Editorial: Hospital case payment systems in Europe

Unraveling the effects of DIP payment reform on inpatient healthcare: insights into impacts and challenges

BACKGROUND

The Diagnosis-Intervention Packet (DIP) payment system, initiated by China's National Healthcare Security Administration, is designed to enhance healthcare efficiency and manage rising healthcare costs. This study aims to evaluate the impact of the DIP payment reform on inpatient care in a specialized obstetrics and gynecology hospital, with a focus on its implications for various patient groups.

METHODS

To assess the DIP policy's effects, we employed the Difference-in-Differences (DID) approach. This method was used to analyze changes in total hospital costs and Length of Stay (LOS) across different patient groups, particularly within select DIP categories. The study involved a comprehensive examination of the DIP policy's influence pre- and post-implementation.

RESULTS

Our findings indicate that the implementation of the DIP policy led to a significant increase in both total costs and LOS for the insured group relative to the self-paying group. The study further identified variations within DIP groups both before and after the reform. In-depth analysis of specific disease groups revealed that the insured group experienced notably higher total costs and LOS compared to the self-paying group.

CONCLUSIONS

The DIP reform has led to several challenges, including upcoding and diagnostic ambiguity, because of the pursuit of higher reimbursements. These findings underscore the necessity for continuous improvement of the DIP payment system to effectively tackle these challenges and optimize healthcare delivery and cost management.

Optimizing Geriatric Venipuncture: A DRG-Compatible Team-Based Reengineering Strategy

Objective

This study evaluates a reengineered intervention aimed at improving the clinical management of intravenous indwelling needles in geriatric patients, focusing on cost-efficiency within the Diagnosis-Related Group (DRG) payment framework.

Methods

The intervention was assessed through a comparative study involving 387 elderly patients in the Geriatric Department of Xuanwu Hospital, between June 2021 and March 2022. The study contrasted outcomes between patients treated before and after implementing a new team-based management protocol in November 2021.

Results

Findings indicate enhanced first-attempt venipuncture success, reduced consumable costs, and decreased complication rates in the post-intervention group (P < 0.001), compared to controls.

Conclusion

The intervention demonstrates significant benefits in venipuncture efficiency, cost reduction, and patient safety, suggesting its potential for broader adoption in geriatric care.

Case mix-based changes in health status: A prospective study of elective surgery patients in Vancouver, Canada

INTRODUCTION

Hospital activity is often measured using diagnosis-related groups, or case mix groups, but this information does not represent important aspects of patients' health outcomes. This study reports on case mix-based changes in health status of elective (planned) surgery patients in Vancouver, Canada.

DATA AND METHODS

We used a prospectively recruited cohort of consecutive patients scheduled for planned inpatient or outpatient surgery in six acute care hospitals in Vancouver. All participants completed the EQ-5D(5L) preoperatively and 6 months postoperatively, collected from October 2015 to September 2020 and linked with hospital discharge data. The main outcome was whether patients' self-reported health status improved among different inpatient and outpatient case mix groups.

RESULTS

The study included 1665 participants with completed EQ-5D(5L) preoperatively and postoperatively, representing a 44.8% participation rate across eight inpatient and outpatient surgical case mix categories. All case mix categories were associated with a statistically significant gain in health status (p < .01 or lower) as measured by the utility value and visual analogue scale score. Foot and ankle surgery patients had the lowest preoperative health status (mean utility value: 0.6103), while bariatric surgery patients reported the largest improvements in health status (mean gain in utility value: 0.1515).

CONCLUSIONS

This study provides evidence that it was feasible to compare patient-reported outcomes across case mix categories of surgical patients in a consistent manner across a system of hospitals in one province in Canada. Reporting changes in health status of operative case mix categories identifies characteristics of patients more likely to experience significant gains in health.

Impact of Diagnosis-Related Groups on Inpatient Quality of Health Care: A Systematic Review and Meta-Analysis

The aim of this meta-analysis was to comprehensively evaluate the effectiveness of Diagnosis-related group (DRG) based payment on inpatient quality of care. A comprehensive literature search was conducted in PubMed, EMBASE, Cochrane Central Register of Controlled Trials and Web of Science from their inception to December 30, 2022. Included studies reported associations between DRGs-based payment and length of stay (LOS), re-admission within 30 days and mortality. Two reviewers screened the studies independently, extracted data of interest and assessed the risk of bias of eligible studies. Stata 13.0 was used in the meta-analysis. A total of 29 studies with 36 214 219 enrolled patients were analyzed. Meta-analysis showed that DRG-based payment was effective in LOS decrease (pooled effect: SMD = -0.25, 95% CI = -0.37 to -0.12, Z = 3.81, P < .001), but showed no significant overall effect in re-admission within 30 days (RR = 0.79, 95% CI = 0.62-1.01, Z = 1.89, P = .058) and mortality (RR = 0.91, 95% CI = 0.72-1.15, Z = 0.82, P = .411). DRG-based payment demonstrated statistically significant superiority over cost-based payment in terms of LOS reduction. However, owing to limitations in the quantity and quality of the included studies, an adequately powered study is necessary to consolidate these findings.

DRG grouping by machine learning: from expert-oriented to data-based method

Background

Diagnosis-related groups (DRGs) are a payment system that could effectively solve the problem of excessive increases in healthcare costs which are applied as a principal measure in the healthcare reform in China. However, expert-oriented DRG grouping is a black box with the drawbacks of upcoding and high cost.

Methods

This study proposes a method of data-based grouping, designed and updated by machine learning algorithms, which could be trained by real cases, or even simulated cases. It inherits the decision-making rules from the expert-oriented grouping and improves performance by incorporating continuous updates at low cost. Five typical classification algorithms were assessed and some suggestions were made for algorithm choice. The kappa coefficients were reported to evaluate the performance of grouping.

Results

Based on tenfold cross-validation, experiments showed that data-based grouping had a similar classification performance to the expert-oriented grouping when choosing suitable algorithms. The groupings trained by simulated cases had less accuracy when they were tested by the real cases rather than simulated cases, but the kappa coefficients of the best model were still higher than 0.6. When the grouping was tested in a new DRGs system, the average kappa coefficients were significantly improved from 0.1534 to 0.6435 by the update; and with enough computation resources, the update process could be completed in a very short time.

Conclusions

As a new potential option, the data-based grouping meets the requirements of the DRGs system and has the advantages of high transparency and low cost in the design and update process.

