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System-wide impacts of hospital payment reforms: Evidence from Central and Eastern Europe and Central Asia

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  • Moreno-Serra, Rodrigo
  • Wagstaff, Adam

Abstract

While there is broad agreement that the way that health care providers are paid affects their performance, the empirical literature on the impacts of provider payment reforms is surprisingly thin. During the 1990s and early 2000s, many European and Central Asian (ECA) countries shifted from paying hospitals through historical budgets to fee-for-service (FFS) or patient-based payment (PBP) methods (mostly variants of diagnosis-related groups, or DRGs). Using panel data on 28 countries over the period 1990-2004, we exploit the phased shift from historical budgets to explore aggregate impacts on hospital throughput, national health spending, and mortality from causes amenable to medical care. We use a regression version of difference-in-differences (DID) and two variants that relax the DID parallel trends assumption. We find that FFS and PBP both increased national health spending, including private (i.e. out-of-pocket) spending. However, they had different effects on inpatient admissions (FFS increased them; PBP had no effect), and average length of stay (FFS had no effect; PBP reduced it). Of the two methods, only PBP appears to have had any beneficial effect on "amenable mortality", but we found significant impacts for only a couple of causes of death, and not in all model specifications.

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  • Moreno-Serra, Rodrigo & Wagstaff, Adam, 2010. "System-wide impacts of hospital payment reforms: Evidence from Central and Eastern Europe and Central Asia," Journal of Health Economics, Elsevier, vol. 29(4), pages 585-602, July.
  • Handle: RePEc:eee:jhecon:v:29:y:2010:i:4:p:585-602
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    1. Tsiachristas, Apostolos & Dikkers, Carolien & Boland, Melinde R.S. & Rutten-van Mölken, Maureen P.M.H., 2016. "Impact of financial agreements in European chronic care on health care expenditure growth," Health Policy, Elsevier, vol. 120(4), pages 420-430.
    2. Stefan Meyer, 2015. "Payment schemes and cost efficiency: evidence from Swiss public hospitals," International Journal of Health Economics and Management, Springer, vol. 15(1), pages 73-97, March.
    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, vol. 107(2), pages 202-208.
    4. Francesco Longo & Luigi Siciliani & Andrew Street, 2015. "Are costs differences between specialist and general hospitals compensated by the prospective payment system?," Discussion Papers 15/30, Department of Economics, University of York.
    5. Margit Sommersguter-Reichmann & Adolf Stepan, 2017. "Hospital physician payment mechanisms in Austria: do they provide gateways to institutional corruption?," Health Economics Review, Springer, vol. 7(1), pages 1-13, December.
    6. Sutherland, Jason M. & Liu, Guiping & Crump, R. Trafford & Law, Michael, 2016. "Paying for volume: British Columbia’s experiment with funding hospitals based on activity," Health Policy, Elsevier, vol. 120(11), pages 1322-1328.
    7. Adam Wagstaff & Daniel Cotlear & Patrick Hoang-Vu Eozenou & Leander R. Buisman, 2016. "Measuring progress towards universal health coverage: with an application to 24 developing countries," Oxford Review of Economic Policy, Oxford University Press, vol. 32(1), pages 147-189.
    8. 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, vol. 107(2), pages 194-201.
    9. Galina Besstremyannaya, 2014. "The adverse effects of value-based purchasing in health care: dynamic quantile regression with endogeneity," Discussion Papers 14-006, Stanford Institute for Economic Policy Research.
    10. Jayendra Sharma, 2016. "An assessment of fiscal space for health in Bhutan," International Journal of Health Planning and Management, Wiley Blackwell, vol. 31(3), pages 296-308, July.
    11. Bogut, Martina & Voncina, Luka & Yeh, Ethan, 2012. "Impact of hospital provider payment reforms in Croatia," Policy Research Working Paper Series 5992, The World Bank.
    12. Galina Besstremyannaya, 2015. "The adverse effects of incentives regulation in health care: a comparative analysis with the U.S. and Japanese hospital data," Working Papers w0218, Center for Economic and Financial Research (CEFIR).
    13. Nguyen, Ha Thi Hong & Bales, Sarah & Wagstaff, Adam & Dao, Huyen, 2013. "Getting incentives right : an impact evaluation of district hospital capitation payment in Vietnam," Policy Research Working Paper Series 6709, The World Bank.
    14. Bisceglia, Michele & Cellini, Roberto & Grilli, Luca, 2017. "Regional regulators in healthcare service under quality competition: A game theoretical model," MPRA Paper 80507, University Library of Munich, Germany.
    15. Randall P. Ellis & Bruno Martins & Michelle McKinnon Miller, 2015. "Provider Payment Methods and Incentives," Boston University - Department of Economics - Working Papers Series wp2015-023, Boston University - Department of Economics.
    16. Antonia Rosa Gurrieri & Marilene Lorizio, 2016. "Management in Healthcare System: A Case Study," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 6(11), pages 327-341, November.
    17. Cox, James C. & Sadiraj, Vjollca & Schnier, Kurt E. & Sweeney, John F., 2016. "Incentivizing cost-effective reductions in hospital readmission rates," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PB), pages 24-35.
    18. Aoife Brick & Anne Nolan & Jacqueline O’Reilly & Samantha Smith, 2012. "Conflicting Financial Incentives in the Irish Health-Care System," The Economic and Social Review, Economic and Social Studies, vol. 43(2), pages 273-301.
    19. Cheng, Amy H.Y. & Sutherland, Jason M., 2013. "British Columbia's pay-for-performance experiment: Part of the solution to reduce emergency department crowding?," Health Policy, Elsevier, vol. 113(1), pages 86-92.
    20. Guccio, Calogero & Lisi, Domenico & Pignataro, Giacomo, 2014. "Readmission and Hospital Quality under Prospective Payment System," MPRA Paper 56490, University Library of Munich, Germany.
    21. Owen Smith & Son Nam Nguyen, 2013. "Getting Better : Improving Health System Outcomes in Europe and Central Asia," World Bank Publications, The World Bank, number 13832, July.
    22. repec:bla:ijhplm:v:31:y:2016:i:4:p:580-601 is not listed on IDEAS
    23. Gao, Chen & Xu, Fei & Liu, Gordon G., 2014. "Payment reform and changes in health care in China," Social Science & Medicine, Elsevier, vol. 111(C), pages 10-16.
    24. Wubulihasimu, Parida & Gheorghe, Maria & Slobbe, Lany & Polder, Johan & van Baal, Pieter, 2015. "Trends in Dutch hospital spending by age and disease 1994–2010," Health Policy, Elsevier, vol. 119(3), pages 316-323.

    More about this item

    Keywords

    Provider payment methods Hospital reimbursement Health sector reform;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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