Do Diagnosis‐Related Group‐Based Payments Incentivise Hospitals to Adjust Output Mix?

This study investigates whether the diagnosis‐related group (DRG)‐based payment method motivates hospitals to adjust output mix in order to maximise profits. The hypothesis is that when there is an increase in profitability of a DRG, hospitals will increase the proportion of that DRG (own‐price effects) and decrease those of other DRGs (cross‐price effects), except in cases where there are scope economies in producing two different DRGs. This conjecture is tested in the context of the case payment scheme (CPS) under Taiwan's National Health Insurance programme over the period of July 1999 to December 2004. To tackle endogeneity of DRG profitability and treatment policy, a fixed‐effects three‐stage least squares method is applied. The results support the hypothesised own‐price and cross‐price effects, showing that DRGs which share similar resources appear to be complements rather substitutes. For‐profit hospitals do not appear to be more responsive to DRG profitability, possibly because of their institutional characteristics and bonds with local communities. The key conclusion is that DRG‐based payments will encourage a type of ‘product‐range’ specialisation, which may improve hospital efficiency in the long run. However, further research is needed on how changes in output mix impact patient access and pay‐outs of health insurance. Copyright © 2014 John Wiley & Sons, Ltd.     

Empowerment in healthcare policy making: three domains of substantive controversy

This paper distinguishes between the uses of empowerment across different contexts in healthcare policy and health promotion, providing a model for the ethical and political scrutiny of those uses. We argue that the controversies currently engendered by empowerment are better understood by means of a historical distinction between two concepts of empowerment, namely, what we call the radical empowerment approach and the new wave of empowerment. Building on this distinction, we present a research agenda for ethicists and policy makers, highlighting three domains of controversy raised by the new wave of empowerment, namely: (1) the relationship between empowerment and paternalistic interferences on the part of professionals; (2) the evaluative commitment of empowerment strategies to the achievement of health‐related goals; and (3) the problems arising from the emphasis on responsibility for health in recent uses of empowerment. Finally, we encourage the explicit theorisation of these moral controversies as a necessary step for the development and implementation of ethically legitimate empowerment processes.     

Realigning Demand and Supply Side Incentives to Improve Primary Health Care Seeking in Rural China

China's recent and ambitious health care reform involves a shift from the reliance on markets to the reaffirmation of the central role of the state in the financing and provision of services. In collaboration with the Government of the Ningxia province, we examined the impact of two key features of the reform on health care utilisation using panel household data. The first policy change was a redesign of the rural insurance benefit package, with an emphasis on reorientating incentives away from inpatient towards outpatient care. The second policy change involved a shift from a fee‐for‐service payment method to a capitation budget with pay‐for‐performance amongst primary care providers. We find that the insurance intervention, in isolation, led to a 47% increase in the use of outpatient care at village clinics and greater intensity of treatment (e.g. injections). By contrast, the two interventions in combination showed no effect on health care use over and above that generated by the redesign of the insurance benefit package. Copyright © 2014 John Wiley & Sons, Ltd.