* a 10.3% is a 15%
increase increase
Decreasing 0.38 0.48 0.50 0.63
Mean Travel is a 5% increase is a 6.7% is a 8.7% is a 8.6%
Time by half an increase increase increase
hour*
* All other variables at their real mean value

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153
PART TWO. INSTITUTIONAL CHOICE

TABLE 6.17
ATLANTIC REGION
Nested-Multinomial Logit Estimates
Variable Coefficient T-Statistic
Age -0.0108 -0.061
Education 0.2101 4.491
Total Persons 0.0117 0.345
Prenatal Care 0.3763 2.494*
Insurance 1.0130 3.918*
Being At Home -0.0354 -0.228
Bed-Population Ratio -0.1164 -0.362
Income*Price 0.0004 2.538*
Price*Price -0.0097 -0.642
Price -0.0173 -1.585**
Inclusive Value 0.0513 0.174
Significant at 5% level
** Significant at 10% level

Combined Summary
R-squared = 0.14
Adj. R-squared = 0.114
LR = 133.8
Number of Cases = 1712
Observations = 428

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154

TABLE 6.18
ORIENTAL REGION
Nested-Multinomial Logit Estimates
Variable Coefficient T-Statistic
Age -0.0200 -20.72*
Education 0.2024 77.88*
Total Persons -0.0636 -25.20*
Prenatal Care 0.2694 29.38*
Insurance 0.7746 77.89*
Being At Home -0.0956 -10.94*
Bed-Population Ratio 0.2129 9.78*
Income*Price 0.0003 2.01*
Price*Price -0.1446 -4.41*
Price 0.4462 2.73*
Inclusive Value 0.5142 14.81*
'"Significant at 5% level
Combined Summary
R-squared = 0.185
Adj. R-squared = 0.181
LR = 722
Number of Cases = 2172
Observations = 543
Estimation is done weighing
observations by choice sample
proportions observed.

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155

TABLE 6.19
REGION OF BOGOTA
Nested-Multinomial Logit Estimates
Variable Coefficient T-Statistic
Age -0.058 -1.73*
Education 0.077 1.10
Total Persons -0.016 -0.20
Prenatal Care 0.624 2.90*
Insurance 0.274 1.17
Being At Home 0.057 0.28
Bed-Population Ratio 1.425 2.86*
Income*Price 0.0003 4.12*
Price*Price 0.0033 0.90
Price -0.263 -4.89*
Inclusive Value -0.107 -0.14
* Significant at 5%.

Combined Summary
R-squared = 0.287
Adj. R-squared = 0.267
LR = 325.4
Number of Cases = 1340
Observations = 335

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156

TABLE 6.20
CENTRAL REGION
Nested-Multinomial Logit Estimates
Variable Coefficient T-Statistic
Age 0.667 3.50*
Education 0.156 3.32*
Total Persons -0.100 -2.66*
Prenatal Care 0.227 1.87**
Insurance 0.173 0.89
Being At Home 0.126 0.85
Bed-Population Ratio -5.442 -5.75*
Income*Price 0.001 3.87*
Price*Price -0.171 -4.48*
Price 0.478 2.43*
Inclusive Value 9.940 6.23*
Significant at 5% level
Combined Summary
R-squared = 0.578
Adj. R-squared = 0.562
LR = 806.44
Number of Cases = 2084
Observations = 521

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157

TABLE 6.21
PACIFIC REGION
Nested-Multinomial Logit Estimates
Variable Coefficient T-Statistic
Age -0.192 -1.13
Education 0.198 4.99*
Total Persons -0.205 -0.56
Prenatal Care 0.341 2.58*
Insurance 0.669 4.63*
Being At Home 0.115 1.03
Bed-Population Ratio 0.242 0.31
Income*Price 0.0004 1.68**
Price*Price -0.053 -1.59**
Price -0.070 -0.31
Inclusive Value -0.63 -0.43
* Significant at 5%.
** Significant at 10%.

