Hospital cost control in Norway: a decade's experience with prospective payment

Under Norway's prospective payment system, which was in existence from 1972 to 1980, hospital costs increased 15.8 percent annually, compared with 15.3 percent in the United States. In 1980 the Norwegian national government started paying for all institutional services according to a population-based, morbidity-adjusted formula. Norway's prospective payment system provides important insights into problems of controlling hospital costs despite significant differences, including ownership of medical facilities and payment and spending as a percent of GNP. Yet striking similarities exist. Annual real growth in health expenditures from 1972 to 1980 in Norway was 2.2 percent, compared with 2.4 percent in the United States. In both countries, public demands for cost control were accompanied by demands for more services. And problems of geographic dispersion of new technology and distribution of resources were similar. Norway's experience in the 1970s demonstrates that prospective payment is no panacea. The annual budget process created disincentives to hospitals to control costs. But Norway's changes in 1980 to a population-based methodology suggest a useful approach to achieve a more equitable distribution of resources. This method of payment provides incentives to control variations in both admissions and cost per case. In contrast, the Medicare approach based on Diagnostic Related Groups (DRGs) is limited, and it does not affect variations in admissions and capital costs. Population-based methodologies can be used in adjusting DRG rates to control both problems. In addition, the DRG system only applies to Medicare payments; the Norwegian experience demonstrates that this system may result in significant shifting of costs onto other payors.     

Optimal hospital payment rules under rationing by waiting

We derive optimal rules for paying hospitals for non-emergency care when providers choose quality and capacity, and patient demand is rationed by waiting time. Waiting for treatment is costly for patients, so that hospital payment rules should take account of their effect on waiting time as well as on quality. Since deterministic waiting time models imply that profit maximising hospitals will never choose to have both positive quality and positive waiting time, we develop a stochastic model of rationing by waiting in which both quality and expected waiting are positive in equilibrium. We use it to show that, although a prospective output price gives hospitals an incentive to attract patients by raising quality and reducing waiting times, it must be supplemented by a price attached to hospital decisions on quality or capacity or to a performance indicator which depends on those decisions (such as average waiting time, or average length of stay). A prospective output price by itself can support the optimal quality and waiting time distribution only if the welfare function respects patient preferences over quality and waiting time, if patients’ marginal rates of substitution between quality and waiting time are independent of income, and if waiting for treatment does not reduce the productivity of patients. If these conditions do not hold, supplementing the output price with a reward linked to the hospital's cost can increase welfare, though it is possible that costs should be taxed rather than subsidised.     

Accounting and reimbursement schemes for inpatient care in France

The new French case-mix system of hospital payment was adopted in 2004 for public hospitals and in March 2005 for private-for-profit hospitals. Implementing this reform requires a period of transition but the challenges ahead can already be predicted. Prices will have to change before this mode of reimbursement can have any real impact. This requires producing more detailed hospital cost data and using fine measuring tools such as the cost accounting method developed for use in this context. This article describes and analyses the main tools and methods selected to implement the new French prospective payment system.     

Hospital utilization and reimbursement method in Brazil

Urban private hospital discharges in Brazil increased enormously during the last decade. Several measures were taken in an effort to slow the rate of increase in hospital admissions and the escalation of hospital costs, which were out of control by the end of the last decade. The introduction of a new case-based reimbursement method, late in 1983, not only contributed to increased hospitalizations, but to changed hospital case mix, as private hospitals shifted from more costly to less costly patients. This occurred especially in the most developed areas of the country, where the concentration of profit-making hospitals is very high. The case-based prospective payment method can be seen as a good managerial tool for use in comparing hospital performance. However, it seems not to be a good mechanism for controlling health care expenditures, especially when profit-making hospitals dominate the provision of hospital care. Any decrease in hospitalization by private hospitals in Brazil has been caused by the severe economic recession, which hit the Brazilian economy hard, and by the shift in hospital admissions from private to public hospitals, not by the introduction of the new reimbursement method which has changed the unit of payment from ‘patient day’ to case or procedure.     

Evaluation of the impact of Medicare and Medicaid prospective payment on utilization of Philadelphia area hospitals.

