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Heterogeneous hospital response to a per diem prospective payment system

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  • Galina Besstremyannaya

    (CEFIR)

Abstract

The paper demonstrates the adverse effects of degressive rates, dependent on the percentiles of length of stay, in a prospective payment system with per diem payments. Using the dynamic panel data estimates with a recent nationwide administrative database for major diagnostic categories in 697 Japanese hospitals in July 2007- March 2012, the paper shows that average length of stay significantly increases (decreases) for hospitals in percentiles 0-25 (51-100) of the pre-reform length of stay. The decline of the average length of stay is larger for hospitals in higher percentiles of the length of stay. Hospitals in percentiles 51-100 significantly raise planned early readmission rate. As a remedy to the problem, the paper discusses the applicability of the “best practice” rate-setting.

Suggested Citation

  • Galina Besstremyannaya, 2013. "Heterogeneous hospital response to a per diem prospective payment system," Working Papers w0193, Center for Economic and Financial Research (CEFIR).
    • Handle: RePEc:cfr:cefirw:w0193
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    More about this item

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • R22 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Other Demand

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