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Does prospective payment increase hospital (in)efficiency? Evidence from the Swiss hospital sector

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  • Philippe Widmer

Abstract

Several European countries have followed the USA in introducing prospective payment for hospitals with the expectation of achieving cost efficiency gains. This article examines whether theoretical expectations of cost efficiency gains can be empirically confirmed. In contrast to previous studies, the analysis of hospitals in Switzerland provides a comparison of a retrospective per diem payment system with a prospective global budget and a payment per patient case system. Using a sample of approximately 90 public financed Swiss hospitals during the years 2004–2009 and Bayesian inference of a standard and a random parameter frontier model, cost efficiency gains are found, particularly with payment per patient case. Prospective payment, designed to put hospitals at operating risk, is more effective in terms of cost reduction than the retrospective alternative. However, hospitals are heterogeneous with respect to their production technologies, making a random parameter frontier model the superior specification for Switzerland. Copyright Springer-Verlag Berlin Heidelberg 2015

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  • Philippe Widmer, 2015. "Does prospective payment increase hospital (in)efficiency? Evidence from the Swiss hospital sector," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 16(4), pages 407-419, May.
  • Handle: RePEc:spr:eujhec:v:16:y:2015:i:4:p:407-419
    DOI: 10.1007/s10198-014-0581-9
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    Cited by:

    1. Braendle, Thomas & Colombier, Carsten, 2016. "What drives public health care expenditure growth? Evidence from Swiss cantons, 1970–2012," Health Policy, Elsevier, vol. 120(9), pages 1051-1060.
    2. Stefan Meyer, 2015. "Payment schemes and cost efficiency: evidence from Swiss public hospitals," International Journal of Health Economics and Management, Springer, vol. 15(1), pages 73-97, March.
    3. Andrews Antony & Emvalomatis Grigorios, 2024. "Efficiency Measurement in Healthcare: The Foundations, Variables, and Models – A Narrative Literature Review," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 18(1), pages 1-24.
    4. Remers, Toine E.P. & Wackers, Erik M.E. & van Dulmen, Simone A. & Jeurissen, Patrick P.T., 2022. "Towards population-based payment models in a multiple-payer system: the case of the Netherlands," Health Policy, Elsevier, vol. 126(11), pages 1151-1156.
    5. Cavalieri, M. & Guccio, C. & Lisi, D. & Pignataro, G., 2015. "Does the Extent of Per-Case Payment System Affect Hospital Efficiency? Evidence from the Italian NHS," Health, Econometrics and Data Group (HEDG) Working Papers 15/29, HEDG, c/o Department of Economics, University of York.
    6. Widmer, Philippe K., 2016. "SwissDRG: Ein Vergütungssystem mit ungleichen finanziellen Risiken für die Spitäler?," Die Unternehmung - Swiss Journal of Business Research and Practice, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 70(3), pages 210-226.
    7. Cristian Barra & Raffaele Lagravinese & Roberto Zotti, 2022. "Exploring hospital efficiency within and between Italian regions: new empirical evidence," Journal of Productivity Analysis, Springer, vol. 57(3), pages 269-284, June.
    8. Alejandro Arvelo-Martín & Juan José Díaz-Hernández & Ignacio Abásolo-Alessón, 2019. "Hospital productivity bias when not adjusting for cost heterogeneity: The case of Spain," PLOS ONE, Public Library of Science, vol. 14(6), pages 1-17, June.
    9. Carine Milcent & Saad Zbiri, 2022. "Supplementary private health insurance: The impact of physician financial incentives on medical practice," Health Economics, John Wiley & Sons, Ltd., vol. 31(1), pages 57-72, January.
    10. Philippe K. Widmer & Maria Trottmann & Peter Zweifel, 2018. "Choice of reserve capacity by hospitals: a problem for prospective payment," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(5), pages 663-673, June.

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    More about this item

    Keywords

    Hospital inefficiency; Prospective payment system; Bayesian inference; Stochastic frontier analysis; C11; C23; D24; I18;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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