The pilot of a new patient classification-based payment system in China: The impact on costs, length of stay and quality

With the urgent need to regulate provider behaviors, China developed a novel patient classification with global budget payment system, expecting to achieve both easy implementation and cost containment. The new system, called "diagnosis-intervention packet (DIP)" payment, is based on a deterministic patient classification approach, which groups patients according to the combination of principal diagnosis ICD-10 (International Classification of Diseases, 10th Revision) codes and procedure ICD-9-CM3 (International Classification of Diseases, 9th Revision, Clinical Modification) codes and links each group to relative historical costs market-wide. This study investigated the impact of the DIP-based payment on inpatient costs, length of stay, and quality of care in the largest DIP pilot city of China. In 2018, the city changed from the "fixed rate per admission with a cap on annual total compensation" policy to DIP with global budget for all insured inpatients. A difference-in-differences approach was employed to identify changes in outcome variables before and after the DIP policy among insured relative to uninsured patients. We found an average of 8.5% (p = 0.000) increase in inpatient costs per case (as intended), trivial changes in length of stay, and a 3.6% (p = 0.046) reduction in postoperative complication rate in response to DIP adoption among patients with high severity. Our findings suggested that the DIP-based payment helped regulate provider behaviors when treating high-risk patients. And the new payment has the potential for rapid rollout in resource-limited areas where lack a uniform coding practice or high-quality historical data.

Assessment of the introduction of DRG-based reimbursement in Switzerland: Evidence on the short-term effects on length of stay compliance in university hospitals

The implementation of a nationwide diagnosis-related groups (DRG) reimbursement system in 2012 marked an important step in increasing the transparency and efficiency of hospital services in Switzerland. However, no clear evidence exists to date on the response of hospitals to the introduction of SwissDRG. Using administrative data on inpatient stays in Swiss university hospitals and the length of stay compliance (LOSC) as a measure of hospital performance, we find a significant short-term reduction in LOSC for hospitals that experienced a change from retrospective per diem to prospective DRG reimbursement, compared to hospitals with a prospective payment system already before 2012. LOSC can be interpreted as a performance indicator because it compares the actual length of stay with a benchmark value, taken from the yearly DRG catalogue. The reduction in LOSC implies that hospitals in the treatment group on average had an increase in LOS relative to the benchmark compared to the control hospitals. This may be interpreted as a negative effect of SwissDRG on hospital performance, at least in the short-run, and we provide supporting evidence that hospitals that worked under DRG already before adapted more quickly and efficiently.

Analyzing economies of scale and scope in hospitals by use of case mix planning

This study analyzes the effect of economies of scale and scope on the optimal case mix of a hospital or hospital system. With respect to the ideal volume and patient composition, the goal is to evaluate (i) the impact of changes in the efficiency of resource use with increasing scale, and (ii) to determine the potential effects of spreading fixed costs over a greater number of patients. The problem is formulated as a non-linear mixed integer program. It turns out that this non-linear program is too difficult to be solved with standard software. As an alternative, an iterative procedure using piecewise linear approximations to derive lower and upper bounds is proposed and shown to converge to the optimum. The procedure is applied using a public database on German hospital costs and performance statistics. Results indicate that changes in the efficiency of resource use with increasing scale have a considerable impact if similar services can be consolidated, e.g., among different departments. However, if the scope for decision-making regarding the case mix of a hospital is limited, such changes may be negligible.

Are cost differences between specialist and general hospitals compensated by the prospective payment system?

Prospective payment systems fund hospitals based on a fixed-price regime that does not directly distinguish between specialist and general hospitals. We investigate whether current prospective payments in England compensate for differences in costs between specialist orthopaedic hospitals and trauma and orthopaedics departments in general hospitals. We employ reference cost data for a sample of hospitals providing services in the trauma and orthopaedics specialty. Our regression results suggest that specialist orthopaedic hospitals have on average 13% lower profit margins. Under the assumption of break-even for the average trauma and orthopaedics department, two of the three specialist orthopaedic hospitals appear to make a loss on their activity. The same holds true for 33% of departments in our sample. Patient age and severity are the main drivers of such differences.

Medical Service Quality, Efficiency and Cost Control Effectiveness of Upgraded Case Payment in Rural China: A Retrospective Study

Background: As the principal means of reimbursing medical institutions, the effects of case payment still need to be evaluated due to special environments and short exploration periods, especially in rural China. Methods: Xi County was chosen as the intervention group, with 36,104, 48,316, and 59,087 inpatients from the years 2011 to 2013, respectively. Huaibin County acted as the control group, with 33,073, 48,122, and 51,325 inpatients, respectively, from the same period. The inpatients' information was collected from local insurance agencies. After controlling for age, gender, institution level, season fixed effects, disease severity, and compensation type, the generalised additive models (GAMs) and difference-in-differences approach (DID) were used to measure the changing trends and policy net effects from two levels (the whole county level and each institution level) and three dimensions (cost, quality and efficiency). Results: At the whole-county level, the cost-related indicators of the intervention group showed downward trends compared to the control group. Total spending, reimbursement fee and out-of-pocket expense declined by ¥346.59 (p < 0.001), ¥105.39 (p < 0.001) and ¥241.2 (p < 0.001), respectively (the symbol ¥ represents Chinese yuan). Actual compensation ratio, length of stay, and readmission rates exhibited ascending trends, with increases of 7% (p < 0.001), 2.18 days (p < 0.001), and 1.5% (p < 0.001), respectively. The intervention group at county level hospital had greater length of stay reduction (¥792.97 p < 0.001) and readmission rate growth (3.3% p < 0.001) and lower reimbursement fee reduction (¥150.16 p < 0.001) and length of stay growth (1.24 days p < 0.001) than those at the township level. Conclusions: Upgraded case payment is more reasonable and suitable for rural areas than simple quota payment or cap payment. It has successfully curbed the growth of medical expenses, improved the efficiency of medical insurance fund utilisation, and alleviated patients' economic burden of disease. However, no positive effects on service quality and efficiency were observed. The increase in readmission rate and potential hidden dangers for primary health care institutions should be given attention.

Does DRG funding encourage hospital specialization? Evidence from the Italian National Health Service

The impact of diagnosis-related group (DRG)-based funding has been analyzed along a wide range of dimensions. Its effects on hospital specialization, however, have been investigated only sparsely. This paper examines such effects in the context of the Italian National Health Service, where decentralization has produced a significant degree of variation in funding arrangements. To this end, a 9-year panel data set covering 762 Italian public and private hospitals was analyzed using a finite mixture model approach. Hospital specialization was measured by the internal Herfindahl-Hirschman Index. Three variables were introduced as proxies for the choices made by Italian Regions with respect to the development and use of their DRG systems. The best finite mixture model identified three groups of hospitals, two of which sizeable. Of these, one included nearly all public hospitals, while the other was composed almost exclusively of small and medium-sized investor-owned hospitals. Averagely, private and smaller hospitals showed a stronger tendency to specialize over time. The positive impact of DRG funding on the hospitals' propensity to specialize found only limited empirical support. Moreover, it emerged as comparatively much smaller for public hospitals vis à vis private ones.