Combined Summary
R-squared =18
Adj. R-squared = 0.16
LR = 201.88
Number of Cases = 1892
Observations = 473

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158

TABLE 6.22
URBAN WOMEN ONLY
Nested-Multinomial Logit Estimates
Variable Coefficient T-Statistic
Age -0.017 -1.89*
Education 0.153 6.34*
Total Persons -0.147 -0.65
Prenatal Care 0.163 1.89*
Insurance 0.539 6.24*
Being At Home 0.0005 0.01
Bed-Population Ratio 0.783 5.33*
Income*Price 0.0004 6.91*
Price*Price 0.0043 1.09
Price -0.368 -9.40*
Inclusive Value -0.578 -2.13*
* Significant at 5%.

Combined Summary
R-squared = 0.18
Adj. R-squared = 0.176
LR = 742.5
Number of Cases = 5388
Observations = 1347

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159

TABLE 6.23
RURAL WOMEN ONLY
Nested-Multinomial Logit Estimates
Variable Coefficient T-Statistic
Age 0.022 1.83*
Education 0.127 3.17*
Total Persons -0.126 -3.95*
Prenatal Care 0.268 2.58*
Insurance 0.393 1.91*
Being At Home -0.074 -0.60
Bed-Population Ratio -2.333 -8.55*
Time to the Hospital -0.583 -8.11*
Income*Price 0.003 4.35*
Price*Price -0.943 -10.42*
Price -4.225 10.87*
Inclusive Value 0.995 11.9*
"Significant at 5% level

Combined Summary
R-squared = 0.48
Adj. R-squared = 0.47
LR = 954
Number of Cases = 3812
Observations = 953

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160

TABLE 6.24
TOTAL COUNTRY
Nested-Multinomial Logit Estimates
Variable Coefficient T-Statistic
Age 0.019 -3.13*
Education 0.234 11.83*
Total Persons -0.044 -2.69*
Prenatal Care 0.279 4.83*
Insurance 0.724 9.67*
Being At Home -0.113 -1.99*
Bed-Population Ratio 0.586 4.78*
Income*Price 0.0004 7.34*
Price*Price -0.033 -3.58*
Price -0.128 -2.23*
Inclusive Value -0.566 -2.43*
* Significant at 5%

Combined Summaiy
R-squared = 0.158
Adj. R-squared = 0.162
LR = 963.8
Number of Cases = 9200
Observations = 2300

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TABLE 6.25
HOSPITAL AND HOME CARE PROBABILITIES BY REGION AT MEAN
VALUES. NMNL Results
Region ATLANTIC ORIENTAL BOGOTA CENTRAL PACIFIC
Probability
HOME CARE 0.48 0.31 0.84 1 0.10
HOSP. CARE 0.52 0.69 0.16 0.00 0.90
PUBLIC 0.23 0.37 0.00 0.00 0.38
PRIVATE 0.07 0.04 0.15 0.00 0.00*
ISS 0.22 0.28 0.00 0.00 0.51
These probabilities are calculated at mean sample values of independent variables.
NOTE: When calculated probabilities are very small it was suggested to report them as zeroes. * Actual
figure is 0.0E-03

TABLE 6.26
SUMMARY TABLE. HOSPITAL AND HOME CARE PROBABILITIES AT
MEAN VALUES. NMNL Results
Region URBAN RURAL ALL COUNTRY
Probability
HOME CARE 0.12 0.83 0.29
HOSP. CARE 0.88 0.17 0.71
PUBLIC 0.62 0.16 0.12
PRIVATE 0.00 0.00 0.47
ISS 0.26 1.7E-02 0.12
These probabilities are calculated at mean sample values of independent variables.
NOTE: When calculated probabilities are very small it was suggested to report them as zeroes.

TABLE 6.27
ATLANTIC REGION HOSPITAL AND HOME CARE PROBABILITIES

Income Level Minimum Income Mean + Standard Maximum


Probability Dev.
HOME CARE 0.48 0.48 0.44
HOSP. CARE 0.52 0.52 0.56
PUBLIC 0.23 0.23 0.031
PRIVATE 0.056 0.08 0.51
ISS 0.023 0.211 0.015
The rest o f the variables are at mean sample values.

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162
TABLE 6.28
PACIFIC REGION HOSPITAL AND HOME CARE PROBABILITIES BY
____________ INCOME LEVEL (in thousands). NMNL Results__________
Income Level Minimum Income Mean + Standard Maximum
Probability Dev.
HOME CARE 0.10 0.10 0.11
HOSP. CARE 0.90 0.90 0.89
PUBLIC 0.39 0.39 0.399
PRIVATE 0.0003 0.0007 0.0041
ISS 0.51 0.56 0.49
The rest o f the variables are at mean sample values.