The article evaluates the impact of Medicare and Medicaid DRG prospective payment on utilization in Philadelphia area hospitals. These hospitals began a combined Medicare-Medicaid DRG prospective payment at the same time after a common cost-based reimbursement history. Particular attention is paid to the hospital-driven as opposed to physician-driven explanations of declining inpatient utilization. The evaluation of the Tax Equity and Fiscal Responsibility Act (TEFRA) and Diagnosis-Related Group (DRG) interventions uses an ARIMA model that removes both seasonal and autoregressive effects. Both TEFRA and the DRG payment system produced significant reductions in average length of stay, total hospital days, and hospital occupancy rates. Neither, however, had a significant effect on admissions. Hospitals with a higher proportion of Medicare and Medicaid discharges reduced their average length of stay more than other facilities. Hospitals with a higher proportion of outpatient visits to inpatient admissions also reduced inpatient length of stay more. Hospitals with higher than expected overall admissions after the introduction of the DRG program tended to have lower than expected average lengths of stay. The results lend support to the "hospital-driven" interpretation of declines in average length of stay. They fail to support the contention that the DRG system will produce automatic counteracting increases in admissions in the system as a whole.     

A partial test of a hospital behavioral model

The influence of hospital and community characteristics on the behavior of five dimensions of hospital output is examined in this article. These dimensions are the level of emergency stand-by capacity, total admissions, the diagnosis-mix of admissions and the hospital's 'style of practice' with regard to ancillary services and length of stay. A simultaneous equations model is estimated with data from a sample of 63 New England short-term general hospitals for 1970. The findings suggest that various types of short-term general hospitals have distinctive preferences for emergency capacity, volume, case mix and style of practice, and that style of practice may be more appropriately viewed as a rate of resource use per day. Specific findings of interest include the positive interdependence between protection against running out of emergency beds and length of stay, and between length of stay and ancillary service use. Hospitals that admit greater numbers of patients tend to treat more severely ill patients, and sicker patients tend to go to larger hospitals. Hospitals that provide more ancillary services tend to attract the more acutely ill patients. Relationships among other elements of the hospital's utility function represent trade-offs, i.e. substitution, in a constrained world. Among the exogenous factors, patient preferences and ability to pay have strong associations with the types of care provided by hospitals. Highly educated, high income communities, for example, tend to prefer risk averse, service intensive hospital output. Teaching hospitals are shown to prefer higher protection levels, service-intensive patterns of care, and higher admissions levels. Self-paying patients tend to be admitted for more discretionary types of diagnoses and to receive longer diagnosis-specific lengths of stay. A relatively greater supply of physician specialists in the market area is associated with increased use of ancillary services in the hospital. If replicated, these results have significant policy implications for reimbursing teaching hospitals; for defining accessibility of hospital care for the uninsured; for identifying the practice of 'skimming' by proprietary hospitals; and for specifying the role of community preferences in determining hospital performance, especially with respect to quality of care and level of emergency stand-by capacity.     

The variance of length of stay and the optimal DRG outlier payments

Prospective payment schemes in health care often include supply-side insurance for cost outliers. In hospital reimbursement, prospective payments for patient discharges, based on their classification into diagnosis related group (DRGs), are complemented by outlier payments for long stay patients. The outlier scheme fixes the length of stay (LOS) threshold, constraining the profit risk of the hospitals. In most DRG systems, this threshold increases with the standard deviation of the LOS distribution. The present paper addresses the adequacy of this DRG outlier threshold rule for risk-averse hospitals with preferences depending on the expected value and the variance of profits. It first shows that the optimal threshold solves the hospital’s tradeoff between higher profit risk and lower premium loading payments. It then demonstrates for normally distributed truncated LOS that the optimal outlier threshold indeed decreases with an increase in the standard deviation.      

