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When do providers enter the home care market?

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Japanese economists have used the creation of Japan’s current long-term care insurance (LTCI) to test a common idea: That for-profit health care providers enter markets when costs appear to be low and the size of the market appears to be large.

Mutsumi Tokunaga and Hideki Hashimoto published a paper about provider market entry in the academic journal Social Science & Medicine.

Japan set up the country’s public LTCI system in 2000. The system lets for-profit providers provide home care services,

Tokunaga and Hashimoto used nationwide survey data collected from 2002 to 2010 and broke the provider numbers down using various other types of data.

The researchers found that the providers were more likely to enter the home care market when the number of people needing home care was large and cost factors, such as the minimum wage, were low.

“These findings indicate that for-profit providers will strategically choose a local market for maximizing profit,” the researchers said.

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