IDEAS home Printed from https://ideas.repec.org/a/wly/hlthec/v24y2015i7p790-802.html
   My bibliography  Save this article

Measuring the Hospital Length of Stay/Readmission Cost Trade‐Off Under a Bundled Payment Mechanism

Author

Listed:
  • Kathleen Carey

Abstract

If patients are discharged from the hospital prematurely, many may need to return within a short period of time. This paper investigates the relationship between length of stay and readmission within 30 days of discharge from an acute care hospitalization. It applies a two‐part model to data on Medicare patients treated for heart attack in New York state hospitals during 2008 to obtain the expected cost of readmission associated with length of stay. The expected cost of a readmission is compared with the marginal cost of an additional day in the initial stay to examine the cost trade‐off between an extra day of care and the expected cost of readmission. The cost of an additional day of stay was offset by expected cost savings from an avoided readmission in the range of 15% to 65%. Results have implications for payment reform based on bundled payment reimbursement mechanisms. Copyright © 2014 John Wiley & Sons, Ltd.

Suggested Citation

  • Kathleen Carey, 2015. "Measuring the Hospital Length of Stay/Readmission Cost Trade‐Off Under a Bundled Payment Mechanism," Health Economics, John Wiley & Sons, Ltd., vol. 24(7), pages 790-802, July.
    • Handle: RePEc:wly:hlthec:v:24:y:2015:i:7:p:790-802
    DOI: 10.1002/hec.3061
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/hec.3061
    Download Restriction: no
    File URL: https://libkey.io/10.1002/hec.3061?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. John Mullahy, 1998. "Much Ado About Two: Reconsidering Retransformation and the Two-Part Model in Health Economics," NBER Technical Working Papers 0228, National Bureau of Economic Research, Inc.
    2. Kathleen Carey, 2000. "Hospital Cost Containment and Length of Stay: An Econometric Analysis," Southern Economic Journal, John Wiley & Sons, vol. 67(2), pages 363-380, July.
    3. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    4. Cutler, David M, 1995. "The Incidence of Adverse Medical Outcomes under Prospective Payment," Econometrica, Econometric Society, vol. 63(1), pages 29-50, January.
    5. Michael P. Murray, 2006. "Avoiding Invalid Instruments and Coping with Weak Instruments," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 111-132, Fall.
    6. Mullahy, John, 1998. "Much ado about two: reconsidering retransformation and the two-part model in health econometrics," Journal of Health Economics, Elsevier, vol. 17(3), pages 247-281, June.
    7. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    8. Kathleen Carey & Theodore Stefos, 2011. "Measuring the cost of hospital adverse patient safety events," Health Economics, John Wiley & Sons, Ltd., vol. 20(12), pages 1417-1430, December.
    9. Buntin, Melinda Beeuwkes & Zaslavsky, Alan M., 2004. "Too much ado about two-part models and transformation?: Comparing methods of modeling Medicare expenditures," Journal of Health Economics, Elsevier, vol. 23(3), pages 525-542, May.
    10. Andrei Shleifer, 1985. "A Theory of Yardstick Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 319-327, Autumn.
    11. Manning, Willard G. & Mullahy, John, 2001. "Estimating log models: to transform or not to transform?," Journal of Health Economics, Elsevier, vol. 20(4), pages 461-494, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhao, Heng & Liu, Zixian & Li, Mei & Liang, Lijun, 2022. "Optimal monitoring policies for chronic diseases under healthcare warranty," Socio-Economic Planning Sciences, Elsevier, vol. 84(C).
    2. Brendan Walsh & Samantha Smith & Maev-Ann Wren & James Eighan & Seán Lyons, 2022. "The impact of inpatient bed capacity on length of stay," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 23(3), pages 499-510, April.
    3. Ann P. Bartel & Carri W. Chan & Song-Hee Kim, 2020. "Should Hospitals Keep Their Patients Longer? The Role of Inpatient Care in Reducing Postdischarge Mortality," Management Science, INFORMS, vol. 66(6), pages 2326-2346, June.
    4. Ambugo, Eliva Atieno & Hagen, Terje P., 2019. "Effects of introducing a fee for inpatient overstays on the rate of death and readmissions across municipalities in Norway," Social Science & Medicine, Elsevier, vol. 230(C), pages 309-317.
    5. Walsh, Brendan & Wren, Maev-Ann & Smith, Samantha & Lyons, Seán & Eighan, James & Morgenroth, Edgar, 2019. "An analysis of the effects on Irish hospital care of the supply of care inside and outside the hospital," Research Series, Economic and Social Research Institute (ESRI), number RS91.
    6. Caruso, Enza & Rossi Zadra, Andrea, 2020. "The trade-off between costs and outcome after cardiac surgery. Evidence from an Italian administrative registry," Health Policy, Elsevier, vol. 124(12), pages 1345-1353.
    7. Yuxi Wang & Simone Ghislandi & Aleksandra Torbica, 2020. "Investigating the geographic disparity in quality of care: the case of hospital readmission after acute myocardial infarction in Italy," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 21(8), pages 1149-1168, November.