基于TOPSIS法和因素分析法的我国公立医院经济运行分析

目的：评估我国公立医院运行情况，分析公立医院门诊收入和住院收入的影响因素，为促进公立医院良好运行、控制医疗费用不合理增长提出建议。方法：采用结合因子分析的TOPSIS法和因素分析法，从公立医院运行指标和医疗收入两个切入点展开分析。结果：公立医院的经济运行状况与当地的经济发展水平并没有明显相关关系；我国多数省份公立医院资产风险较高；东部地区省份公立医院成本管理能力有待提升；中西部地区公立医院运营能力较差；门诊收入增长为门诊人次和次均费用共同作用的结果，住院收入增长则主要依赖于住院人数的增长。结论：我国公立医院经济运行整体质量不高，建议加大政府投入，减轻公立医院债务负担；提高成本管理水平，增强内部管理能力；积极推进支付方式改革，控制医疗费用不合理增长。     

Hospital reimbursement patterns among patients with surgical wound infections following open heart surgery

Of the more than 200,000 patients who undergo open heart surgery annually in the United States, 2% to 10% will develop a post-operative infection related to their surgery. The economic impact of such infections on hospitals under the prospective payment system is unclear. To study the effect of such infections on hospital costs and reimbursement patterns, we compared case patients with controls of similar age, sex, urgency of surgery and type of surgery. The postoperative stay for cases was significantly longer than for matched controls (26.8 days and 8.3 days, respectively; p = .0002). The mean hospital cost for case admissions ($25,957) was twice as high as for control admissions ($12,795) (p = .0002). Cases resulted in an average net loss to the hospital of $2,344 per patient, while controls yielded an average net gain of $3,196 per patient (p = .02). We conclude that hospitals have substantial financial incentives to minimize the incidence of postoperative wound infections associated with open heart surgery.     

Payment source and the cost of hospital care: evidence from a multiproduct cost function with multiple payers

This study investigates the capacity of hospitals to vary the intensity of their services based on patients' expected sources of payment. While the concept of price discrimination by hospitals based on payer generosity ("cost-shifting") has been discussed extensively, the notion that hospitals can adjust payer-specific marginal costs to reflect differences in reimbursement policies has not been studied in depth. To examine this issue. this analysis employs a multiproduct cost function with hospital outputs defined as admissions by payment source, controlling for the distribution and severity of illness ("casemix") for each payer. Marginal costs of casemix-adjusted discharges are obtained and compared for Medicare, Medicaid, Private Payers, and a residual category that includes uncompensated care. We find that indeed, payer-specific marginal costs generally reflect payer generosity.     

The Impact of a Tiered Network on Hospital Choice

Objective

To evaluate the effect of a tiered network on hospital choice for scheduled admissions.

Data

The 2009–2012 patient-level claims data from Blue Cross Blue Shield of Massachusetts (BCBSMA).

Study Design

BCBSMA''s three-tiered hospital network employs large differential cost sharing to encourage patients to seek care at hospitals on the preferred tier. During the study period, 44 percent of hospitals were moved to a different tier based on changes in cost or quality performance. We relied on this longitudinal variation for identification and specified conditional logit models to estimate the effect of the tiered network (TN) on patients'' hospital choices relative to a non-TN comparison group.

Principal Findings

The TN was associated with increased use of hospitals on the preferred and middle tiers relative to the nonpreferred tier for planned admissions. The results suggest that if all members were in a TN plan, relative to all members being in a non-TN plan, scheduled admissions to hospitals on the nonpreferred tier would drop by 7.6 percentage points, while those to middle and preferred tier hospitals would rise by 0.9 and 6.6 percentage points, respectively.

Conclusion

Differential cost sharing can steer patients toward preferred hospitals for planned admissions.     

Where Does the Money Go? Analyzing the Patient Experience in Safety-Net Hospitals

BackgroundLow-income, publicly insured admissions historically cost more to treat than does the average patient. To ensure that hospitals are reimbursed an adequate amount for care of indigent populations, Medicare reimburses hospitals an additional percentage amount according to federally set financial schedule. At 15% of a disproportionate patient percentage, a hospital is reimbursed an extra 2.5% of the standard prospective payment rate.ObjectiveThis research seeks to determine whether hospital qualification as a Medicare Disproportionate Share Hospital results in higher patient experience ratings.MethodsA regression discontinuity method was used to determine the effect of lagged Disproportionate Share Hospital (DSH) status on next year patient experience ratings. The Hospital Consumer Assessment of Healthcare Providers and Systems data provide publicly available patient ratings.ResultsOn average, hospital ratings increase by 6% as a result of DSH status. Hospital ratings increase by an average of 6.5% when nonprofit hospitals are analyzed. This finding is primarily driven by patient facility cleanliness and medical provider communication ratings.ConclusionsThe federal mandate that individuals purchase health insurance in the United States coupled with the state expansion of Medicaid coverage will theoretically eliminate the need for Medicare DSH payments. It is calculated, however, that hospitals will need increased Medicaid reimbursements of more than $300 per patient to make up for the loss of Medicare DSH reimbursements. Hospitals will likely suffer financially as a direct result of reduced Medicare reimbursements through the DSH program.     

