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Session: Assessing Incentives
Room: Meeting Room 21
Time: Fri 10:15-11:30

Presenter: Shelley Farrar (Univeristy of Aberdeen. Health Economics Research Unit)

Abstract

Aim: To examine whether the changes in key outcomes associated with the introduction of Payment by Results (PbR) had impacts differentially across patient groups.

Background: PbR is a prospective payment system which reimburses acute care hospitals in England for the type and number of patients treated. Empirical analysis of the first three years of the system suggests that implementation of the tariff-based reimbursement is associated with reduced length of stay, increased volume of hospital activity and has not been detrimental to quality of care. These outcomes suggest that the introduction of the policy has not had the perverse effects on quality which are predicted by principal agent theory. Patients may have benefited from lower lengths of stay and higher rates of daycase treatement. However, such gains may be distributed unevenely across patient groups. For instance, hospitals may focus their efforts to reduce length of stay of younger and less deprived patients. In this study we examine whether there have been any distributional effects of the impact of PbR.

Data and methods: We use patient level data from the English Hospital Episode Statistics and Scottish Morbidity Records for 2002/03 to 2007/08. The main outcome measures are changes in length of stay and proportion of daycase admissions as a proxy for unit cost; and changes in in-hospital mortality, 30-day post-surgical mortality and emergency readmission following treatment for hip fracture as measures of the impact on the quality of care. We analyse changes in these across quintiles of patient age and an index of deprivation. We apply difference in differences analysis using Scotland as a control group – part of the UK where PbR policy has not implemented.

Key Terms

Hospital activity based funding, distributional effects, index of multiple deprivation, age, difference in differences

Authors:

Shelley Farrar (University of Aberdeen. Health Economics Research Unit, ) , Deokhee Yi (University of Aberdeen. Health Economics Research Unit, ) , Ada Ma (University of Aberdeen. Health Economics Research Unit, ) , Martin Chalkley (University of Dundee. Economic Studies) and Matt Sutton (University of manchester. Health Methodology Research Group)

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