Does prospective payment increase hospital (in)efficiency? Evidence from the Swiss hospital sector

Supplementary private health insurance: The impact of physician financial incentives on medical practice

In the French diagnosis-related group (DRG)-based payment system, both private and public hospitals are financed by a public single payer. Public hospitals are overcrowded and have no direct financial incentives to choose one procedure over another. If a patient has a strong preference, they can switch to a private hospital. In private hospitals, the preference does come into play, but the patient has to pay for the additional cost, for which they are reimbursed if they have supplementary private health insurance. Do financial incentives from the fees received by physicians for different procedures drive their behavior? Using French exhaustive data on delivery, we find that private hospitals perform significantly more cesarean deliveries than public hospitals. However, for patients without private health insurance, the two sectors differ much less in terms of cesareans rate. We determine the impact of the financial incentive for patients who can afford the additional cost. Affordability is mainly ensured by the reimbursement of costs by private health insurance. These findings can be interpreted as evidence that, in healthcare systems where a public single payer offers universal coverage, the presence of supplementary private insurance can contribute to creating incentives on the supply side and lead to practices and an allocation of resources that are not optimal from a social welfare perspective.

Hospital productivity bias when not adjusting for cost heterogeneity: The case of Spain

This research quantifies the bias caused in hospital productivity measurements when cost heterogeneity is not considered. A multi-output stochastic cost frontier under a normalised translog specification is used to approximate the structure of technology of a sample of public general hospitals in Spain during the period 2002–2009. To control for observable heterogeneity in costs, a set of variables related to hospital characteristics are included in the cost frontier specification (i.e., hospital complexity, degree of specialisation, availability of outpatient clinics, variety of high-technology equipment available, teaching activity and quality of care), whereas unobservable heterogeneity is accounted for by means of individual dummy variables. A measure of hospitals’ cost efficiency is first obtained, and the analysis is then completed by measuring and decomposing the total factor productivity index (TFP-I) change. Findings reveal that controlling for heterogeneity decreases total productivity from an annual average rate of 0.028% to 1.330%, mainly driven by the negative contribution of the cost efficiency change component. Hence, a bias of 1.303 percentage points in the overall TFP-I is found as consequence of not controlling for heterogeneity. In addition to this, if heterogeneity factors are not accounted for, the mean cost efficiency index during the period analysed is 0.730, figure that increases up to 0.974 if heterogeneity is considered. Hence, the omission of heterogeneity leads to a bias of 24.4 percentage points in the mean cost efficiency. Therefore, not adjusting for heterogeneity in costs gives rise to distorted measurements of hospital productivity, as well as distortions in the contribution of each of its components, which may lead to the adoption of inadequate policies and decisions on resource allocation.

A performance analysis of Brazilian public health: TOPSIS and neural networks application

Purpose

The purpose of this paper is to estimate the performance of Brazilian hospitals’ services and to examine contextual variables in the socioeconomic, demographic and institutional domains as predictors of the performance levels attained.

Design/methodology/approach

The paper applied a two-stage approach of the technique for order preference by similarity to the ideal solution (TOPSIS) in public hospitals in 92 Rio de Janeiro municipalities, covering the 2008–2013 period. First, TOPSIS is used to estimate the relative performance of hospitals in each municipality. Next, TOPSIS results are combined with neural networks in an effort to originate a performance model with predictive ability. Data refer to hospitals’ outpatient and inpatient services, based on frequent indicators adopted by the healthcare literature.

Findings

Despite a slight performance increase over the period, substantial room for improvement is observed. The most important performance predictors were related to the demographic and socioeconomic status (area in square feet and GDP per capita) and to the juridical nature and type of ownership of the healthcare facilities (number of federal and private hospitals).

Practical implications

The results provide managerial insights regarding the performance of public hospitals and opportunities for better resource allocation in the healthcare sector. The paper also considers the impact of external socioeconomic, demographic and institutional factors on hospitals’ performance, indicating the importance of integrative public health policies.

Originality/value

This study displays an innovative context for applying the two-stage TOPSIS technique, with similar efforts not having been identified in the healthcare literature.

A scoping review of empirical evidence on the impacts of the DRG introduction in Germany and Switzerland

CONTEXT

Germany and Switzerland have introduced diagnosis-related groups (DRGs) for hospital reimbursement. This scoping review aims to evaluate if empirical evidence exists on the effect of the DRG introduction.

METHODS

Medline via PubMed, Embase (Elsevier), CINAHL, PsychINFO, and Psyndex were systematically screened for studies from 2003 onwards using keywords-DRG, prospective payment system, and lump sum-in English, German, and French. Abstracts were screened for alignment with our inclusion criteria and classified as editorial/commentary, review, or empirical study. The full-text extraction included data on country, study design, collected data, study population, specialty, comparison group, and outcome measures.

RESULTS

Our literature search yielded 1944 references, of which 1405 references were included in the abstract screening after removal of duplicates. 135 articles were relevant to DRG, including 94 editorials/comments/reviews and 41 empirical articles from 36 different samples. The most frequently used outcome parameters were length of stay (12), reimbursement/cost (9), and case numbers (9).

CONCLUSIONS

Only a minority of identified articles (30.4%; 41 of 135) presented empirical data. This indicates that discussion on the topic is not totally evidence-based. The only common trend was a decrease in length of stay.

Effectiveness evaluation of quota payment for specific diseases under global budget: a typical provider payment system reform in rural China

BACKGROUND

Quota payment for specific diseases under global budget is one of the most typical modes of provider payment system reform in rural China. This study aimed to assess this reform mode from aspects of the total fee, structure of the fee and enrollees' benefits.

