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PubMed1991

Alternative methods of hospital remuneration in Israel.

The current method of remunerating hospitals by an average per diem fee tends to over-reimburse hospitals that have a concentration of departments whose true costs are less than the average price received. Hospitals with a high concentration of expensive high-technology service departments whose true costs are more than the average price received will be under-reimbursed and are obliged to cover their running deficits by other means, e.g., donations. Reimbursements on a per diem basis provide a 'perverse incentive' for all hospitals to maximize the length of patient stays in order to maximize their income. This paper briefly examines alternative methods to the deficient per diem method of reimbursing hospitals, such as fee for service, historical budgeting, capitation, gatekeeper's fees and diagnosis-related groups (DRGs). Fee for service or historical budgeting shows little or no advantage over the present system. However, a combination of capitation and/or DRG linked with some form of payment via physician gatekeepers appears to provide a favorable option for correcting the distortions of the per diem system. Department-specific DRG weights for each hospital's department admission mix are used to estimate the magnitude of the current distortion in resources allocated to hospitals. The calculation is based on the changes in hospital income were a DRG mechanism introduced instead of a per diem method. Such changes would increase the hospitalization income of hospitals with low lengths of stay and high bed turnover rates up to 39%. Regional hospital centers with high lengths of stays and low bed turnover rates would receive as much as 17% lower income in some cases. Only if DRG weights were available for each individual hospital would it be possible to ascertain whether differences in lengths of stay reflect differing severities of case loads or differing hospital efficiency levels.

Capitation Fee↗
PubMed1990

Efficiency, costs, and quality: the New Jersey experience revisited.

Focusing on two prospective payment systems that operated concurrently in New Jersey, this study employs the hospital department as the unit of analysis and compares the effects of the all-payer DRG system with those of the SHARE program on hospitals. Relative to the SHARE program, which regulated the revenue derived from Blue Cross and Medicaid, the results indicate that the comprehensive approach to prospective payment induced hospitals to control not only the direct costs of multiple dimensions of patient care per case but also the direct cost per day of nursing care and per unit of ancillary care. The results also suggest that the DRG system reduced the length of stay, the daily use of radiological procedures, and the volume of these services per case. On the other hand, the DRG system was accompanied by an increase in the daily use of laboratory procedures and the volume of laboratory care per case.

Ancillary Services, Hospital↗
PubMed1988

Uncompensated care pools and care to the uninsured: lessons from the New York Prospective Hospital Reimbursement Methodology.

One policy response to both the growing number of uninsured and the increased volume of uncompensated care is the development of revenue pools to explicitly finance uncompensated care. Despite the growing popularity of this response, few analyses have examined their success in financing uncompensated care and improving access to the uninsured. This study examines one such program developed as part of New York State's all-payer rate-setting system. The results indicate that the revenue pools improved the financial condition of New York hospitals but were less effective in improving access to care by the uninsured. The latter result was traced to the method selected by New York to measure "need" and distribute payments to hospitals. If the goal of such programs is to earmark payments to the uninsured, methods other than the New York system should be employed.

Data Collection↗

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