The Impact of Bundled Payment Policy on Hospital Operations: Evidence From China
28 Pages Posted: 10 Dec 2018 Last revised: 12 May 2019
Date Written: November 16, 2018
This paper studies the impact of bundled payment policy on health care expenditures, utilization, and quality. Previous literature has primarily focused on analytical models. We empirically offer a more nuanced understanding of the impact of bundled payment policy on hospital operations and provide new evidence from China. We use insurance claim data in China to empirically evaluate the impact of bundled payment on hospital operational performance. Our evidence suggests that transitioning from fee-for-service to bundled payment reimbursement resulted in declines in expenditures and length of stay, but increases in revisits to outpatient clinics which indicates shifted care from inpatient to outpatient setting. However, the change of readmission rate to inpatient wards is insignificant. We suggest policymakers design the bundles very carefully to encourage providers implementing the new program while maintaining quality.
Keywords: Bundled payment, health care operations, length of stay, readmission
JEL Classification: I13
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