Economics
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Excerpt
A major theme of health care policy in the 1980s was the revamping of payment to hospitals and physicians in order to reduce medical care costs while improving, or at least maintaining, quality and access. Researchers have studied the responses of hospitals and physicians to these incentives to understand better the underlying principles of provider behavior and to guide future health care policy initiatives.
Early studies on the impact of Medicare's diagnosis related groups (DRG)-based prospective payment system (PPS) for US hospitals confirmed that patients are discharged earlier in the course of their illnesses. Patients with problems such as hip fracture receive fewer inpatient services, are discharged with poorer health status, are more often sent to nursing homes, and stay there longer than before the implementation of the PPS in October 1983.1 Other studies have found that, while fewer inpatient services are provided during the entire hospitalization since the