The suitability of a DRG casemix system in the Maltese hospital setting

The healthcare system in Malta is financed through global budgets and healthcare is provided free at the point of use. This paper is a first attempt to examine the feasibility of introducing a Diagnosis Related Groups casemix system for Malta, not necessarily for payment and funding purposes, but as a tool to help describe, manage and measure resource use. This is particularly challenging in view of the constraints and characteristics of a small state country. The study evaluates the applicability of the MS-DRG (Version 27.0) Grouper to describe acute hospital activity on the island. The classification of 151,615 admissions between 2009-2011 resulted in 636 DRG categories. Around half of these DRGs accounted for 99% of the total activity at the hospital, while 296 DRG categories had fewer than 15 cases over the period. Patient length of stay is used to explain resource use and the Coefficient of Multiple Determination obtained was of 0.19 (improving to 0.25 when a number of trimming algorithms were applied). A good proportion of the resulting DRGs had a Coefficient of Variation, which indicates a low degree of variability within the obtained DRG groups. This presents good evidence to support the introduction of a DRG system in Malta particularly in view of the recent drive towards more public-private partnerships and legislation on cross-border patient treatment.

Utility of functioning in predicting costs of care for patients with mood and anxiety disorders: a prospective cohort study

Development of payment systems for mental health services has been hindered by limited evidence for the utility of diagnosis or symptoms in predicting costs of care. We investigated the utility of functioning information in predicting costs for patients with mood and anxiety disorders. This was a prospective cohort study involving 102 adult patients attending a tertiary referral specialist clinic for mood and anxiety disorders. The main outcome was total costs, calculated by applying unit costs to healthcare use data. After adjusting for covariates, a significant total costs association was yielded for functioning (e=1.02; 95% confidence interval: 1.01-1.03), but not depressive symptom severity or anxiety symptom severity. When we accounted for the correlations between the main independent variables by constructing an abridged functioning metric, a significant total costs association was again yielded for functioning (e=1.04; 95% confidence interval: 1.01-1.09), but not symptom severity. The utility of functioning in predicting costs for patients with mood and anxiety disorders was supported. Functioning information could be useful within mental health payment systems.

Cost Accounting in Public Hospitals in Poland

The aim of this article is to assess the cost accounting solutions that are used currently in Polish hospitals. The evaluation covered three main areas that require cost data—management, external reporting and pricing of health services (performed by a regulatory body). The study concerned the costing model that was obligatory for Polish public hospitals in the years 1998–2011 (top-down micro-costing model) and has not yet been replaced by another solution. Different research methods have been used for each of the areas under research, inter alia surveys, direct interviews and case study methods.

Empirical results indicate a limited usefulness of the researched costing model in all of the evaluated areas: management, financial reporting and pricing. First, the costing model is used moderately only for the most important management areas, such as planning, control and operational decision making. Second, it does not include the specifics of diagnosis-related groups (DRGs) (basic pricing object) and therefore does not allow for accurate determination of their costs. Third, due to lack of the complex costing methodology the model is used in an unstructured and incoherent manner.

Estimation of a physician practice cost function

OBJECTIVE

The goal of the present paper is to provide evidence on the behavior of physician practice cost functions.

DATA SOURCES

Our study is based on the data of 3686 physician practices in Germany for the years 2006 to 2008.

STUDY DESIGN

We apply a translog functional form and include a comprehensive set of variables that have not been previously used in this context. A system of four equations using three-stage least squares is estimated.

PRINCIPAL FINDINGS

We find that a higher degree of specialization leads to a decrease in costs, whereas quality certification increases costs. Costs of group practices are higher than of solo practices. The latter finding can be explained by the existence of indivisibilities of expensive technical equipment. Smaller practices do not reach the critical mass to invest in certain technologies, which leads to differences in the type of health care services provided by different practice types.

CONCLUSIONS

This is the first study to use physician practices as the unit of observation and to consider the endogenous character of physician input. Our results suggest that identifying factors that influence physician practice costs is important for providing evidence-based physician payment systems and to enable decision-makers to set incentives effectively.

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Zusammenfassung. Diagnose-bezogene Fallgruppen, DRGs, sind eines der seit den 1960er in den USA entwickelten und erstmals 1983 zu Abrechnungszwecken eingeführten Patientenklassifikationssysteme, die den Anspruch erheben, klinisch ähnliche Fälle, die ähnlich teuer sind, zwecks einer erhöhten Vergleichbarkeit zusammenzufassen. Die Hauptziele, welche mit der Einführung von DRGs zu Abrechnungszwecken verfolgt werden, sind einerseits eine Erhöhung der Transparenz der erbrachten Leistungen, sowie andererseits eine Steigerung der Effizienz durch die pauschale Rückvergütung des durchschnittlichen Aufwands der Fälle der selben DRG. In der Schweiz werden seit 2012 sämtliche stationäre, akut-somatische Fälle über DRGs abgerechnet. Obwohl einige Befürchtungen nicht objektiviert werden konnten, haben sich andere bestätigt.

Cost-Efficiency Analysis of a Multi-Pavilion Hospital in Cluj County

Background and aim

Multi-hospital health systems have become the most popular administrative structure in healthcare, leading to both opportunities and challenges for hospital administrators. In government-funded healthcare systems, there is a balance between costs and the provision of health services.

The aim of the present study is to assess the efficiency in terms of costs of a multi-pavilion hospital from Cluj County, Romania.

Methods

The institution analyzed in this article is the Adults’ Clinical Hospital in Cluj-Napoca. A descriptive retrospective study collected data from January 2004 to December 2010. A set of indicators were compiled, divided into three main categories: personnel, statistics, and financial.

Results

Twenty-one financial indicators were investigated. Heterogeneity between different years was observed for the continuous hospitalization indicator and the wage budget indicator. The highest variability was observed between the budget and expenses indicators, while a smaller variability was observed at the average costs per patient. The costs per patient have increased at all pavilions in the studied time frame, the higher costs being at the Internal Medicine and Surgery pavilions: 10,203 RON in 2010 (1 euro ~ 4.4 RON)

Conclusion

The pavilions included in the Adults’ Clinical Hospital Cluj-Napoca have different expenses patterns, as each pavilion is focused on different specialties. Each pavilion serves different target groups, requiring different procedures. This in turn results in different expense patterns across each pavilion.

Capturing patients' needs in casemix: a systematic literature review on the value of adding functioning information in reimbursement systems

BACKGROUND

Contemporary casemix systems for health services need to ensure that payment rates adequately account for actual resource consumption based on patients' needs for services. It has been argued that functioning information, as one important determinant of health service provision and resource use, should be taken into account when developing casemix systems. However, there has to date been little systematic collation of the evidence on the extent to which the addition of functioning information into existing casemix systems adds value to those systems with regard to the predictive power and resource variation explained by the groupings of these systems. Thus, the objective of this research was to examine the value of adding functioning information into casemix systems with respect to the prediction of resource use as measured by costs and length of stay.