TABLE 6.29
RURAL WOMEN ONLY. HOSPITAL AND HOME CARE
PROBABILITIES BY INCOME LEVEL (in thousands). NMNL Results
Income Level Minimum Income Mean + Standard Maximum
Probability Dev.
HOME CARE 0.84 0.81 0.46
HOSP. CARE 0.16 0.19 0.54
PUBLIC 0.14 0.17 0.52
PRIVATE* 0.00 0.00 0.00
ISS 0.02 0.02 0.02
The rest of the variables are at mean sample values. * Actual figures are 3.9E-16,3.2E-1S and 1.4E-09.
NOTE: When calculated probabilities are very small it was suggested to report them as zeroes.

TABLE 6.30
URBAN WOMEN ONLY. HOSPITAL AND HOME CARE
PROBABILITIES BY INCOME LEVEL (in thousands). NMNL Results
Income Level Minimum Income Mean + Standard Maximum
Probability Dev.
HOME CARE 0.12 0.12 0.15
HOSP. CARE 0.88 0.88 0.85
PUBLIC 0.61 0.62 0.65
PRIVATE* 0.00 0.00 0.00
ISS 0.27 0.25 0.20
The rest o f the variables are at mean sample values. * Actual figures are 6.4E-11 , 1.6E-10 and 6.7E-09.

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163

TABLE 6.31
TOTAL COUNTRY. HOSPITAL AND HOME CARE PROBABILITIES BY

Income Level Minimum Income Mean + Standard Maximum


Probability Dev.
HOME CARE 0.26 0.34 0.90
HOSP. CARE 0.74 0.66 0.10
PUBLIC 0.14 0.07 0.00*
PRIVATE 0.43 0.51 0.10
ISS 0.17 0.08 0.00 **
The rest o f the variables are at mean sample values.
* Actual figure is 1.2E-04. ** Actual figure is 9.3E-05

TABLE 6.32
TOTAL COUNTRY
HOSPITAL AND HOME CARE PROBABILITIES BY INCOME QUARTILE

Income First Quartile Second Third Quartile Fourth Quartile


Quartile mean=46.81 Quartile mean=206.6 mean=499.9
Probability mean=109.5

HOME CARE 0.23 0.33 0.46 0.70


HOSP. CARE 0.77 0.67 0.54 0.30

PUBLIC 0.14 0.09 0.06 0.01


PRIVATE 0.46 0.48 0.41 0.28
ISS 0.17 0.10 0.07 0.01
N=1373 N=532 N=275 N=120
These probabilities are calculated at corresponding mean sample values of independent variables for each
income quartile.
Mean income is in thousands o f Colombian Pesos of 1980.
N is number of observations in each income quartile.

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164
TABLE 6.33
ATLANTIC REGION
HOSPITAL AND HOME CARE PROBABILITIES BY INCOME QUARTILE
Income First Quartile Second Third Quartile Fourth Quartile
Quartile mean=43.2 Quartile mean=201.9 mean=509.6
Probability mean=111.3

HOME CARE 0.49 0.48 0.47 0.45

HOSP. CARE 0.51 0.52 0.53 0.55

PUBLIC 0.23 0.23 0.23 0.18

PRIVATE 0.06 0.07 0.10 0.25

ISS 0.22 0.22 0.20 0.12


N=288 N=93 N=28 N=19
These probabilities are calculated at corresponding mean sample values of independent variables for each
income quartile.
Mean income is in thousands o f Colombian Pesos of 1980.
N is number of observations in each income quartile.

TABLE 6.34
ORIENTAL REGION
HOSPITAL AND HOME CARE PROBABILITIES BY INCOME QUARTILE
Income First Quartile Second Third Quartile Fourth Quartile
Quartile mean=47.7 Quartile mean=202.4 mean=421.5
Probability mean=111.3

HOME CARE 0.36 0.28 0.24 0.18

HOSP. CARE 0.64 0.72 0.76 0.82

PUBLIC 0.35 0.37 0.37 0.39

PRIVATE 0.03 0.07 0.11 0.17


ISS 0.27 0.28 0.28 0.26
N=303 N=140 N=74 N=26
These probabilities are calculated at corresponding mean sample values of independent variables for each
income quartile.
Mean income is in thousands of Colombian Pesos o f 1980.
N is number of observations in each income quartile.

