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Reimbursement Schemes for Hospitals: The Impact of Case and Firm Characteristics

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  • Wohlschlegel, Ansgar
  • Feess, Eberhard
  • Mueller, Helge

Abstract

We use data from a German health insurer to study how the impact of switching from a fee for service system (FFS) to a high powered incentive scheme (prospective payment system; PPS) depends on the characteristics of patients and hospitals. As hospitals had a transition period of several years to complete the switch, we can adopt a difference-in-differences approach by adding hospital fixed effects and a time trend. Our results support hypotheses drawn from an incentive and selection perspective: PPS reduces the length of stay of older relative to younger patients, of more severe relative to less severe cases, and in smaller relative to larger hospitals. Hospitals which adopted PPS earlier provide higher quality under PPS as proxied by the case-specific readmission rate.

Suggested Citation

  • Wohlschlegel, Ansgar & Feess, Eberhard & Mueller, Helge, 2017. "Reimbursement Schemes for Hospitals: The Impact of Case and Firm Characteristics," VfS Annual Conference 2016 (Augsburg): Demographic Change 145776, Verein für Socialpolitik / German Economic Association, revised 2017.
  • Handle: RePEc:zbw:vfsc16:145776
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    1. Pott, Clara & Stargardt, Tom & Frey, Simon, 2023. "Does prospective payment influence quality of care? A systematic review of the literature," Social Science & Medicine, Elsevier, vol. 323(C).

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    More about this item

    Keywords

    Hospital reimbursement; high-powered incentives; readmission; length of stay; difference-in-differences estimation;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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