DRGs: the link between investment in technologies and appropriateness
AbstractIn this paper we investigate the relationship between the DRG system for hospital reimbursement and investment in technologies. We use a simple economic model where the reimbursement policy for treatments whose provision requires a sunk investment cost has an impact on both the decision whether to adopt the technology and many patients to treat with it. The optimal pricing policy involves a two-part tariff: a price equal to the marginal cost of the patient whose benefit of treatment equals the cost of provision, and a separate payment for the partial reimbursement of capital costs. Departures from this scheme, which are frequent in DRG tariff systems designed around the world, lead to a trade-off between the objective of making effective technologies available to patients and the need to ensure appropriateness in use.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Verona, Department of Economics in its series Working Papers with number 31/2012.
Date of creation: Nov 2012
Date of revision:
DRG; prospective payment; appropriateness; capital cost; health care investment;
Find related papers by JEL classification:
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-12-06 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rossella Levaggi & Michele Moretto, 2007.
"Investment in hospital care technology under different purchasing rules: a real option approach,"
"Marco Fanno" Working Papers
0046, Dipartimento di Scienze Economiche "Marco Fanno".
- Rosella Levaggi & Moretto Michele, 2008. "Investment In Hospital Care Technology Under Different Purchasing Rules: A Real Option Approach," Bulletin of Economic Research, Wiley Blackwell, vol. 60(2), pages 159-181, 04.
- Michele Moretto & Rosella Levaggi, 2004. "Investment in Hospital Care Technology under Different Purchasing Rules: A Real Option Approach," Working Papers 2004.75, Fondazione Eni Enrico Mattei.
- Siciliani, Luigi, 2006. "Selection of treatment under prospective payment systems in the hospital sector," Journal of Health Economics, Elsevier, vol. 25(3), pages 479-499, May.
- Liu, Ting & Ma, Ching-to Albert, 2013.
"Health insurance, treatment plan, and delegation to altruistic physician,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 85(C), pages 79-96.
- Ching-to Albert MA & Ting Liu, 2011. "Health Insurance, Treatment Plan, and Delegation to Altruistic Physician," Boston University - Department of Economics - Working Papers Series WP2011-022, Boston University - Department of Economics.
- Ting Liu & Ching-to Albert Ma, 2012. "Health Insurance, Treatment Plan, and Delegation to Altruistic Physician," Department of Economics Working Papers 12-08, Stony Brook University, Department of Economics.
- Rosella Levaggi & Michele Moretto & Paolo Pertile, 2010.
"Static and Dynamic Efficiency of Irreversible Health Care Investments under Alternative Payment Rules,"
2010.130, Fondazione Eni Enrico Mattei.
- Levaggi, R. & Moretto, M. & Pertile, P., 2012. "Static and dynamic efficiency of irreversible health care investments under alternative payment rules," Journal of Health Economics, Elsevier, vol. 31(1), pages 169-179.
- Bos, Dieter & De Fraja, Gianni, 2002. "Quality and outside capacity in the provision of health services," Journal of Public Economics, Elsevier, vol. 84(2), pages 199-218, May.
- Elin Johanna Gudrun Hafsteinsdottir & Luigi Siciliani, 2010.
"DRG prospective payment systems: refine or not refine?,"
John Wiley & Sons, Ltd., vol. 19(10), pages 1226-1239.
- Luigi Siciliani & Elín J. G. Hafsteinsdóttir, 2008. "DRG prospective payment system: refine or not refine?," Discussion Papers 08/29, Department of Economics, University of York.
- Schreyögg, Jonas & Bäumler, Michael & Busse, Reinhard, 2009. "Balancing adoption and affordability of medical devices in Europe," Health Policy, Elsevier, vol. 92(2-3), pages 218-224, October.
- Dranove, David & White, William D, 1994. "Recent Theory and Evidence on Competition in Hospital Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 169-209, Spring.
- Kamil Dybczak & Bartosz Przywara, 2010. "The role of technology in health care expenditure in the EU," European Economy - Economic Papers 400, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael Reiter).
If references are entirely missing, you can add them using this form.