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The Impact of Bundled Payment on Hospital Operations

Author

Listed:
  • Yiming Fan

    (Anhui Province Key Laboratory of Contemporary Logistics and Supply Chain, Institute of Advanced Technology, School of Management, University of Science and Technology of China, Hefei, Anhui 230026, China)

  • Jingqi Wang

    (School of Management and Economics and Shenzhen Finance Institute, The Chinese University of Hong Kong, Longgang, Shenzhen 518172, China)

  • Jingui Xie

    (School of Management, Technical University of Munich, 74076 Heilbronn, Germany; Munich Data Science Institute, Technical University of Munich, 80333 Munich, Germany)

  • Yugang Yu

    (Anhui Province Key Laboratory of Contemporary Logistics and Supply Chain, International Institute of Finance, School of Management, University of Science and Technology of China, Hefei, Anhui 230026, China)

  • Liqing Cao

    (The First Affiliated Hospital of University of Science and Technology of China, Division of Life Sciences and Medicine, University of Science and Technology of China, Hefei, Anhui 230001, China)

Abstract

This paper studies the impact of bundled payment policy on healthcare cost, efficiency, quality, and shift of care. Using insurance claim data, we empirically offer a more nuanced understanding of the impact of bundled payment policy on hospital operations and provide new evidence from China. Our evidence suggests that transitioning from fee-for-service to bundled payment reimbursement resulted in declines in treatment costs and length of stay. Along with that decline, there was an increase in planned revisits to outpatient clinics, which indicates a shift of care from the inpatient to the outpatient setting, as well as a rise in unplanned revisits, indicating a decline in service quality. The increase in readmission rate to inpatient wards is very small and not statistically significant. In addition, we discuss the design and implementation of bundled payment. Our results imply that careful bundle design is vital to encouraging providers to implement the new program without sacrificing quality.

Suggested Citation

  • Yiming Fan & Jingqi Wang & Jingui Xie & Yugang Yu & Liqing Cao, 2023. "The Impact of Bundled Payment on Hospital Operations," Service Science, INFORMS, vol. 15(2), pages 129-155, June.
    • Handle: RePEc:inm:orserv:v:15:y:2023:i:2:p:129-155
    DOI: 10.1287/serv.2022.0314
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