METHODS

A systematic literature review was performed. Peer-reviewed studies, published before May 2014 were retrieved from CINAHL, EconLit, Embase, JSTOR, PubMed and Sociological Abstracts using keywords related to functioning ('Functioning', 'Functional status', 'Function*, 'ICF', 'International Classification of Functioning, Disability and Health', 'Activities of Daily Living' or 'ADL') and casemix systems ('Casemix', 'case mix', 'Diagnosis Related Groups', 'Function Related Groups', 'Resource Utilization Groups' or 'AN-SNAP'). In addition, a hand search of reference lists of included articles was conducted. Information about study aims, design, country, setting, methods, outcome variables, study results, and information regarding the authors' discussion of results, study limitations and implications was extracted.

RESULTS

Ten included studies provided evidence demonstrating that adding functioning information into casemix systems improves predictive ability and fosters homogeneity in casemix groups with regard to costs and length of stay. Collection and integration of functioning information varied across studies. Results suggest that, in particular, DRG casemix systems can be improved in predicting resource use and capturing outcomes for frail elderly or severely functioning-impaired patients.

CONCLUSION

Further exploration of the value of adding functioning information into casemix systems is one promising approach to improve casemix systems ability to adequately capture the differences in patient's needs for services and to better predict resource use.

Review of Diagnosis-Related Group-Based Financing of Hospital Care

Since the 1990s, diagnosis-related group (DRG)-based payment systems were gradually introduced in many countries. The main design characteristics of a DRG-based payment system are an exhaustive patient case classification system (ie, the system of diagnosis-related groupings) and the payment formula, which is based on the base rate multiplied by a relative cost weight specific for each DRG. Cases within the same DRG code group are expected to undergo similar clinical evolution. Consecutively, they should incur the costs of diagnostics and treatment within a predefined scale. Such predictability was proven in a number of cost-of-illness studies conducted on major prosperity diseases alongside clinical trials on efficiency. This was the case with risky pregnancies, chronic obstructive pulmonary disease, diabetes, depression, alcohol addiction, hepatitis, and cancer. This article presents experience of introduced DRG-based payments in countries of western and eastern Europe, Scandinavia, United States, Canada, and Australia. This article presents the results of few selected reviews and systematic reviews of the following evidence: published reports on health system reforms by World Health Organization, World Bank, Organization for Economic Co-operation and Development, Canadian Institute for Health Information, Canadian Health Services Research Foundation, and Centre for Health Economics University of York. Diverse payment systems have different strengths and weaknesses in relation to the various objectives. The advantages of the DRG payment system are reflected in the increased efficiency and transparency and reduced average length of stay. The disadvantage of DRG is creating financial incentives toward earlier hospital discharges. Occasionally, such polices are not in full accordance with the clinical benefit priorities.

Case mix planning in hospitals: a review and future agenda

The case mix planning problem deals with choosing the ideal composition and volume of patients in a hospital. With many countries having recently changed to systems where hospitals are reimbursed for patients according to their diagnosis, case mix planning has become an important tool in strategic and tactical hospital planning. Selecting patients in such a payment system can have a significant impact on a hospital's revenue. The contribution of this article is to provide the first literature review focusing on the case mix planning problem. We describe the problem, distinguish it from similar planning problems, and evaluate the existing literature with regard to problem structure and managerial impact. Further, we identify gaps in the literature. We hope to foster research in the field of case mix planning, which only lately has received growing attention despite its fundamental economic impact on hospitals.

A systematic review of the predictors of health service utilisation by adults with mental disorders in the UK

OBJECTIVES

To identify variables that predict health service utilisation (HSU) by adults with mental disorders in the UK, and to determine the evidence level for these predictors.

DESIGN

A narrative synthesis of peer-reviewed studies published after the year 2000. The search was conducted using four databases (ie, PsycINFO, CINAHL Plus with full text, MEDLINE and EMBASE) and completed on 25 March 2014.

SETTING

The majority of included studies were set in health services across primary, secondary, specialist and inpatient care. Some studies used data from household and postal surveys.

PARTICIPANTS

Included were UK-based studies that predicted HSU by adults with mental disorders. Participants had a range of mental disorders including psychotic disorders, personality disorders, depression, anxiety disorders, eating disorders and dementia.

PRIMARY OUTCOME

A wide range of HSU outcomes were examined, including general practitioner (GP) contacts, medication usage, psychiatrist contacts, psychotherapy attendances, inpatient days, accident and emergency admissions and 'total HSU'.

RESULTS

Taking into account study quality, 28 studies identified a range of variables with good preliminary evidence supporting their ability to predict HSU. Of these variables, comorbidity, personality disorder, age (heterogeneous age ranges), neurotic symptoms, female gender, a marital status of divorced, separated or widowed, non-white ethnicity, high previous HSU and activities of daily living, were associated with increased HSU. Moreover, good preliminary evidence was found for associations of accessing a primary care psychological treatment service and medication use with decreased HSU.

CONCLUSIONS

The findings can inform decisions about which variables might be used to derive mental health clusters in 'payment by results' systems in the UK. The findings also support the need to investigate whether combining broad diagnoses with care pathways is an effective method for mental health clustering, and the need for research to further examine the association between mental health clusters and HSU.

Cholecystectomy and Diagnosis-Related Groups (DRGs): patient classification and hospital reimbursement in 11 European countries

BACKGROUND

As part of the EuroDRG project, researchers from eleven countries (i.e. Austria, England, Estonia, Finland, France, Germany, Ireland, Netherlands, Poland, Sweden, and Spain) compared how their Diagnosis-Related Groups (DRG) systems deal with cholecystectomy patients. The study aims to assist surgeons and national authorities to optimize their DRG systems.

METHODS

National or regional databases were used to identify hospital cases with a procedure of cholecystectomy. DRG classification algorithms and indicators of resource consumption were compared for those DRGs that individually contained at least 1% of cases. Six standardised case vignettes were defined, and quasi prices according to national DRG-based hospital payment systems were ascertained and compared to an index case.

RESULTS

European DRG systems vary widely: they classify cholecystectomy patients according to different sets of variables into diverging numbers of DRGs (between two DRGs in Austria and Poland to nine DRGs in England). The most complex DRG is valued at four times more resource intensive than the index case in Ireland but only 1.3 times more resource intensive than the index case in Austria.

CONCLUSION

Large variations in the classification of cholecystectomy patients raise concerns whether all systems rely on the most appropriate classification variables. Surgeons, hospital managers and national DRG authorities should consider how other countries' DRG systems classify cholecystectomy patients in order to optimize their DRG systems and to ensure fair and appropriate reimbursement.

Patient classification and hospital reimbursement for inguinal hernia repair: a comparison across 11 European countries

PURPOSE

This comparative study examines the categorisation of patients undergoing surgical repair of inguinal hernia in the diagnosis-related group (DRG) systems of 11 European countries (Austria, England, Estonia, Finland, France, Germany, Ireland, the Netherlands, Poland, Spain and Sweden). Understanding the design and operation of DRG systems for this common surgical procedure is important, given their increasing use internationally for hospital reimbursement and performance measurement.

