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Presentation

Session: Posters
Room: TBA
Time: Fri 13:00-14:30

Presenter: Philippe Widmer (University of Zurich, Socioeconomic Institute" 27,Dirk,Sauerland,dirk.sauerland@uni-wh.de,Witten/Herdecke University 33,Daniele,Paci,daniele.paci@ec.europa.eu,"European Commission, Institute for Pro. Economics)

Abstract

Several European countries have followed the United States in introducing prospective payment
for hospitals, with the expectation of important cost eciency gains. However, most of the empirical
evidence is limited to eects on length of stay (e.g. Dismuke, 1995 for the United States, Linna
1999 for Finland, Propper and S¨oderlund for the UK), while Biorn et al. (2006) do investigate
cost eciency but fail to find an eect. Since the transition to prospective financing occurred at
the level of the country, the time series available are very short. In this situation, evidence from a
federal country where some member states changed to dierent variants of prospective payment
while others remained with the conventional per diem alternative may be of considerable interest.
In 2004 and 2005, some of the 100 Swiss hospitals sampled were operating under a global budget,
others, under DRG payment, while a majority was still on per diem payment. Both a standard
and a random coecient cost frontier model are estimated in order to check for the importance of
hidden heterogeneity. Both model variants support the hypothesis that prospective payment fails
to enhance hospital eciency – at least as long as public authorities do not firmly exclude a bailout.

Key Terms

Hospital efficiency, financing system, Bayesian inference, Switzerland, Stochastic Frontier Analysis

Authors:

Philippe Widmer (Socioeconomic Institute. Economics) and Peter Zweifel (Socioeconomic Institute. Economics)

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