METHODS

A total of 127,491 inpatient records from 2014 to 2016 were extracted from the New Rural Cooperative Medical Scheme (NRCMS) database in Weiyuan County, Gansu Province. Total fee, actual compensation ratio, out-of-pocket ratio, constituent ratio of the treatment fee, constituent ratio of the inspection and laboratory fee, and length of stay were selected as dependent variables. Both generalized additive models (GAMs) and multiple linear regression models were used to measure the change in dependent variables along with year.

RESULTS

Prior to the adjustment of the compensation type, out-of-pocket ratio and length of stay decreased, while total fee, actual compensation ratio, constituent ratio of the treatment fee, and constituent ratio of the inspection and laboratory fee increased. After the compensation type was adjusted, the mean of the total fee increased rapidly in 2015 and remained stable in 2016. The mean length of stay increased in 2015 but decreased in 2016. A comparison of inpatients suffering from diseases covered by quota payments and those suffering from general diseases revealed that total fee, out-of-pocket ratio, and length of stay decreased and actual compensation ratio increased for the former, whereas the opposite was true for the latter. Constituent ratio of the treatment fee and constituent ratio of the inspection and laboratory fee increased for both samples, except for the constituent ratio of the inspection and laboratory fee of quota payment diseases in 2016, which did not change.

CONCLUSIONS

Quota payment for specific diseases under global budget had obviously positive effects on cost control in Weiyuan, Gansu. Considering the limited coverage of quota payment for diseases, the long-term effect of this reform mode and its replicability awaits further evaluation.

Choice of reserve capacity by hospitals: a problem for prospective payment

This contribution analyzes the impact of prospective payment on hospital decisions with regard to reserve capacity, using Swiss hospital data covering the years 2004-2009. This data set is unique because it permits distinguishing of institutional characteristics (e.g., ownership status) from the mode of payment as determinants of hospital efficiency, due to the fact that some Swiss cantons introduced prospective payment early while others waited for federal legislation to be enacted in 2012. Since a hospital's choice of reserve capacity depends also on the risk preferences of management while affecting the cost function, heterogeneity is predicted even in the presence of identical technology and factor prices. For estimating hospitals' marginal costs, we employ the flexible representation of risk preferences by Pope and Chavas [Am J Agric Econ 76, 196-204 (1994)]. Production uncertainty is measured as the difference between actual admissions and admissions predicted by an autoregressive moving average model. Its effect on hospital cost is analyzed using a multilevel stochastic cost frontier model with random coefficients reflecting unobserved differences in technology. Public hospitals are found to opt for a higher probability of meeting unexpected demand, as predicted. Their operating cost is 1.1% higher than for private hospitals and even 1.9% higher than for teaching hospitals, creating an incentive to turn away patients or to keep them waiting for treatment.

What drives public health care expenditure growth? Evidence from Swiss cantons, 1970-2012

A better understanding of the determinants of public health care expenditures is key to designing effective health policies. We integrate demand and supply-side determinants and factors from political economy into an empirical analysis of the highly decentralized Swiss health care system and control for major health care finance reforms. We compile a novel data set of the cantonal health care expenditure in Switzerland, which currently amounts to about one fifth of total health care expenditure. We analyze the period 1970-2012 and use dynamic panel estimation methods. We find that per capita income, the unemployment rate and the share of foreigners are positively related to public health care expenditure growth. With regard to political economy aspects, public health care expenditures increase with the share of women elected to parliament. However, institutional restrictions for politicians, such as fiscal rules, do not appear to limit public health care expenditure growth.

The impact of the global budget system on dynamics of dental manpower and utilization of dental services

Background:

This study aimed to investigate dentists’ supply and practice patterns following the implementation of the global budget system in Taiwan.

Materials and Methods:

Data of reimbursement claims, municipal socioeconomic status and dental manpower were collected from the National Health Insurance administration, the Ministry of Internal Affair, and the Ministry of Health and Welfare, respectively. A multivariate linear regression method was used for data analysis.

Results:

A municipality that reported a higher percentage of tertiary educated population (t = 3.718, P < 0.001), a higher per capita income (t = 6.172, P < 0.001), a higher population density (t = 6.172, P < 0.001), or a lower percentage of elderly population (t = −2.506, P = 0.014) was more likely to have a higher number of dentists per 100,000 population. A municipality that reported a higher Herfindahl-Hirschman Index (HHI) value (t = 2.880, P = 0.005) was more likely to show a higher move-out rate among dentists. The rate was lower after the implementation of the global budget system (t = −2.436, P = 0.018). A municipality that had a higher percentage of elderly population (t = 3.628, P < 0.001), a lower percentage of young population (t = −2.138, P = 0.035), or a higher rate of population growth (t = 4.412, P < 0.001) was more likely to display a higher move-in rate among dentists. The percentage of amalgam restorations in total claims reduced from 19.82% to 17.94%, while the percentage of tooth-colored material restorations increased from 25.46% to 28.79%.

Conclusion:

This study has demonstrated a stabilizing effect of the global budget system on dynamics of dental manpower in Taiwan. A relationship between HHI and dentists’ move-out rate has been found. The relationship between municipal socioeconomic status and the density of dentists has also been confirmed. In addition, reduced utilization of amalgam restorations was accompanied by increased utilization of tooth-colored material restorations. Further investigations are indicated.