Estimating Influenza-Related Hospital Admissions in Children and Adults

Introduction

Influenza is associated with illnesses such as pneumonia and other respiratory conditions and in severe cases leads to death. The prevalence of these illnesses and deaths fluctuates with the seasons during the year, even in the absence of influenza. Although many studies have focussed on mortality associated with influenza epidemics, and some have examined hospitalizations in elderly patients, there are very few studies that have examined the effect of influenza epidemics on adults or children. This study seeks to determine the association between general practitioner (GP) consultations for influenza-like illnesses and hospital admissions of adults and children associated with influenza epidemics.

Methods

Structural Time Series Models with stochastic trend and seasonal components were developed for two age groups (children aged 0–15 years, and adults aged 16–50 years). Data from the Swiss Sentinel Surveillance Network on GP consultation rates for influenza-like illnesses, and data from Swiss hospital admissions, were obtained for the period 1987–1996. The explanatory variables (i.e., the percentage of GP consultations for influenza-like illnesses and a 1-week lag of this variable) were modeled against hospital admission rates for pneumonia and influenza and other respiratory conditions. Excess hospitalizations were calculated as the difference between predicted hospital admissions during influenza epidemics and expected hospital admissions in the absence of influenza epidemics.

Results

In these two age groups, there was an annual average of 1452 (range: 1000–1700) hospital admissions directly associated with influenza epidemics. Excess admission rates were substantially higher in children (pneumonia and influenza: 4.77 per 10 000 children per year, and other respiratory conditions: 2.29 per 10 000 children per year) compared with adults (pneumonia and influenza: 0.86 per 10 000 adults per year and other respiratory conditions: 0.68 per 10 000 adults per year). The models explained 56–84% of the variation in hospital admissions. The seasonal patterns were stable over the 10 years modeled and the variances of the trends were small.

Conclusion

The structural time series models is an ideal approach to model influenza-related hospitalizations as the models capture trends, seasonal variation, and the association with exogenous factors.

     

Long‐Term Impact of Medicare Payment Reductions on Patient Outcomes

Objective

To examine the long-term impact of Medicare payment reductions on patient outcomes for Medicare acute myocardial infarction (AMI) patients.

Data Sources

Analysis of secondary data compiled from 100 percent Medicare Provider Analysis and Review between 1995 and 2005, Medicare hospital cost reports, Inpatient Prospective Payment System Payment Impact Files, American Hospital Association annual surveys, InterStudy, Area Resource Files, and County Business Patterns.

Study Design

We used a natural experiment—the Balanced Budget Act (BBA) of 1997—as an instrument to predict cumulative Medicare revenue loss due solely to the BBA, and basing on the predicted loss categorized hospitals into small, moderate, or large payment-cut groups and followed Medicare AMI patient outcomes in these hospitals over an 11-year panel between 1995 and 2005.

Principal Findings

We found that while Medicare AMI mortality trends remained similar across hospitals between pre-BBA and initial-BBA periods, hospitals facing large payment cuts saw smaller improvement in mortality rates relative to that of hospitals facing small cuts in the post-BBA period. Part of the relatively higher AMI mortalities among large-cut hospitals might be related to reductions in staffing levels and operating costs, and a small part might be due to patient selection.

Conclusions

We found evidence that hospitals facing large Medicare payment cuts as a result of BBA of 1997 were associated with deteriorating patient outcomes in the long run. Medicare payment reductions may have an unintended consequence of widening the gap in quality across hospitals.     

Cost-shifting under cost reimbursement and prospective payment.