    8. Damien Échevin & Bernard Fortin & Aristide Houndetoungan, 2023. "Healthcare Quality by Specialists under a Mixed Compensation System: an Empirical Analysis," CIRANO Working Papers 2023s-19, CIRANO.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Keane, Michael & Stavrunova, Olena, 2016. "Adverse selection, moral hazard and the demand for Medigap insurance," Journal of Econometrics, Elsevier, vol. 190(1), pages 62-78.
    2. Kurt Lavetti & Thomas DeLeire & Nicolas R. Ziebarth, 2023. "How do low‐income enrollees in the Affordable Care Act marketplaces respond to cost‐sharing?," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 90(1), pages 155-183, March.
    3. Li, Xin & Zhang, Wei, 2013. "The impacts of health insurance on health care utilization among the older people in China," Social Science & Medicine, Elsevier, vol. 85(C), pages 59-65.
    4. Dunn, Abe, 2016. "Health insurance and the demand for medical care: Instrumental variable estimates using health insurer claims data," Journal of Health Economics, Elsevier, vol. 48(C), pages 74-88.
    5. Andreas Bayerstadler & Franz Benstetter & Christian Heumann & Fabian Winter, 2014. "A predictive modeling approach to increasing the economic effectiveness of disease management programs," Health Care Management Science, Springer, vol. 17(3), pages 284-301, September.
    6. Besstremyannaya, Galina, 2017. "Measuring income equity in the demand for healthcare with finite mixture models," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 46, pages 5-29.
    7. Yi Yao & Joan Schmit & Julie Shi, 2019. "Promoting sustainability for micro health insurance: a risk-adjusted subsidy approach for maternal healthcare service," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 44(3), pages 382-409, July.
    8. Patrick Richard & Peter Shin & Tishra Beeson & Laura S Burke & Susan F Wood & Sara Rosenbaum, 2015. "Quality and Cost of Diabetes Mellitus Care in Community Health Centers in the United States," PLOS ONE, Public Library of Science, vol. 10(12), pages 1-11, December.
    9. Julie Shi & Yi Yao & Gordon Liu, 2018. "Modeling individual health care expenditures in China: Evidence to assist payment reform in public insurance," Health Economics, John Wiley & Sons, Ltd., vol. 27(12), pages 1945-1962, December.
    10. Michael Keane & Olena Stavrunova, 2011. "A smooth mixture of Tobits model for healthcare expenditure," Health Economics, John Wiley & Sons, Ltd., vol. 20(9), pages 1126-1153, September.
    11. Valerie Albouy & Laurent Davezies & Thierry Debrand, 2009. "Dynamic Estimation of Health Expenditure: A new approach for simulating individual expenditure," Working Papers DT20, IRDES institut for research and information in health economics, revised Jan 2009.
    12. Jones, A.M, 2010. "Models For Health Care," Health, Econometrics and Data Group (HEDG) Working Papers 10/01, HEDG, c/o Department of Economics, University of York.
    13. Joel Smith & Helen Banks & Harry Campbell & Anne Douglas & Eilidh Fletcher & Alison McCallum & Tron Anders Moger & Mikko Peltola & Sofia Sveréus & Sarah Wild & Linda J. Williams & John Forbes & on beh, 2015. "Parameter Heterogeneity In Breast Cancer Cost Regressions – Evidence From Five European Countries," Health Economics, John Wiley & Sons, Ltd., vol. 24(S2), pages 23-37, December.
    14. Toni Mora & Joan Gil & Antoni Sicras-Mainar, 2015. "The influence of obesity and overweight on medical costs: a panel data perspective," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 16(2), pages 161-173, March.
    15. Amanda Kowalski, 2016. "Censored Quantile Instrumental Variable Estimates of the Price Elasticity of Expenditure on Medical Care," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 34(1), pages 107-117, January.
    16. Amir Marashi & Shima Ghassem Pour & Vincy Li & Chris Rissel & Federico Girosi, 2019. "The association between physical activity and hospital payments for acute admissions in the Australian population aged 45 and over," PLOS ONE, Public Library of Science, vol. 14(6), pages 1-16, June.
    17. Galina Besstremyannaya, 2012. "Estimating income equity in social health insurance system," Working Papers w0172, Center for Economic and Financial Research (CEFIR).
    18. Galina Besstremyannaya, 2012. "Estimating income equity in social health insurance system," Working Papers w0172, New Economic School (NES).
    19. Galina Besstremyannaya, 2014. "Heterogeneous effect of coinsurance rate on healthcare costs: generalized finite mixtures and matching estimators," Discussion Papers 14-014, Stanford Institute for Economic Policy Research.
    20. Steven C. Hill & G. Edward Miller, 2010. "Health expenditure estimation and functional form: applications of the generalized gamma and extended estimating equations models," Health Economics, John Wiley & Sons, Ltd., vol. 19(5), pages 608-627, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:hlthec:v:24:y:2015:i:7:p:790-802. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/5749 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.