How do hospitals respond to price changes in emergency departments?

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Abstract

Little is known about how prospective provider payment affects the provision of services led by unpredictable demand. We investigate hospital responses to a 32% increase in price for two treatments in emergency departments in England in April 2011 using data on 11,532,304 attendances (79 hospitals) between 2009/10 and 2013/14. We compare changes in the volumes of these two treatments to a treatment not attracting additional reimbursement using a difference-in-differences framework. Additional reimbursement led to 76% and 152% increases in the volumes of the two incentivised treatments. Hospitals received an additional £64.4M between April 2011 and March 2014 for providing these treatments, of which 40% (£30.0M) was attributable to the unanticipated hospital response to the price increase. We use time in treatment to distinguish real increases in treatment from reductions in under-coding or increases in up-coding. The association between the recorded receipt of these treatments and time spent in treatment was the same before and after the price increase and there was no association between hospital-specific increases in recorded treatment volumes and changes in treatment times. The persistence of the treatment time increment suggests the increase in recorded treatment was a real increase in provision of treatments.
Original languageEnglish
JournalHealth Economics
Early online date24 Jun 2019
DOIs
Publication statusPublished - 2019

Keywords

  • hospital behaviour
  • payment systems
  • hospital reimbursement
  • emergency department

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