Cost-shifting is seen as a three-way phenomenon involving hospital interests as well as those of government and private patients. Without economies of scale, private patients are indifferent to government policies unless underpayment leads to hospital bankruptcy. In the presence of economies of scale, private patients benefit from reductions in government payment under either cost reimbursement or prospective payment. Their interest in a shift to prospective payment depends upon the hospital's location on its cost curve. Hospitals benefit from increases in payment rates in all cases, but benefit from a shift to prospective payment only if operating in a region of declining average costs. The conventional view of cost-shifting is inconsistent with profit maximization and may be inappropriate for many voluntary hospitals as well.     

Variable prospective financing in the Danish hospital sector and the development of a Danish case-mix system

This article aims to describe and assess the Danish case-mix system, the cost accounting applied in setting national tariffs and the introduction of variable, prospective payment in the Danish hospital sector. The tariffs are calculated as a national average from hospital data gathered in a national cost database. However, uncertainty, mainly resulting from the definition of cost centres at the individual hospital, implies that the cost weights may not fully reflect the hospital treatment cost. As variable prospective payment of hospitals currently only applies to 20% of a hospital's budget, the incentives and the effects on productivity, quality and equality are still limited.     

The effect of investor-owned chain acquisitions on hospital expenses and staffing.

Much concern has been raised about the effect of "corporatization" of health through the expansion of investor-owned hospital chains. One method of expansion is through hospital acquisition. At issue is the question of the effect of acquisitions on expenses and on such patient care inputs as staffing levels. In this article, we examine the effect of acquisition by one investor-owned chain on hospital costs and staffing. Subsequent to acquisition, hospital costs increase and staffing decreases, relative to competitor hospitals. However, since investor-owned hospitals not recently acquired do not have higher cost levels than their competitors, the increase in costs appears to be due to factors associated with the acquisition itself rather than factors associated with being an investor-owned hospital. Under the retrospective payment system in effect at the time, revenues also were higher for acquired hospitals. Under prospective payment, increasing revenues has been more difficult, decreasing acquisition incentives.     

The optimality of hospital financing system: the role of physician–manager interactions

The ability of a prospective payment system to ensure an optimal level of both quality and cost reducing activities in the hospital industry has been stressed by Ma (Ma, J Econ Manage Strategy 8(2):93–112, 1994) whose analysis assumes that decisions about quality and costs are made by a single agent. This paper examines whether this result holds when the main decisions made within the hospital are shared between physicians (quality of treatment) and hospital managers (cost reduction). Ma’s conclusions appear to be relevant in the US context (where the hospital managers pay the whole cost of treatment). Nonetheless, when physicians partly reimburse hospitals for the treatment cost as it is the case in many European countries, we show that the ability of a prospective payment system to achieve both objectives is sensitive to the type of interaction (simultaneous, sequential or joint decision-making) between the agents. Our analysis suggests that regulation policies in the hospital sector should not be exclusively focused on the financing system but should also take the interaction between physicians and hospital managers into account.      

四川省慢性阻塞性肺炎患者住院费用分析研究

[目的]研究四川省慢性阻塞性肺疾病(COPD)患者真实的住院花费,明确该疾病对患者造成的直接经济负担,为四川省科学控费、提高医院医疗水平、促进分级诊疗和优化医疗资源配置提供切实依据。[方法]对2017年四川省183个区县按照ICD-10被诊断为COPD的患者开展住院费用全人群分析,使用Excel分析中西医院住院费用的构成情况,采用STATA 15.0进行数据清理和统计分析;应用GLM回归方法对影响患者住院总费用的主要因素进行分析。[结果](1)患者住院总费用均值为5,223.44元,中位数为3,561.195元,最大值为593,168.8元。(2)患者住院费用占比最高的是西药类费用,约占总费用的38.32%。(3)患者住院总费用均值前三位依次是:专科医院7,841.29元,中医院7,614.52元,综合医院7,394.49元。(4)从自付金额来看,现役军人患者自付金额最低,为434.38元;专业技术人员需要承担的自付金额均值最高,为2,775.77元。[结论]男性患者住院总费用高于女性患者;患者的年龄与住院总费用呈现正相关的关系;没有配偶的患者住院平均总费用比有配偶的高;相对于专科医院,在其他医疗机构就诊的COPD患者住院平均总费用均低于专科医院。