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165
TABLE 6.35
BOGOTA, D.E.
HOSPITAL AND HOME CARE PROBABILITIES BY INCOME QUARTILE
Income First Quartile Second Third Quartile Fourth Quartile
Quartile mean=53.4 Quartile mean=220.2 mean=543.6
Probability mean= 106.24

HOME CARE 0.84 0.84 0.85 0.87


HOSP. CARE 0.16 0.16 0.15 0.13
PUBLIC * 0.00 0.00 0.00 0.00

PRIVATE 0.16 0.16 0.15 0.13

ISS ** 0.00 0.00 0.00 0.00


N=158 N=79 N=55 N=43
These probabilities are calculated at corresponding mean sample values of independent variables for each
income quartile.
Mean income is in thousands of Colombian Pesos of 1980.
N is number of observations in each income quartile.
NOTE: When calculated probabilities are very small it was suggested to report them as zeroes.
* Actual figures are 1.1E-07,9.3E-08,6.3E-08 and 2.3E-08. ** Actual figures are 5.7E-07,4.8E-07,
3.1E-07 and 1.1E-07.

TABLE 6.36
PACIFIC REGION
HOSPITAL AND HOME CARE PROBABILITIES BY INCOME QUARTILE
Income First Quartile Second Third Quartile Fourth Quartile
Quartile mean=41.9 Quartile mean= 198.8 mean=407
Probability mean=109.5

HOME CARE 0.08 0.12 0.17 0.22


HOSP. CARE 0.92 0.88 0.83 0.78

PUBLIC 0.39 0.38 0.36 0.35


PRIVATE 0.00* 0.00* 0.001 0.01
ISS 0.52 0.50 0.47 0.42
N=299 N=91 N=71 N=12
These probabilities are calculated at corresponding mean sample values of independent variables for each
income quartile.
Mean income is in thousands of Colombian Pesos of 1980.
N is number of observations in each income quartile.
* Actual figures are 0.3E-03 and 0.7E-03 respectively.

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166
TABLE 6.37
URBAN WOMEN ONLY
HOSPITAL AND HOME CARE PROBABILITIES BY INCOME QUARTILE
Income First Quartile Second Third Quartile Fourth Quartile
Quartile mean=52.9 Quartile mean=208.3 mean=497.7
Probability mean=110.3

HOME CARE 0.10 0.12 0.15 0.21

HOSP. CARE 0.90 0.88 0.86 0.79


PUBLIC 0.63 0.61 0.59 0.57

PRIVATE * 0.00 0.00 0.00 0.00

ISS 0.27 0.26 0.25 0.22


N=622 N=378 N=232 N=115
These probabilities are calculated at corresponding mean sample values of independent variables for each
income quartile.
Mean income is in thousands of Colombian Pesos of 1980.
N is number of observations in each income quartile.
* Actual figures are 7.5E-11 ,9.4E-11 ,1.2E-10 and 3.3E-10 respectively.

TABLE 6.38
RURAL WOMEN ONLY
HOSPITAL AND HOME CARE PROBABILITIES BY INCOME QUARTILE
Income First Quartile Second Third Quartile Fourth Quartile
Quartile mean=41.7 Quartile mean=197.6 mean=551.5
Probability mean=107.6

HOME CARE 0.85 0.77 0.67 0.09


HOSP. CARE 0.15 0.23 0.33 0.91

PUBLIC 0.14 0.21 0.31 0.90


PRIVATE * 0.00 0.00 0.00 0.00
ISS 0.01 0.02 0.02 8.3E-03
N=751 N=154 N=43 N=5
These probabilities are calculated at corresponding mean sample values of independent variables for each
income quartile.
Mean income is in thousands o f Colombian Pesos of 1980.
N is number of observations in each income quartile.
NOTE: When calculated probabilities are very small it was suggested to report them as zeroes.
* Actual figures are 5.1E-16,6.4E-15,4.5E-13 and 2.3E-12.

