DRGs: the link between investment in technologies and appropriateness

Rosella Levaggi, Michele Moretto and Paolo Pertile

No 31/2012, Working Papers from University of Verona, Department of Economics

Abstract: In this paper we investigate the relationship between the DRG system for hospital reimbursement and investment in technologies. We use a simple economic model where the reimbursement policy for treatments whose provision requires a sunk investment cost has an impact on both the decision whether to adopt the technology and many patients to treat with it. The optimal pricing policy involves a two-part tariff: a price equal to the marginal cost of the patient whose benefit of treatment equals the cost of provision, and a separate payment for the partial reimbursement of capital costs. Departures from this scheme, which are frequent in DRG tariff systems designed around the world, lead to a trade-off between the objective of making effective technologies available to patients and the need to ensure appropriateness in use.

Keywords: DRG; prospective payment; appropriateness; capital cost; health care investment (search for similar items in EconPapers)
JEL-codes: I18 (search for similar items in EconPapers)
Pages: 15
Date: 2012-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://dse.univr.it/home/workingpapers/polar_2012_10_17_R_P.pdf First version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ver:wpaper:31/2012

Access Statistics for this paper

More papers in Working Papers from University of Verona, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Michael Reiter ().