Impacts of Performance Pay for Hospitals: The Readmissions Reduction Program

Atul Gupta

American Economic Review, 2021, vol. 111, issue 4, 1241-83

Abstract: US policy increasingly ties payments for providers to performance on quality measures, though little empirical evidence guides the design of such incentives. I deploy administrative data to study a large federal program that penalizes hospitals with high readmissions rates. Using policy-driven variation in the penalty incentive across hospitals for identification, I find that hospital responses to the penalty account for two-thirds of the observed decrease in readmissions over this period, as well as a decrease in heart attack mortality. Quality improvement accounts for about one-half of the decrease in readmissions; the remainder is explained by selective admission of returning patients.

JEL-codes: G22 H51 I11 I12 I13 I18 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (27)

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DOI: 10.1257/aer.20171825

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