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1
TABLE 6.39
OWN PRICE ELASTICITIES BY REGION AT MEAN INCOME.
NMNL Results
Region ATLANTIC ORIENTAL BOGOTA CENTRAL PACIFIC
Hospital Type

PUBLIC -0.003 0.010 -0.00 -0.00 -2.334

PRIVATE -0.060 -0.170 -0.00 -0.00 -0.003


ISS -0.007 0.057 -0.00 -0.00 -0.501
These elasticities are calculated at mean sample values of independent variables.
NOTE: When calculated elasticities were very small it was suggested to report them as zeroes.

TABLE 6.40
TOTAL COUNTRY
OWN PRICE PRICE ELASTICITIES BY INCOME QUARTILE. NMNL
RESULTS
Income First Quartile Second Third Quartile Fourth Quartile
Quartile mean=46.81 Quartile mean=206.6 mean=499.9
Elasticity mean=109.5

PUBLIC -0.0971 -0.0145 -0.0004 0.0003


PRIVATE -1.3059 -1.1349 -0.9262 -0.1869
ISS -0.0186 -0.0042 0.0066 0.0009
N=1373 N=532 N=275 N=120
These elasticities are calculated at corresponding mean sample values of independent variables for each
income quartile.
Mean income is in thousands o f Colombian Pesos of 1980.
N is number of observations in each income quartile.

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168
TABLE 6.41
ATLANTIC REGION
OWN PRICE PRICE ELASTICITIES BY INCOME QUARTILE. NMNL
RESULTS
Income First Quartile Second Third Quartile Fourth Quartile
Quartile mean=43.2 Quartile mean=201.9 mean=509.6
Elasticity mean=111.3

PUBLIC -0.0055 -0.0020 -0.0001 0.0008


PRIVATE -0.0645 -0.0462 -0.0225 0.2543
ISS -0.0100 -0.0058 -0.0001 0.0144
N=288 N=93 N=28 N=19
These elasticities are calculated at corresponding mean sample values of independent variables for each
income quartile.
Mean income is in thousands o f Colombian Pesos o f 1980.
N is number o f observations in each income quartile.

TABLE 6.42
ORIENTAL REGION
OWN PRICE PRICE ELASTICITIES BY INCOME QUARTILE. NMNL
RESULTS
Income First Quartile Second Third Quartile Fourth Quartile
Quartile mean=47.7 Quartile mean=202.4 mean=421.5
Elasticity mean=111.3

PUBLIC 0.0125 -0.1612 -0.0829 -0.0404


PRIVATE -0.3897 -0.2872 -0.2114 -0.1215
ISS 0.0442 0.0661 0.0882 0.1414
N=303 N=140 N=74 N=26
These elasticities are calculated at corresponding mean sample values of independent variables for each
income quartile.
Mean income is in thousands o f Colombian Pesos o f 1980.
N is number of observations in each income quartile.

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169
TABLE 6.43
BOGOTA, D.E.
OWN PRICE PRICE ELASTICITIES BY INCOME QUARTILE. NMNL
RESULTS
Income First Quartile Second Third Quartile Fourth Quartile
Quartile mean=53.4 Quartile mean=220.2 mean=543.6
Elasticity mean=106.24

PUBLIC -0.00 -0.00 -0.00 -0.00

PRIVATE -0.00 -0.00 -0.00 -0.00

ISS -0.00 -0.00 -0.00 -0.00


N=158 N=79 N=55 N=43
These elasticities are calculated at corresponding mean sample values of independent variables for each
income quartile.
Mean income is in thousands of Colombian Pesos of 1980.
N is number of observations in each income quartile.
NOTE: When calculated elasticities were very small it was suggested to report them as zeroes.
* Actual figures are -4.1E-15, -2.2E-15, -4.9E-16 and 3.4E-17 for Public care.
** Actual figures are -4.1E-06, -2.9E-06, -1.2E-06 and 5.1E-07 for Private care.
*** Actual figures are -4.4E-08, -3.1E-08, -1.3E-08 and 2.7E-09 for ISS care.

