Swiss DRGs: Patient Heterogeneity and Hospital Payments
AbstractIn this paper, we analyze the prospective method of paying hospitals when the within-DRG variance is high. To avoid patients dumping, an outlier payment system is implemented. In the APDRG Swiss System, it consists in a mixture of fully prospective payments for low costs patients and partially cost-based system for high cost patients. We show how the optimal policy depends on the degree to which hospitals take patients' interest into account. A fixed-price policy is optimal when the hospital is sufficiently benevolent. When the hospital is weakly benevolent, a mixed policy solving a trade-off between rent extraction, efficiency and dumping deterrence must be preferred. Following Mougeot and Naegelen (2008), we show how the optimal combination of fixed price and partially costbased payment depends on the degree of benevolence of the hospital, the social cost of public funds and the distribution of patients severity.
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Bibliographic InfoArticle provided by Swiss Society of Economics and Statistics (SSES) in its journal Swiss Journal of Economics and Statistics.
Volume (Year): 144 (2008)
Issue (Month): III (September)
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More information through EDIRC
hospital price regulation; outlier payment; piecewise mechanism;
Find related papers by JEL classification:
- I1 - Health, Education, and Welfare - - Health
- L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
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