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Costs and prices for inpatient care in England: Mirror twins or distant cousins?

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  • David Epstein
  • Anne Mason

Abstract

The National Health Service (NHS) in England is introducing a national cost-per-case tariff system for the reimbursement of hospital services. Unlike most other countries with similar payment mechanisms, hospitals in England will have few alternative sources of income once the tariff system is fully implemented. This new financial regime generates powerful incentives for change, but exposes purchasers and providers to considerable financial risks. This paper examines the structure of the tariff. We describe how costs are determined, analyse the extent to which prices reflect costs, and review the results of an early evaluation of the system. Copyright Springer Science + Business Media, LLC 2006

Suggested Citation

  • David Epstein & Anne Mason, 2006. "Costs and prices for inpatient care in England: Mirror twins or distant cousins?," Health Care Management Science, Springer, vol. 9(3), pages 233-242, August.
    • Handle: RePEc:kap:hcarem:v:9:y:2006:i:3:p:233-242
    DOI: 10.1007/s10729-006-9090-4
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    References listed on IDEAS

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    1. Andrew Street, 2004. "Activity Based Funding for Hospitals: English Policy, International Experience," Monograph 000487, Office of Health Economics.
    2. Marisa Miraldo & Maria Goddard & Peter C Smith, 2006. "The incentive effects of payment by results," Working Papers 019cherp, Centre for Health Economics, University of York.
    3. John Appleby & Renu Jobanputra, 2004. "Payment by Results," New Economy, Institute for Public Policy Research, vol. 11(4), pages 195-200, December.
    4. Dusheiko, Mark & Gravelle, Hugh & Jacobs, Rowena & Smith, Peter, 2006. "The effect of financial incentives on gatekeeping doctors: Evidence from a natural experiment," Journal of Health Economics, Elsevier, vol. 25(3), pages 449-478, May.
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    Cited by:

    1. Matthias Vogl, 2012. "Assessing DRG cost accounting with respect to resource allocation and tariff calculation: the case of Germany," Health Economics Review, Springer, vol. 2(1), pages 1-12, December.
    2. Oliver Tiemann, 2008. "Variations in hospitalisation costs for acute myocardial infarction – a comparison across Europe," Health Economics, John Wiley & Sons, Ltd., vol. 17(S1), pages 33-45, January.
    3. Vogl, Matthias, 2013. "Improving patient-level costing in the English and the German ‘DRG’ system," Health Policy, Elsevier, vol. 109(3), pages 290-300.
    4. Andrew Street & Kirsi Vitikainen & Afsaneh Bjorvatn & Anne Hvenegaard, 2007. "Introducing activity-based financing: a review of experience in Australia, Denmark, Norway and Sweden," Working Papers 030cherp, Centre for Health Economics, University of York.
    5. Vogl, Matthias, 2014. "Hospital financing: Calculating inpatient capital costs in Germany with a comparative view on operating costs and the English costing scheme," Health Policy, Elsevier, vol. 115(2), pages 141-151.
    6. Raulinajtys-Grzybek, Monika, 2014. "Cost accounting models used for price-setting of health services: An international review," Health Policy, Elsevier, vol. 118(3), pages 341-353.
    7. Wozny, Florian, 2020. "Hospital Resources: Persistent Reallocation under Price Changes," IZA Discussion Papers 13256, Institute of Labor Economics (IZA).
    8. Jonas Schreyögg & Tom Stargardt & Oliver Tiemann & Reinhard Busse, 2006. "Methods to determine reimbursement rates for diagnosis related groups (DRG): A comparison of nine European countries," Health Care Management Science, Springer, vol. 9(3), pages 215-223, August.
    9. Galina Besstremyannaya, 2013. "The impact of Japanese hospital financing reform on hospital efficiency: A difference-in-difference approach," The Japanese Economic Review, Japanese Economic Association, vol. 64(3), pages 337-362, September.
    10. Fainman, Emily Zhu & Kucukyazici, Beste, 2020. "Design of financial incentives and payment schemes in healthcare systems: A review," Socio-Economic Planning Sciences, Elsevier, vol. 72(C).
    11. Polyzos, Nikolaos & Karanikas, Haralampos & Thireos, Eleftherios & Kastanioti, Catherine & Kontodimopoulos, Nick, 2013. "Reforming reimbursement of public hospitals in Greece during the economic crisis: Implementation of a DRG system," Health Policy, Elsevier, vol. 109(1), pages 14-22.

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