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Readmission and Hospital Quality under Different Payment Regimes

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  • Calogero Guccio
  • Domenico Lisi
  • Giacomo Pignataro

Abstract

Recent health-care policies in OECD countries seem to consider hospital readmissions quality-dependent . In this paper, we study the incentives for hospitals to provide quality and cost-reducing effort under different payment regimes - either a retrospective or a prospective payment system - explicitly considering the role played by financial incentives linked to readmissions. In line with the general wisdom, we find that prospective payment systems do not perform better than retrospective systems, especially if the payment to the hospital is not adjusted to further enhance the incentive for the quality of care. More specifically, if the hospital receives full payment for readmitted patients, moving from a retrospective to a prospective payment system could induce a reduction in quality and, in turn, an increase in readmissions. However, if the prospective system is adjusted to internalize this counterincentive via a reduced payment for readmitted patients, it could foster higher treatment quality.

Suggested Citation

  • Calogero Guccio & Domenico Lisi & Giacomo Pignataro, 2016. "Readmission and Hospital Quality under Different Payment Regimes," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 72(4), pages 453-474, December.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201612)72:4_453:rahqud_2.0.tx_2-6
    DOI: 10.1628/001522108X14764450192180
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    Cited by:

    1. Domenico Lisi & Luigi Siciliani & Odd Rune Straume, 2020. "Hospital competition under pay‐for‐performance: Quality, mortality, and readmissions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(2), pages 289-314, April.
    2. Roberto Cellini & Domenico Lisi, 2020. "Readmission treatment price and product quality in the hospital sector," Health Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 61-71, January.
    3. Cellini, Roberto & Lisi, Domenico, 2019. "Readmission treatment price and product quality in the hospital sector: A note," MPRA Paper 92505, University Library of Munich, Germany.

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    More about this item

    Keywords

    patient readmission; quality; cost-reducing effort; PPS;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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