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Heterogeneous hospital response to a per diem prospective payment system

Galina Besstremyannaya

No w0193, Working Papers from New Economic School (NES)

Abstract: The paper demonstrates the adverse effects of degressive rates, dependent on the percentiles of length of stay, in a prospective payment system with per diem payments. Using the dynamic panel data estimates with a recent nationwide administrative database for major diagnostic categories in 697 Japanese hospitals in July 2007- March 2012, the paper shows that average length of stay significantly increases (decreases) for hospitals in percentiles 0-25 (51-100) of the pre-reform length of stay. The decline of the average length of stay is larger for hospitals in higher percentiles of the length of stay. Hospitals in percentiles 51-100 significantly raise planned early readmission rate. As a remedy to the problem, the paper discusses the applicability of the “best practice” rate-setting.

JEL-codes: G22 I10 I18 R22 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2013-05
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