METHODS

A common definition was used to identify inguinal hernia patients and the corresponding data were extracted from national databases. The analysis compared the variables and algorithms for classifying these patients to DRGs across the participating countries, as well as the number, composition and relative resource intensity of groups. An index case and six standardised vignettes were grouped using each country’s DRG system and the associated quasi-prices were calculated.

RESULTS

The number of groups to which inguinal hernia patients are assigned is typically three or four, but ranges from two in Poland to ten in France. In most systems, categorising patients is contingent on procedure, principal and secondary diagnoses, and age, with treatment setting (day case/inpatient) being less common. Added to these, the French system also incorporates length of stay and whether the patient died. More resource intensive DRGs generally contained patients who were older, treated as inpatients, did not die, had (more severe) complications and/or co-morbidities, and/or underwent laparoscopic repair. There are cross-country disparities in day case rates and the use of laparoscopic repairs.

CONCLUSIONS

The categorisation of inguinal hernia patients varies across the 11 European DRG systems under study. By highlighting the main differences across these systems, this comparative analysis allows the relevant decision makers to assess the adequacy and specificity of their own DRG systems.

The role of hospital payments in the adoption of new medical technologies: an international survey of current practice

This study examined the role of prospective payment systems in the adoption of new medical technologies across different countries. A literature review was conducted to provide background for the study and guide development of a survey instrument. The survey was disseminated to hospital payment systems experts in 15 jurisdictions. Fifty-one surveys were disseminated, with 34 returned. The surveys returned covered 14 of the 15 jurisdictions invited to participate. The majority (71%) of countries update the patient classification system and/or payment tariffs on an annual basis to try to account for new technologies. Use of short-term separate or supplementary payments for new technologies occurs in 79% of countries to ensure adequate funding and facilitate adoption. A minority (43%) of countries use evidence of therapeutic benefit and/or costs to determine or update payment tariffs, although it is somewhat more common in establishing short-term payments. The main barrier to using evidence is uncertain or unavailable clinical evidence. Almost three-fourths of respondents believed diagnosis-related group systems incentivize or deter technology adoption, depending on the particular circumstances. Improvements are needed, such as enhanced strategies for evidence generation and linking evidence of value to payments, national and international collaboration and training to improve existing practice, and flexible timelines for short-term payments. Importantly, additional research is needed to understand how different payment policies impact technology uptake as well as quality of care and costs.

Hospital financing: calculating inpatient capital costs in Germany with a comparative view on operating costs and the English costing scheme

OBJECTIVES

The paper analyzes the German inpatient capital costing scheme by assessing its cost module calculation. The costing scheme represents the first separated national calculation of performance-oriented capital cost lump sums per DRG.

METHODS

The three steps in the costing scheme are reviewed and assessed: (1) accrual of capital costs; (2) cost-center and cost category accounting; (3) data processing for capital cost modules. The assessment of each step is based on its level of transparency and efficiency. A comparative view on operating costing and the English costing scheme is given.

RESULTS

Advantages of the scheme are low participation hurdles, low calculation effort for G-DRG calculation participants, highly differentiated cost-center/cost category separation, and advanced patient-based resource allocation. The exclusion of relevant capital costs, nontransparent resource allocation, and unclear capital cost modules, limit the managerial relevance and transparency of the capital costing scheme.

CONCLUSIONS

The scheme generates the technical premises for a change from dual financing by insurances (operating costs) and state (capital costs) to a single financing source. The new capital costing scheme will intensify the discussion on how to solve the current investment backlog in Germany and can assist regulators in other countries with the introduction of accurate capital costing.

Systematically evaluating the impact of diagnosis-related groups (DRGs) on health care delivery: a matrix of ethical implications

Swiss hospitals were required to implement a prospective payment system for reimbursement using a diagnosis-related groups (DRGs) classification system by the beginning of 2012. Reforms to a health care system should be assessed for their impact, including their impact on ethically relevant factors. Over a number of years and in a number of countries, questions have been raised in the literature about the ethical implications of the implementation of DRGs. However, despite this, researchers have not attempted to identify the major ethical issues associated with DRGs systematically. To address this gap in the literature, we have developed a matrix for identifying the ethical implications of the implementation of DRGs. It was developed using a literature review, and empirical studies on DRGs, as well as a review and analysis of existing ethics frameworks. The matrix consists of the ethically relevant parameters of health care systems on which DRGs are likely to have an impact; the ethical values underlying these parameters; and examples of specific research questions associated with DRGs to illustrate how the matrix can be applied. While the matrix has been developed in light of the Swiss health care reform, it could be used as a basis for identifying the ethical implications of DRG-based systems worldwide and for highlighting the ethical implications of other kinds of provider payment systems (PPS).

Acute myocardial infarction and diagnosis-related groups: patient classification and hospital reimbursement in 11 European countries

AIMS

As part of the diagnosis related groups in Europe (EuroDRG) project, researchers from 11 countries (i.e. Austria, England, Estonia, Finland, France, Germany, Ireland, Netherlands, Poland, Spain, and Sweden) compared how their DRG systems deal with patients admitted to hospital for acute myocardial infarction (AMI). The study aims to assist cardiologists and national authorities to optimize their DRG systems.

METHODS AND RESULTS

National or regional databases were used to identify hospital cases with a primary diagnosis of AMI. Diagnosis-related group classification algorithms and indicators of resource consumption were compared for those DRGs that individually contained at least 1% of cases. Six standardized case vignettes were defined, and quasi prices according to national DRG-based hospital payment systems were ascertained. European DRG systems vary widely: they classify AMI patients according to different sets of variables into diverging numbers of DRGs (between 4 DRGs in Estonia and 16 DRGs in France). The most complex DRG is valued 11 times more resource intensive than an index case in Estonia but only 1.38 times more resource intensive than an index case in England. Comparisons of quasi prices for the case vignettes show that hypothetical payments for the index case amount to only €420 in Poland but to €7930 in Ireland.

CONCLUSIONS

Large variation exists in the classification of AMI patients across Europe. Cardiologists and national DRG authorities should consider how other countries' DRG systems classify AMI patients in order to identify potential scope for improvement and to ensure fair and appropriate reimbursement.

Has incentive payment improved venous thrombo-embolism risk assessment and treatment of hospital in-patients?

