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Institutional responses to Medicare's prospective payment system
H Maarse1, D Rooijakkers, R Duzijn
1Faculty of Health Sciences, State University of Limburg, Maastricht, Netherlands.
Health Policy (Amsterdam, Netherlands)
|September 5, 1993
Summary
The prospective payment system (PPS) prompted US hospitals to focus on revenue enhancement over cost containment. This shift impacted hospital strategies and organizational structures for better market positioning.
Area of Science:
- Health Services Research
- Hospital Administration
- Healthcare Economics
Background:
- The implementation of Medicare's prospective payment system (PPS) significantly altered the operational landscape for US hospitals.
- PPS aimed to incentivize improvements in both clinical and non-clinical hospital efficiency.
Purpose of the Study:
- To analyze the impact of the prospective payment system (PPS) on hospital services.
- To investigate the strategic responses of a non-profit Pennsylvania hospital to PPS.
Main Methods:
- A case study methodology was employed.
- Analysis focused on a single non-profit hospital in Pennsylvania.
- Examined hospital strategies for cost containment and revenue enhancement.
Main Results:
- Hospitals adopted a dual strategy: cost containment and revenue enhancement.
- Revenue enhancement, including market position strengthening, became a primary focus over cost containment.
- Observed organizational changes included increased strategic management importance, enhanced hospital-physician collaboration, and improved medical information systems.
Conclusions:
- Hospitals strategically adapted to PPS, prioritizing revenue generation and market positioning.
- The prospective payment system (PPS) drove significant organizational and strategic shifts within healthcare facilities.
- Effective adaptation to PPS involved integrated hospital-physician relationships and robust information systems.