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How should hospital reimbursement be refined to support concentration of complex care services?

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  • Chris Bojke
  • Katja Grašič
  • Andrew Street

Abstract

The English National Health Service is promoting concentration of the treatment of patients with relatively rare and complex conditions into a limited number of specialist centres. If these patients are more costly to treat, the prospective payment system based on Healthcare Resource Groups (HRGs) may need refinement because these centres will be financially disadvantaged. To assess the funding implications of this concentration policy, we estimate the cost differentials associated with caring for patients that receive complex care and examine the extent to which complex care services are concentrated across hospitals and HRGs. We estimate random effects models using patient‐level activity and cost data for all patients admitted to English hospitals during the 2013/14 financial year and construct measures of the concentration of complex services. Payments for complex care services need to be adjusted if they have large cost differentials and if provision is concentrated within a few hospitals. Payments can be adjusted either by refining HRGs or making top‐up payments to HRG prices. HRG refinement is preferred to top‐payments the greater the concentration of services among HRGs.

Suggested Citation

  • Chris Bojke & Katja Grašič & Andrew Street, 2018. "How should hospital reimbursement be refined to support concentration of complex care services?," Health Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 26-38, January.
    • Handle: RePEc:wly:hlthec:v:27:y:2018:i:1:p:e26-e38
    DOI: 10.1002/hec.3525
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    References listed on IDEAS

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    1. Elin Johanna Gudrun Hafsteinsdottir & Luigi Siciliani, 2010. "DRG prospective payment systems: refine or not refine?," Health Economics, John Wiley & Sons, Ltd., vol. 19(10), pages 1226-1239, October.
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    4. Andrew Street & Conrad Kobel & Thomas Renaud & Josselin Thuilliez & ON BEHALF OF THE EURODRG GROUP, 2012. "How Well Do Diagnosis‐Related Groups Explain Variations In Costs Or Length Of Stay Among Patients And Across Hospitals? Methods For Analysing Routine Patient Data," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 6-18, August.
    5. Katja Grašič & Anne Mason & Andrew Street, 2015. "Paying for the quantity and quality of hospital care: the foundations and evolution of payment policy in England," Health Economics Review, Springer, vol. 5(1), pages 1-10, December.
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