This paper focuses on financial incentives rewarding successful implementation of guidelines in the UK National Health Service (NHS). In particular, it assesses the implementation of National Institute for Health and Clinical Excellence (NICE) venous thrombo-embolism (VTE) guidance in 2010 on the risk assessment and secondary prevention of VTE in hospital in-patients and the financial incentives driving successful implementation introduced by the Commissioning for Quality and Innovation for Payment Framework (CQUIN) for 2010-2011. We systematically compared the implementation of evidence-based national guidance on VTE prevention across two specialities (general medicine and orthopaedics) in four hospital sites in the greater South West of England by auditing and evaluating VTE prevention activity for 2009 (i.e. before the 2010 NICE guideline) and late 2010 (almost a year after the guideline was published). Analysis of VTE prevention activity reported in 816 randomly selected orthopaedic and general medical in-patient medical records was complemented by a qualitative study into the practical responses to revised national guidance. This paper's contribution to knowledge is to suggest that by financially rewarding the implementation of national guidance on VTE prevention, paradoxes and contradictions have become apparent between the 'payment by volume system' of Healthcare Resource Groups and the 'payment by results' system of CQUIN.

Diagnosis-related groups for stroke in Europe: patient classification and hospital reimbursement in 11 countries

BACKGROUND

Diagnosis-related groups (DRGs) are increasingly being used for various purposes in many countries. However, there are no studies comparing different DRG systems in the care of stroke. As part of the EuroDRG project, researchers from 11 countries (i.e. Austria, England, Estonia, Finland, France, Germany, Ireland, the Netherlands, Poland, Sweden and Spain) compared how their DRG systems deal with stroke patients. The study aims to assist clinicians and national authorities to optimize their DRG systems.

METHODS

National or regional databases were used to identify hospital cases with a diagnosis of stroke. DRG classification algorithms and indicators of resource consumption were compared for those DRGs that individually represent at least 1% of stroke cases. In addition, standardized case vignettes were defined, and quasi prices according to national DRG-based hospital payment systems were ascertained.

RESULTS

European DRG systems vary widely: they classify stroke patients according to different sets of variables (between 1 and 7 classification variables) into diverging numbers of DRGs (between 1 and 10 DRGs). In 6 of the countries more than half of the patients are concentrated within a single DRG. The countries' systems also vary with respect to the evaluation of different kinds of stroke patients. The most complex DRG is considered 3.8 times more resource intensive than an index case in Finland. By contrast, in England, the DRG system does not account for complex cases. Comparisons of quasi prices for the case vignettes show that hypothetical payments for the index case amount to only EUR 907 in Poland but to EUR 7,881 in Ireland.

CONCLUSIONS

Large variations in the classification of stroke patients raise concerns whether all systems rely on the most appropriate classification variables and whether the DRGs adequately reflect differences in the complexity of treating different groups of patients. Learning from other DRG systems may help in improving the national systems. Clinicians and national DRG authorities should consider how other countries' DRG systems classify stroke patients in order to optimize their DRG system and to ensure fair and appropriate reimbursement. In future, quantitative research is needed to verify whether the most important determinants of cost are considered in different patient classification systems, and whether differences between systems reflect country-specific differences in treatment patterns and, most importantly, what influence they have on patient outcomes.

Childbirth and Diagnosis Related Groups (DRGs): patient classification and hospital reimbursement in 11 European countries

OBJECTIVES

The study compares how Diagnosis-Related Group (DRG) based hospital payment systems in eleven European countries (Austria, England, Estonia, Finland, France, Germany, Ireland, Netherlands, Poland, Spain, and Sweden) deal with women giving birth in hospitals. It aims to assist gynaecologists and national authorities in optimizing their DRG systems.

METHODS

National or regional databases were used to identify childbirth cases. DRG grouping algorithms and indicators of resource consumption were compared for those DRGs which account for at least 1% of all childbirth cases in the respective database. Five standardized case vignettes were defined and quasi prices (i.e. administrative prices or tariffs) of hospital deliveries according to national DRG-based hospital payment systems were ascertained.

RESULTS

European DRG systems classify childbirth cases according to different sets of variables (between one and eight variables) into diverging numbers of DRGs (between three and eight DRGs). The most complex DRG is valued 3.5 times more resource intensive than an index case in Ireland but only 1.1 times more resource intensive than an index case in The Netherlands. Comparisons of quasi prices for the vignettes show that hypothetical payments for the most complex case amount to only € 479 in Poland but to € 5532 in Ireland.

CONCLUSIONS

Differences in the classification of hospital childbirth cases into DRGs raise concerns whether European systems rely on the most appropriate classification variables. Physicians, hospitals and national DRG authorities should consider how other countries' DRG systems classify cases to optimize their system and to ensure fair and appropriate reimbursement.

Improving patient-level costing in the English and the German 'DRG' system

OBJECTIVES

The purpose of this paper is to develop ways to improve patient-level cost apportioning (PLCA) in the English and German inpatient 'DRG' cost accounting systems, to support regulators in improving costing schemes, and to give clinicians and hospital management sophisticated tools to measure and link their management.

METHODS

The paper analyzes and evaluates the PLCA step in the cost accounting schemes of both countries according to the impact on the key aspects of DRG introduction: transparency and efficiency. The goal is to generate a best available PLCA standard with enhanced accuracy and managerial relevance, the main requirements of cost accounting.

RESULTS

A best available PLCA standard in 'DRG' cost accounting uses: (1) the cost-matrix from the German system; (2) a third axis in this matrix, representing service-lines or clinical pathways; (3) a scoring system for key cost drivers with the long-term objective of time-driven activity-based costing and (4) a point of delivery separation.

CONCLUSION

Both systems have elements that the other system can learn from. By combining their strengths, regulators are supported in enhancing PLCA systems, improving the accuracy of national reimbursement and the managerial relevance of inpatient cost accounting systems, in order to reduce costs in health care.

Reforming reimbursement of public hospitals in Greece during the economic crisis: Implementation of a DRG system

OBJECTIVES

Until recently, in-patient NHS hospital care in Greece was reimbursed via an anachronistic and under-priced retrospective per diem system, which has been held primarily responsible for continuous budget deficits. The purpose of this paper is to present the efforts of the Ministry of Health (MoH) to implement a new DRG-based payment system.

METHODS

As in many countries, the decision was to adopt a patient classification from abroad and to refine it for use in Greece with national data. Pricing was achieved with a combination of activity-based costing with data from selected Greek hospitals, and "imported" cost weights. Data collection, IT support and monitoring are provided via ESY.net, a web-based facility developed and implemented by the MoH.

RESULTS

After an initial pilot testing of the classification in 20 hospitals, complete DRG reimbursement data was reported by 113 hospitals (85% of total) for the fourth quarter of 2011. The recorded monthly increase in patient discharges billed with the new system and in revenue implies increasing adaptability by the hospitals. However, the unfavorable inlier vs. outlier distribution of discharges and revenue observed in some health regions signifies the need for corrective actions.

CONCLUSIONS

The importance of this reimbursement reform is discussed in light of the current crisis faced by the Greek economy. There is yet much to be done and many projects are currently in progress to support this effort; however the first cost containment results are encouraging.

