Does per-diem reimbursement necessarily increase length of stay? The case of a public psychiatric hospital

Weiyan Jian and Yan Guo
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Weiyan Jian: Department of Health Policy and Management, School of Public Health, Peking University, Beijing, China, Postal: Department of Health Policy and Management, School of Public Health, Peking University, Beijing, China
Yan Guo: Department of Health Policy and Management, School of Public Health, Peking University, Beijing, China, Postal: Department of Health Policy and Management, School of Public Health, Peking University, Beijing, China

Health Economics, 2009, vol. 18, issue S2, pages S97-S106

Abstract: Payment methods can affect providers' behaviour and in turn influence the outcome of medical services. The per-diem reimbursement method is predicted to increase length of stay (LOS) and reduce daily expenditure. Using a Difference in Differences design, this study empirically examines the impact of changing from fee-for-service to per-diem reimbursement in a large psychiatric hospital in Beijing. Results show that the LOS did not increase but daily expenditure in fact increased. We provide several potential explanations for these puzzling findings, including the internal contracts between the hospitals and their physician staff among public hospitals in China. Copyright © 2009 John Wiley & Sons, Ltd.

Date: 2009
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