TABLE 6.44
PACIFIC REGION
OWN PRICE PRICE ELASTICITIES BY INCOME QUARTILE. NMNL
RESULTS
Income First Quartile Second Third Quartile Fourth Quartile
Quartile mean=41.9 Quartile mean=198.8 mean=407
Elasticity mean=109.5

PUBLIC -3.5205 -1.7220 -0.7435 -0.2337


PRIVATE -0.0019 -0.0043 -0.0076 -0.0491
ISS -0.6608 -0.4123 -0.2329 -0.1108
N=299 N=91 N=71 N=12
These elasticities are calculated at corresponding mean sample values of independent variables for each
income quartile.
Mean income is in thousands o f Colombian Pesos of 1980.
N is number of observations in each income quartile.

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170
TABLE 6.45
URBAN WOMEN ONLY
OWN PRICE PRICE ELASTICITIES BY INCOME QUARTILE. NMNL
RESULTS
Income First Quartile Second Third Quartile Fourth Quartile
Quartile mean=52.9 Quartile mean=208.3 mean=497.7
Elasticity mean=l 10.3

PUBLIC -1.2663 -0.8330 -0.3660 0.0052

PRIVATE -0.2656 -0.2141 -0.1466 -0.0308

ISS -0.0614 -0.0434 -0.0225 0.0001


N=622 N=378 N=232 N=115
These elasticities arc calculated at corresponding mean sample values of independent variables for each
income quartile.
Mean income is in thousands of Colombian Pesos of 1980.
N is number of observations in each income quartile.

TABLE 6.46
RURAL WOMEN ONLY
OWN PRICE PRICE ELASTICITIES BY INCOME QUARTILE. NMNL
RESULTS
Income First Quartile Second Third Quartile Fourth Quartile
Quartile mean=41.7 Quartile mean=197.6 mean=551.5
Elasticity mean=107.6

PUBLIC -0.4526 -0.3525 -0.3532 -0.1188

PRIVATE * -0.00 -0.00 -0.00 -0.00

ISS -0.0043 -0.0055 -0.0071 -0.0022


N=751 N=154 N=43 N=5
These elasticities are calculated at corresponding mean sample values of independent variables for each
income quartile.
Mean income is in thousands of Colombian Pesos of 1980.
N is number of observations in each income quartile.
* NOTE: When calculated elasticities were very small it was suggested to report them as zeroes.
Actual figures are -6.7E-36, -9.9E-34, -2.1E-31 and -1.6E-31.

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171
TABLE 6.47
ASYMPTOTIC t-STATISTICS. MARKET SEGMENTATION TEST
Nested Multinomial Logit Estimation
Variable t-Statisdc
Age 3.22*
Education 1.63
Total Persons 0.38
Prenatal Care 0.02
Insurance -0.19
Being at home -1.30
Bed/Population Ratio -10.92*
Price -11.76*
Price*Income -3.18*
Price*Price 10.46*

* Significant at 5%

TABLE 6.48
ATLANTIC REGION
Multinomial Logit Estimates
Variable Coefficient T-Statistic
Age -0.029 -2.19*
Education 0.210 4.55*
Total Persons -0.017 -0.46
Prenatal Care 0.392 2.47*
Insurance 1.155 4.87*
Being At Home -0.147 -0.89
Bed-Population Ratio. -2.264 -10.02
Income*Price 0.001 3.56*
Price*Price -0.169 -6.29*
Price 3.189 8.69*
"Significant at 5% level
R-squared = 0.58
Adj. R-squared = 0.599
LR = 690.54

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172
TABLE 6.49
REGION OF BOGOTA, D.E.
Multinomial Logit Estimates
Variable Coefficient T-Statistic
Age 0.020 1.02
Education 0.137 2.23*
Total Persons 0.022 0.30
Prenatal Care 0.575 2.73*
Insurance 0.188 0.87
Being At Home 0.080 0.40
Bed-Populadon Ratio -1.249 -12.90*
Income*Price 0.0005 4.76*
Price*Price -0.150 -8.22*
Price 3.130 11.17*
Significant at 5% level

R-squared = 0.52
Adj. R-squared = 0.498
LR = 485.34

TABLE 6.50
CENTRAL REGION
Multinomial Logit Estimates
Variable Coefficient T-Statistic
Age 0.045 3.50*
Education 0.315 6.58*
Total Persons 0.004 0.12
Prenatal Care 0.366 2.65*
Insurance 0.713 4.02*
Being At Home 0.224 1.35
Bed-Population Ratio -3.752 -13.51*
Income*Price 0.0015 7.39*
Price*Price -0.337 -10.84*
Price 5.658 12.80*
Significant at 5% level

