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Provider payment reform in China: the case of hospital reimbursement in Hainan province

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  • Winnie Yip

    (Harvard School of Public Health, Cambridge, Massachusetts, USA)

  • Karen Eggleston

    (Tufts University, Medford, Massachusetts, USA)

Abstract

This paper develops a simple model of payment incentives and empirically evaluates provider payment reform in Hainan Province, China. We use a pre-post study design with a control group to analyse two years of claims data to assess the impact of a January 1997 change to prospective payment for a sub-sample of the hospitals. This difference-in-difference empirical strategy allows us to isolate the supply-side payment reform effects from demand-side changes, in contrast with previous studies of China's reforms. Our results validate the theory that Chinese providers' behavioural response to payment incentives is similar to that reported in the literature derived from the experience of industrialized countries. We find that prepayment is associated with a slower rate of growth of overall expenditures, programme spending and patient co-payments per inpatient admission, compared to fee-for-service (FFS). These findings suggest cautious optimism regarding the effectiveness of prospective payment for controlling costs and should be encouraging for policymakers in developing and transitional economies considering replacement of FFS with more aggregated forms of provider payment. Copyright © 2001 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.602
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 10 (2001)
Issue (Month): 4 ()
Pages: 325-339

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Handle: RePEc:wly:hlthec:v:10:y:2001:i:4:p:325-339

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Gruber, Jonathan, 1994. "The Incidence of Mandated Maternity Benefits," American Economic Review, American Economic Association, American Economic Association, vol. 84(3), pages 622-41, June.
  2. Chalkley, Martin & Malcomson, James M., 1998. "Contracting for health services when patient demand does not reflect quality," Journal of Health Economics, Elsevier, Elsevier, vol. 17(1), pages 1-19, January.
  3. Randall P. Ellis & Thomas G. McGuire, 1993. "Supply-Side and Demand-Side Cost Sharing in Health Care," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 7(4), pages 135-151, Fall.
  4. Jonathan Gruber & Kathleen Adams & Joseph P. Newhouse, 1997. "Physician Fee Policy and Medicaid Program Costs," NBER Working Papers 6087, National Bureau of Economic Research, Inc.
  5. Yip, Winnie & Eggleston, Karen, 2004. "Addressing government and market failures with payment incentives: Hospital reimbursement reform in Hainan, China," Social Science & Medicine, Elsevier, Elsevier, vol. 58(2), pages 267-277, January.
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Cited by:
  1. Karen Eggleston & Li Ling & Meng Qingyue & Magnus Lindelow & Adam Wagstaff, 2008. "Health service delivery in China: a literature review," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 17(2), pages 149-165.
  2. Gao, Chen & Xu, Fei & Liu, Gordon G., 2014. "Payment reform and changes in health care in China," Social Science & Medicine, Elsevier, Elsevier, vol. 111(C), pages 10-16.
  3. Cheng, Shou-Hsia & Chen, Chi-Chen & Tsai, Shu-Ling, 2012. "The impacts of DRG-based payments on health care provider behaviors under a universal coverage system: A population-based study," Health Policy, Elsevier, Elsevier, vol. 107(2), pages 202-208.
  4. Eggleston, Karen & Wang, Jian & Rao, Keqin, 2008. "From plan to market in the health sector?: China's experience," Journal of Asian Economics, Elsevier, Elsevier, vol. 19(5-6), pages 400-412.
  5. Karen Eggleston & Winnie Yip, 2004. "Hospital Competition under Regulated Prices: Application to Urban Health Sector Reforms in China," International Journal of Health Care Finance and Economics, Springer, Springer, vol. 4(4), pages 343-368, December.
  6. Weiyan Jian & Yan Guo, 2009. "Does per‐diem reimbursement necessarily increase length of stay? The case of a public psychiatric hospital," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 18(S2), pages S97-S106, July.
  7. Wagstaff, Adam & Yu, Shengchao, 2007. "Do health sector reforms have their intended impacts?: The World Bank's Health VIII project in Gansu province, China," Journal of Health Economics, Elsevier, Elsevier, vol. 26(3), pages 505-535, May.
  8. Bogut, Martina & Voncina, Luka & Yeh, Ethan, 2012. "Impact of hospital provider payment reforms in Croatia," Policy Research Working Paper Series 5992, The World Bank.
  9. Jiale Zhang, 2007. "A DID analysis of the impact of health insurance reform in the city of Hangzhou," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 16(12), pages 1389-1402.
  10. Ardeshir Sepehri & Sisira Sarma & Wayne Simpson, 2006. "Does non-profit health insurance reduce financial burden? Evidence from the Vietnam living standards survey panel," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 15(6), pages 603-616.
  11. Moreno-Serra, Rodrigo & Wagstaff, Adam, 2009. "System-wide impacts of hospital payment reforms : evidence from central and eastern Europe and central Asia," Policy Research Working Paper Series 4987, The World Bank.
  12. Adam Wagstaff & Winnie Yip & Magnus Lindelow & William C. Hsiao, 2009. "China's health system and its reform: a review of recent studies," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 18(S2), pages S7-S23, July.
  13. Karen Eggleston & Chee-Ruey Hsieh, 2004. "Health Care Payment Incentives: A Comparative Analysis of Reforms in Taiwan, Korea and China," Discussion Papers Series, Department of Economics, Tufts University, Department of Economics, Tufts University 0402, Department of Economics, Tufts University.
  14. Likwang Chen & Winnie Yip & Ming-Cheng Chang & Hui-Sheng Lin & Shyh-Dye Lee & Ya-Ling Chiu & Yu-Hsuan Lin, 2007. "The effects of Taiwan's National Health Insurance on access and health status of the elderly," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 16(3), pages 223-242.
  15. World Bank, 2008. "Serbia : Decentralization and Local Service Delivery," World Bank Other Operational Studies 8099, The World Bank.
  16. Biorn, Erik & Hagen, Terje P. & Iversen, Tor & Magnussen, Jon, 2002. "The Effect of Activity-Based Financing on Hospital Efficiency: A Panel Data Analysis of DEA Efficiency Scores 1992-2000," MPRA Paper 8099, University Library of Munich, Germany.
  17. Hamada, Hironori & Sekimoto, Miho & Imanaka, Yuichi, 2012. "Effects of the per diem prospective payment system with DRG-like grouping system (DPC/PDPS) on resource usage and healthcare quality in Japan," Health Policy, Elsevier, Elsevier, vol. 107(2), pages 194-201.

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