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Are cost differences between specialist and general hospitals compensated by the prospective payment system?

Longo, Francesco, Siciliani, Luigi and Street, Andrew (2017) Are cost differences between specialist and general hospitals compensated by the prospective payment system? European Journal of Health Economics. ISSN 1618-7598

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Identification Number: 10.1007/s10198-017-0935-1

Abstract

Prospective payment systems fund hospitals based on a fixed-price regime that does not directly distinguish between specialist and general hospitals. We investigate whether current prospective payments in England compensate for differences in costs between specialist orthopaedic hospitals and trauma and orthopaedics departments in general hospitals. We employ reference cost data for a sample of hospitals providing services in the trauma and orthopaedics specialty. Our regression results suggest that specialist orthopaedic hospitals have on average 13% lower profit margins. Under the assumption of break-even for the average trauma and orthopaedics department, two of the three specialist orthopaedic hospitals appear to make a loss on their activity. The same holds true for 33% of departments in our sample. Patient age and severity are the main drivers of such differences.

Item Type: Article
Official URL: https://link.springer.com/journal/10198
Additional Information: © 2017 The Authors CC BY 3.0
Divisions: Health Policy
Subjects: R Medicine > RA Public aspects of medicine
R Medicine > RA Public aspects of medicine > RA0421 Public health. Hygiene. Preventive Medicine
Sets: Departments > Health Policy
Date Deposited: 29 Nov 2017 13:47
Last Modified: 20 Jun 2020 02:37
Projects: ES/ J500215/1
Funders: Economic and Social Research Council
URI: http://eprints.lse.ac.uk/id/eprint/85874

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