R-squared = 0.63
Adj. R-squared = 0.61
LR = 904.76

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173
TABLE 6.51
PACIFIC REGION
Multinomial Logit Estimates
Variable Coefficient T-Statistic
Age 0.071 5.54*
Education 0.331 8.23*
Total Persons 0.209 0.52
Prenatal Care 0.479 3.33*
Insurance 0.619 4.39*
Being At Home 0.211 1.73**
Bed-Population Ratio -4.601 -12.22*
Income*Price 0.0006 2.89*
Price*Price -0.181 -4.89*
Price 2.728 7.32*
'Significant at 5% level

R-squared = 0.54
Adj. R-squared = 0.53
LR = 710.54

TABLE 6.52
URBAN WOMEN ONLY
Multinomial Logit Estimates
Variable Coefficient T-Statistic
Age 0.015 2.38*
Education 0.158 7.33*
Total Persons -0.030 -1.37
Prenatal Care 0.149 1.76**
Insurance 0.463 5.68*
Being At Home 0.083 1.17
Bed-Population Ratio -0.567 -14.06*
Income*Price 0.0006 10.08*
Price*Price -0.056 -5.91*
Price 0.410 5.80*
"'Significant at 5% level

R-squared = 0.18
Adj. R-squared = 0.17
LR = 665.06

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174
TABLE 6.53
RURAL WOMEN ONLY
Multinomial Logit Estimates
Variable Coefficient T-Statistic
Age -0.016 -1.53
Education 0.151 3.67*
Total Persons -0.131 -4.24*
Prenatal Care 0.221 2.16*
Insurance 0.924 4.66*
Being At Home -0.194 -1.60
Bed-Population Ratio -1.629 -9.47*
Time to the Hospital -0.489 -6.96*
Income*Price 0.001 3.55*
Price*Price -0.963 -12.21*
Price 5.681 15.58*
"Significant at 5% level
R-squared = 0.645
Adj. R-squared = 0.637
LR = 1705

TABLE 6.54
TOTAL COUNTRY
Multinomial Logit Estimates
Variable Coefficient T-Statistic
Age 0.002 0.38
Education 0.225 12.84*
Total Persons -0.069 -4.27*
Prenatal Care 0.257 4.45*
Insurance 0.680 9.56*
Being At Home -0.053 -0.94
Bed-Population Ratio -0.751 -18.02
Income*Price 0.0008 12.68*
Price*Price -0.127 -11.39*
Price 0.908 11.99*
'"Significant at 5% level
R-squared = 0.281
Adj. R-squared = 0.277
LR = 1789.5

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P U B L IC C A R E P R O B A B IL IT Y B Y IN C O M E Q U A R T IL E
URBAN WOMEN

80

70

60

P
R
0
B
A
B
I
L
I
T
r
/.

20-

INCOME QUARTI LE

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P R O B A B IL IT IE S B Y T IM E TO T H E H O S P IT A L
RURAL WOMEN

PROBABILITY 7.
100

50-

40 -

30-

20-

0.25 0.50 0.75 1.00 1-25 1.50 1-75 2.00 2.25 2.50 2.75 3.00

TRAVEL TIME IN HOURS

SQUARE=HOME CARE
STAR=MODERN CARE
DI AMONOr PUBLl C HOSPI TAL
L I N E S = I S S HOSPI TAL

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177
Fig. 3

P R IC E E L A S T IC IT IE S B Y IN C O M E L E V E L . ALL W OM EN
TYPE OF HOSPI T AL . DELI VERY ASSI STANCE

PRI CE E L A S T I C I T Y

-0.05

- 0.20

-0.35

-0.50

-0.55

-0.30 -

-0.95 -

0 50 100 150 200 250 300 350 400 450 500

INCOME IN THOUSANDS OF 198 0 PESOS

SQUARE=PUBLI C HOSPI TAL


STARr PRI VATE HOSPI TAL
DI AMOND=SOCI AL SECURI TY HOSPI TAL

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178

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