Performance of 10 European DRG systems in explaining variation in resource utilisation in inguinal hernia repair

By classifying hospital output into groups of patients with similar clinical characteristics and resource requirements, diagnosis-related groups (DRGs) are designed to be highly correlated with resource utilisation. Using a two-stage approach to control for variation within and between hospitals, we examine the ability of the diverse DRG systems in 10 European countries to explain variability in resource utilisation (costs or length of stay, LoS) for hospital patients undergoing surgical repair of inguinal hernia. Our national regression results suggest that DRGs are statistically significant in explaining cost/LoS variation in the absence of any other regressors and generally remain so in most countries when patient-level characteristics are added to the model. However patient-level characteristics, including those used in DRG assignment, are usually also statistically significant. In nine countries, where the number of relevant DRGs ranges from two (Poland) to seven (France), the inclusion of patient-level characteristics substantially improves model goodness-of-fit compared with that attained with DRGs alone. Only in Sweden is the converse true. If our analysis raises some concerns over the adequacy of DRGs to explain cost/LoS variation in inguinal hernia repair in nine of the 10 European countries, further research is required to consider whether future enhancements may be necessary.

Success of commonly used operating room management tools in reducing tardiness of first case of the day starts: evidence from German hospitals

BACKGROUND

One of the declared objectives of surgical suite management in Germany is to increase operating room (OR) efficiency by reducing tardiness of first case of the day starts. We analyzed whether the introduction of OR management tools by German hospitals in response to increasing economic pressure was successful in achieving this objective. The OR management tools we considered were the appointment of an OR manager and the development and adoption of a surgical suite governance document (OR charter). We hypothesized that tardiness of first case starts was less in ORs that have adopted one or both of these tools.

METHODS

Using representative 2005 survey data from 107 German anesthesiology departments, we used a Tobit model to estimate the effect of the introduction of an OR manager or OR charter on tardiness of first case starts, while controlling for hospital size and surgical suite complexity.

RESULTS

Adoption reduced tardiness of first case starts by at least 7 minutes (mean reduction 15 minutes, 95% confidence interval (CI): 7-22 minutes, P < 0.001).

CONCLUSION

Reductions in tardiness of first case starts figure prominently the objectives of surgical suite management in Germany. Our results suggest that the appointment of an OR manager or the adoption of an OR charter support this objective. For short-term decision making on the day of surgery, this reduction in tardiness may have economic implications, because it reduced overutilized OR time.

Paying for hospital care: the experience with implementing activity-based funding in five European countries

Following the US experience, activity-based funding has become the most common mechanism for reimbursing hospitals in Europe. Focusing on five European countries (England, Finland, France, Germany and Ireland), this paper reviews the motivation for introducing activity-based funding, together with the empirical evidence available to assess the impact of implementation. Despite differences in the prevailing approaches to reimbursement, the five countries shared several common objectives, albeit with different emphasis, in moving to activity-based funding during the 1990s and 2000s. These include increasing efficiency, improving quality of care and enhancing transparency. There is substantial cross-country variation in how activity-based funding has been implemented and developed. In Finland and Ireland, for instance, activity-based funding is principally used to determine hospital budgets, whereas the models adopted in the other three countries are more similar to the US approach. Assessing the impact of activity-based funding is complicated by a shortage of rigorous empirical evaluations. What evidence is currently available, though, suggests that the introduction of activity-based funding has been associated with an increase in activity, a decline in length of stay and/or a reduction in the rate of growth in hospital expenditure in most of the countries under consideration.

Appendectomy and diagnosis-related groups (DRGs): patient classification and hospital reimbursement in 11 European countries

Background

As part of the EuroDRG project, researchers from 11 countries (i.e., Austria, England, Estonia, Finland, France, Germany, Ireland, Netherlands, Poland, Sweden, and Spain) compared how their diagnosis-related groups (DRG) systems deal with appendectomy patients. The study aims to assist surgeons and national authorities to optimize their DRG systems.

Methods

National or regional databases were used to identify hospital cases with a diagnosis of appendicitis treated with a procedure of appendectomy. DRG classification algorithms and indicators of resource consumption were compared for those DRGs that together comprised at least 97% of cases. Six standardized case vignettes were defined, and quasi prices according to national DRG-based hospital payment systems were ascertained.

Results

European DRG systems vary widely: they classify appendectomy patients according to different sets of variables (between two and six classification variables) into diverging numbers of DRGs (between two and 11 DRGs). The most complex DRG is valued 5.1 times more resource intensive than an index case in France but only 1.1 times more resource intensive than an index case in Finland. Comparisons of quasi prices for the case vignettes show that hypothetical payments for the most complex case vignette amount to only 1,005€ in Poland but to 12,304€ in France.

Conclusions

Large variations in the classification of appendectomy patients raise concerns whether all systems rely on the most appropriate classification variables. Surgeons and national DRG authorities should consider how other countries’ DRG systems classify appendectomy patients in order to optimize their DRG system and to ensure fair and appropriate reimbursement.

Electronic supplementary material

The online version of this article (doi:10.1007/s00423-011-0877-5) contains supplementary material, which is available to authorized users.

DRG-based hospital payment systems and technological innovation in 12 European countries

OBJECTIVES

To assess how diagnosis-related group-based (DRG-based) hospital payment systems in 12 European countries participating in the EuroDRG project pay and incorporate technological innovation.

METHODS

A standardized questionnaire was used to guide comprehensive DRG system descriptions. Researchers from each country reviewed relevant materials to complete the questionnaire and drafted standardized country reports. Two characteristics of DRG-based hospital payment systems were identified as particularly important: the existence of short-term payment instruments encouraging technological innovation in different countries, and the characteristics of long-term updating mechanisms that assure technological innovation is ultimately incorporated into DRG-based hospital payment systems.

RESULTS

Short-term payment instruments and long-term updating mechanisms differ greatly among the 12 European countries included in this study. Some countries operate generous short-term payment instruments that provide additional payments to hospitals for making use of technological innovation (e.g., France). Other countries update their DRG-based hospital payment systems very frequently and use more recent data for updates.

CONCLUSIONS

Generous short-term payment instruments to promote technological innovation should be applied carefully as they may imply rapidly increasing health-care expenditures. In general, they should be granted only if rigorous analyses have demonstrated their benefits. If the evidence remains uncertain, coverage with evidence development frameworks or frequent updates of the DRG-based hospital systems may provide policy alternatives. Once the data and evidence base is substantially improved, future research should empirically investigate how different policy arrangements affect the adoption and use of technological innovation and health-care expenditures.

