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The long‐run effects of diagnosis related group payment on hospital lengths of stay in a publicly funded health care system: Evidence from 15 years of micro data

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  • María José Aragón
  • Martin Chalkley
  • Noémi Kreif

Abstract

Diagnosis Related Group (DRG) payment systems are a common means of paying for hospital services. They reward greater activity and therefore potentially encourage more rapid treatment. This paper uses 15 years of administrative data to examine the impact of a DRG system introduced in England on hospital lengths of stay. We utilize different econometric models, exploiting within and cross jurisdiction variation, to identify policy effects, finding that the reduction of lengths of stay was greater than previously estimated and grew over time. This constitutes new and important evidence of the ability of financing reform to generate substantial and persistent change in healthcare delivery.

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  • María José Aragón & Martin Chalkley & Noémi Kreif, 2022. "The long‐run effects of diagnosis related group payment on hospital lengths of stay in a publicly funded health care system: Evidence from 15 years of micro data," Health Economics, John Wiley & Sons, Ltd., vol. 31(6), pages 956-972, June.
    • Handle: RePEc:wly:hlthec:v:31:y:2022:i:6:p:956-972
    DOI: 10.1002/hec.4479
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    1. Valentelyte, Gintare & Keegan, Conor & Sorensen, Jan, 2023. "Hospital response to Activity-Based Funding and price incentives: Evidence from Ireland," Health Policy, Elsevier, vol. 137(C).
    2. Helen Hayes & Jonathan Stokes & Matt Sutton & Rachel Meacock, 2024. "How do hospitals respond to payment unbundling for diagnostic imaging of suspected cancer patients?," Health Economics, John Wiley & Sons, Ltd., vol. 33(5), pages 823-843, May.

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