How financial incentives shape hospital behaviour

Posted on Monday 26 January 2026

The Centre for Health Economics has recently published its latest CHE Research Paper: Can financial incentives shift health care from an inpatient to an outpatient setting? by Katja Grašič, Luigi Siciliani and Jinglin Wen.

This study examines a unique policy change in England that adjusted tariffs to incentivise outpatient care over inpatient care for three common procedures: cystoscopy, hysteroscopy, and sterilisation. 

Using a difference-in-differences approach, the analysis finds that the policy led to a substantial increase in the share of outpatient treatments by 36% for cystoscopy, 16.3% for hysteroscopy, and 3.8% for sterilisation.

Read the full paper to learn what these changes mean for procedure volumes and quality, as well as the distributional implications for both the public insurer and hospitals.