Accessibility statement

Can prospective payment harm quality? evidence on the relationship between length of stay and patient outcomes

Thursday 11 December 2014, 12.00PM to 1.15pm

Speaker(s): Zack Cooper, Assistant Professor of Health Policy and of Economics, Director of Health Policy, Institution for Social and Policy Studies, Yale University

Abstract: Nearly every developed nation has introduced some form of prospective payment to fund hospital care. Economic theory states that prospective payment should incentivize hospitals to reduce length of stay and may lead to reductions in quality under certain conditions. This paper analyzes whether reductions in length of stay in England generated by a policy change in the National Health Service led to increases in mortality and readmissions from 2007 onwards. We begin by illustrating how specific staffing conditions in the National Health Service and gaps in physician knowledge may make physicians more sensitive to hospitals’ financial performance than patient outcomes, ultimately leading quality to fall underprospective payment. We then utilize an instrument for LOS based on idiosyncrasies in hospitals’ discharge procedures to get causal estimates of the effects of reducing length of stay. Our results suggest that a 1-day reduction in length of stay increases 30-day emergency admissions by 8 percentage points and raises out of hospital mortality at 90-days by 2.35 percentage points. We illustrate that even when hospitals have to bear the full costs of readmissions, it remains profitable for them to shorten length of stay at the expense of raising readmissions. Conversely, the economic consequence of raising mortality significantly eclipses the savings from reducing length of stay, although these costs are not borne directly by hospitals.

Location: ARRC Auditorium A/RC/014

Who to contact

For more information on these seminars, contact:

Adrian Villasenor
Adrian Villasenor-Lopez
Dacheng Huo
Dacheng Huo

If you are not a member of University of York staff and are interested in attending the seminar, please contact Adrian Villasenor-Lopez or Dacheng Huo so that we can ensure we have sufficient space

CHE Seminar Programme

  • Thursday 12 January 2017
    Jon Sussex, Chief Economist, RAND Europe
  • Thursday 9 February 2017
    Richard Murray, Kings Fund