British Columbia hospitals: examination and assessment of payment reform (B-CHeaPR)

BACKGROUND

Accounting for 36% of public spending on health care in Canada, hospitals are a major target for cost reductions through various efficiency initiatives. Some provinces are considering payment reform as a vehicle to achieve this goal. With few exceptions, Canadian provinces have generally relied on global and line-item budgets to contain hospital costs. There is growing interest amongst policy-makers for using activity based funding (ABF) as means of creating financial incentives for hospitals to increase the 'volume' of care, reduce cost, discourage unnecessary activity, and encourage competition. British Columbia (B.C.) is the first province in Canada to implement ABF for partial reimbursement of acute hospitalization. To date, there have been no formal examinations of the effects of ABF policies in Canada. This study proposal addresses two research questions designed to determine whether ABF policies affect health system costs, access and hospital quality. The first question examines the impact of the hospital funding policy change on internal hospital activity based on expenditures and quality. The second question examines the impact of the change on non-hospital care, including readmission rates, amount of home care provided, and physician expenditures.

METHODS/DESIGN

A longitudinal study design will be used, incorporating comprehensive population-based datasets of all B.C. residents; hospital, continuing care and physician services datasets will also be used. Data will be linked across sources using anonymized linking variables. Analytic datasets will be created for the period between 2005/2006 and 2012/2013.

DISCUSSION

With Canadian hospitals unaccustomed to detailed scrutiny of what services are provided, to whom, and with what results, the move toward ABF is significant. This proposed study will provide evidence on the impacts of ABF, including changes in the type, volume, cost, and quality of services provided. Policy- and decision-makers in B.C. and elsewhere in Canada will be able to use this evidence as a basis for policy adaptations and modifications. The significance of this proposed study derives from the fact that the change in hospital funding policy has the potential to affect health system costs, residents' access to care and care quality.

Extracranial metastatic patterns on occurrence of brain metastases

Extracranial metastases and their frequency by sites have been described as prognostic factors for survival of patients with brain metastasis. However, these factors must be identified and described in more detail for a large series of patients. Using routine data from the largest German health insurance fund, 5,074 patients with brain metastasis who were diagnosed and treated in 2008 were analyzed to identify the frequency and distribution of extracranial metastatic sites concurrent with brain metastasis in relation to age, gender, and tumor type. Brain metastases were observed in males more frequently than in females (56.4 and 43.6% respectively P < 0.001), and were most often from lung (51.2%), breast (12.3%), and unknown (7.5%) primaries. Extracranial metastatic sites were observed in 58.8% of patients; the number of sites was from 1 to 7, with a mean of 1.11. For the 16 most common primary sites the range was from 0.13 to 1.91 . In 11 of these 16 sites, lungs were the most common concurrent metastatic site. Lung cancer, breast cancer, non-Hodgkin's lymphoma, and testicular cancer most commonly metastasized to bone, and bladder cancer to kidneys. Different primary tumors have different frequencies and patterns of extracranial metastatic sites concurrently with brain metastasis. The lung is the most common metastatic site of most primary tumors, bone for a few tumors, and kidneys for bladder cancer. For the unknown primary tumor type, screening for these most common metastatic sites must be intensified, in particular when molecular assessment is not available.

Rendering hospital budgets volume based and open ended to reduce waiting lists: does it work?

In the past decades fixed budgets for hospitals were replaced by reimbursement based on outputs in several countries in order to bring down waiting lists. This was also the case in the Netherlands where fixed global budgets were replaced by budgets that are to a large extent volume based and in practice open-ended. The objective of this study was to examine the effectiveness of this Dutch policy measure, which was implemented in 2001. We carried out a statistical analysis and interpretation of trends in Dutch hospital admission rates. We observed a significant turn in the development of in-patient admission rates after the abolition of budget caps in 2001: decreasing admission rates turned into an internationally exceptional increase of more than 3% per year. Day care admissions had already been rising explosively for two decades, but the pace increased after 2001. The increase in the number of admissions includes a broad range of patient categories that were not in the first place associated with long waiting times. The growth was attributable for a large part to admissions for observation of the patient and the evaluation of symptoms, not resulting in a definite medical diagnosis. We considered several factors, other than the availability of more resources, to explain the growth: the ageing of the population, making up for waiting list arrears, ditto for "under consumption" of unplanned care and, as to the growth of day care, substitution for inpatient care. However, these factors were all found to fall short as an explanation. Although waiting times have dropped since the change in the budget system, they continue to be long for several procedures. Our study indicates that making available more resources to admit patients, or otherwise an increase in hospital activity, do not in itself lead to equilibrium between demand and supply because the volume and composition of demand are partly induced by supply. We conclude that abolishing budget caps to solve waiting list problems is not efficient. Instead of a generic measure, a more focused approach is necessary. We suggest ingredients for such an approach.

Hospital capacity planning: from measuring stocks to modelling flows

The metric of "bed numbers" is commonly used in hospital planning, but it fails to capture key aspects of how hospital services are delivered. Drawing on a study of innovative hospital projects in Europe, we argue that hospital capacity planning should not be based on beds, but rather on the ability to deliver processes. We propose using approaches that are based on manufacturing theory such as "lean thinking" that focuses on the value that different processes add for the primary customer, i.e. the patient. We argue that it is beneficial to look at the hospital, not from the perspective of beds or specialties, but rather from the path taken by the patients who are treated in them, the respective processes delivered by health professionals and the facilities appropriate to those processes. Systematized care pathways seem to offer one avenue for achieving these goals. However, they need to be underpinned by a better understanding of the flows of patients, work and goods within a hospital, the bottlenecks that occur, and translation of this understanding into new capacity planning tools.

Examining cost variation across hospital departments--a two-stage multi-level approach using patient-level data

Studies of hospital efficiency seldom lead to changes in practice, partly because recommendations are unspecific or results are not seen as robust. We describe a method to compare hospital costs that utilises patient-level data. We perform a two-stage analysis in which we first consider factors that explain costs among patients and then across hospital departments. We illustrate our approach by examining the costs and characteristics of almost one million patients admitted to 136 English NHS hospital obstetrics departments in 2005/2006. We identify those departments with significantly higher costs that need to take action.

System-wide impacts of hospital payment reforms: evidence from Central and Eastern Europe and Central Asia

While there is broad agreement that the way that health care providers are paid affects their performance, the empirical literature on the impacts of provider payment reforms is surprisingly thin. During the 1990s and early 2000s, many European and Central Asian (ECA) countries shifted from paying hospitals through historical budgets to fee-for-service (FFS) or patient-based payment (PBP) methods (mostly variants of diagnosis-related groups, or DRGs). Using panel data on 28 countries over the period 1990-2004, we exploit the phased shift from historical budgets to explore aggregate impacts on hospital throughput, national health spending, and mortality from causes amenable to medical care. We use a regression version of difference-in-differences (DID) and two variants that relax the DID parallel trends assumption. We find that FFS and PBP both increased national health spending, including private (i.e. out-of-pocket) spending. However, they had different effects on inpatient admissions (FFS increased them; PBP had no effect), and average length of stay (FFS had no effect; PBP reduced it). Of the two methods, only PBP appears to have had any beneficial effect on "amenable mortality", but we found significant impacts for only a couple of causes of death, and not in all model specifications.