+ Site Statistics
+ Search Articles
+ PDF Full Text Service
How our service works
Request PDF Full Text
+ Follow Us
Follow on Facebook
Follow on Twitter
Follow on LinkedIn
+ Subscribe to Site Feeds
Most Shared
PDF Full Text
+ Translate
+ Recently Requested

Can Payers Use Prices to Improve Quality? Evidence from English Hospitals



Can Payers Use Prices to Improve Quality? Evidence from English Hospitals



Health Economics 25(1): 56-70



In most activity-based financing systems, payers set prices reactively based on historical averages of hospital reported costs. If hospitals respond to prices, payers might set prices proactively to affect the volume of particular treatments or clinical practice. We evaluate the effects of a unique initiative in England in which the price offered to hospitals for discharging patients on the same day as a particular procedure was increased by 24%, while the price for inpatient treatment remained unchanged. Using national hospital records for 205,784 patients admitted for the incentivised procedure and 838,369 patients admitted for a range of non-incentivised procedures between 1 December 2007 and 31 March 2011, we consider whether this price change had the intended effect and/or produced unintended effects. We find that the price change led to an almost six percentage point increase in the daycase rate and an 11 percentage point increase in the planned daycase rate. Patients benefited from a lower proportion of procedures reverted to open surgery during a planned laparoscopic procedure and from a reduction in long stays. There was no evidence that readmission and death rates were affected. The results suggest that payers can set prices proactively to incentivise hospitals to improve quality.

Please choose payment method:






(PDF emailed within 0-6 h: $19.90)

Accession: 051913588

Download citation: RISBibTeXText

PMID: 25385086

DOI: 10.1002/hec.3121


Related references

Does competition between hospitals improve clinical quality? A review of evidence from two eras of competition in the English NHS. Bmj 343: D6470, 2011

I.T. part of payers' new game plans. Payers are using software to improve customer service and health. Health Data Management 11(6): 66-8 70, 2003

Transparency. After posting prices, hospitals try to put it all in context. Linking prices and quality is the next step, but the real challenge is educating the public. Hospitals and Health Networks 81(9): 18, 2007

Network unites payers, physicians, hospitals. System participants work together to improve access to care and to design cost-saving incentives. Health Progress 74(4): 18-21, 1993

As payers and government push for quality care, staff motivation and goals must change. Groups improve quality by assessing and communicating data metrics to teams. Mgma Connexion 14(5): 34-37, 2014

Partnering with payers to improve surgical quality: the Michigan plan. Surgery 138(5): 815-820, 2005

Does the implementation of responsibility centers, total quality management, and physician fee programs improve hospital efficiency? Evidence from Taiwan hospitals. Medical Care 40(12): 1223-1237, 2002

Finding their way home. Despite mixed evidence, providers and payers are adopting patient-centered medical homes to improve health and cut costs. Modern Healthcare 43(40): 6-7 18-9 2, 2013

Private payers re-examining reimbursement. A host of new payment models will bring pressure on PCPs to hold down costs, improve quality. Medical Economics 90(4): 48-50 52-4, 2013

How hospitals measure up. Annual 100 top hospitals list from Solucient highlights facilities that know how to improve their quality, profitability and service. Modern Healthcare 34(21): 26-29, 2004

The impact of competition on quality and prices in the English care homes market. Journal of Health Economics 34: 73-83, 2014

Prices improve as quality tobacco moves to market. Georgia Farm Bureau news 46(9): 1, 1984

Gum producers can improve quality of gum marketed and get higher prices. USDA Forest Service research note SE: 79 (274), 1979

Better levy deal for English MLC payers on way. Farmers Weekly 137(22), 2002

Payers Try New Approaches To Manage Molecular Diagnostics: Some payers require prior authorization for molecular diagnostic testing and some don't. And some payers are looking at other options. Biotechnology Healthcare 7(3): 26-30, 2010