Hospital Payment Systems
Payment systems (PS) are at the core of the intermediation function between payers and recipients of care, which is complex because of the lack of functioning true markets in healthcare, and where the final outcome is significantly disconnected from what is paid for. There is a major distinction between retrospective and prospective PS. Incentives vary in complex ways, and correspondingly with complex results, between line-item budgets, per diem, global budgets, capitation, diagnosis-related groups, fee-for-service, and pay-for-performance. There are often trade-offs between providing incentives for enhancing quality and containing costs, risk selection and efficiency, creating producer surplus and inducing supply, and governance control and flexibility. Quality top-ups look like a promising route in systems which are neither fully prospective nor retrospective, and which relate to the business model employed.
KeywordsBusiness model Capitation Diagnosis-related groups Efficiency Fee-for-service Flexibility Global budgets Governance Incentives Intermediation Line-item budgets Markets Pay-for-performance Payment systems Per diem Producer surplus Prospective Quality top-ups Retrospective Risk selection Trade-offs
- Belli, P. (2002). Incentives and the Reform of Health Care Systems. London: London School of Economics, PhD thesis.Google Scholar
- Busse, R., Geissler, A., Aaviksoo, A., Cots, F., Hakkinen, U., Kobel, C., et al. (2013). Diagnosis Related Groups in Europe: Moving Towards Transparency, Efficiency, and Quality in Hospitals? BMJ (Clinical Research ed.), 347(7916), 1–7.Google Scholar
- Chalkley, M., & Malcomson, J. (1995). Contracting for Health Services with Unmonitored Quality. Discussion Papers in Economics and Econometrics 9510, University of Southampton.Google Scholar
- Chilingerian, J. (2008). Origins of DRGs in the United States: A Technical, Political and Cultural Story. In J. Kimberly, G. De Pouvourville, & T. D’Aunno (Eds.), The Globalization of Managerial Innovation in Health Care (pp. 4–33). Cambridge: Cambridge University Press. Retrieved from https://www.cambridge.org/core/books/globalization-of-managerial-innovation-in-health-care/origins-of-drgs-in-the-united-states-a-technical-political-and-cultural-story/708E309A8ED8C6C018C45C160356EABD.CrossRefGoogle Scholar
- Christensen, C. (2009). The Innovator’s Prescription a Disruptive Solution for Healthcare. New York: McGraw Hill.Google Scholar
- Enthoven, A. (1985). Reflections of the Management of the NHS. London: Nuffield & Provincial Hospitals Trust.Google Scholar
- Evans, R. (1974). Supplier-Induced Demand: Some Empirical Evidence and Implications. In M. Perlman (Ed.), The Economics of Health and Medical Care. London: Macmillan.Google Scholar
- Ma, C., & McGuire, T. (1997). Optimal Health Insurance and Provider Payment. American Economic Review, 87(4), 685–700.Google Scholar
- Rice, N., & Smith, P. (2000). Strategic Resource Allocation and Funding Decisions. Copenhagen: European Observatory on Health Care Systems. Paper presented at the European Observatory on Health Care Systems’ Project on Funding Health Care: Options for Europe.Google Scholar
- Roemer, M. (1961). Bed Supply and Hospital Utilization: A Natural Experiment. Hospitals, 35, 36–42.Google Scholar
- Stiglitz, J. (1999, June). Incentives and Institutions in the Provision of Health Care in Developing Countries: Towards an Efficient and Equitable Health Care Strategy. Rotterdam: International Health Economic Association. Presented at the iHEA II Meetings, Rotterdam.Google Scholar
- Vlaanderen, F. P., Tanke, M. A., Bloem, B. R., Faber, M. J., Eijkenaar, F., Schut, F. T., et al. (2018, July 5). Design and Effects of Outcome-Based Payment Models in Healthcare: A Systematic Review. European Journal of Health Economics. https://doi.org/10.1007/s10198-018-0989-8.