Jove
Visualize
Contact Us
JoVE
x logofacebook logolinkedin logoyoutube logo
ABOUT JoVE
OverviewLeadershipBlogJoVE Help Center
AUTHORS
Publishing ProcessEditorial BoardScope & PoliciesPeer ReviewFAQSubmit
LIBRARIANS
TestimonialsSubscriptionsAccessResourcesLibrary Advisory BoardFAQ
RESEARCH
JoVE JournalMethods CollectionsJoVE Encyclopedia of ExperimentsArchive
EDUCATION
JoVE CoreJoVE BusinessJoVE Science EducationJoVE Lab ManualFaculty Resource CenterFaculty Site
Terms & Conditions of Use
Privacy Policy
Policies

Related Experiment Videos

Payment levels and hospital response to prospective payment.

D Hodgkin1, T G McGuire

  • 1Department of Economics, Boston University, MA 02215.

Journal of Health Economics
|February 7, 1994
PubMed
Summary
This summary is machine-generated.

Related Concept Videos

You might also read

Related Articles

Articles linked to this work by shared authors, journal, and citation graph.

Sort by
Same author

Effects of a statewide carve out on spending and access to substance abuse treatment in Massachusetts, 1992 to 1996.

Health services research·2005
Same author

Community data--where does the value lie? Assessing confidence limits of community collected water quality data.

Water science and technology : a journal of the International Association on Water Pollution Research·2002
Same author

Substance abuse providers' assessment of the Massachusetts Behavioral Health Program: year 6.

Administration and policy in mental health·2002
Same author

Statistical discrimination in health care.

Journal of health economics·2002
Same author

Will parity in coverage result in better mental health care?

The New England journal of medicine·2002
Same author

Why don't private employers use risk adjustment? Conference overview.

Inquiry : a journal of medical care organization, provision and financing·2002
Same journal

Competition matters: Uniform vs. indication-based pricing of pharmaceuticals.

Journal of health economics·2026
Same journal

Integrating equity and productivity in health evaluation.

Journal of health economics·2026
Same journal

Income and immunity: The consequences of social security administration reform for childhood infection risk.

Journal of health economics·2026
Same journal

When fewer children mean shorter lives: Fertility policy and elderly well-being in China.

Journal of health economics·2026
Same journal

Health dynamics and reporting bias at retirement: An analysis using high-frequency data.

Journal of health economics·2026
Same journal

Intertemporal coordination in volunteer markets.

Journal of health economics·2026
See all related articles

Medicare's Prospective Payment System (PPS) impacts are complex. A new economic model highlights how payment levels, not just incentives, influence hospital care intensity and admissions, offering clearer explanations for PPS effects.

Area of Science:

  • Health Economics
  • Healthcare Management
  • Hospital Administration

Background:

  • Existing economic models struggle to fully explain the observed impacts of Medicare's Prospective Payment System (PPS) after nearly a decade of implementation.
  • The complexity of hospital behavior under PPS necessitates novel theoretical frameworks to understand utilization patterns.

Purpose of the Study:

  • To develop a simplified economic model explaining hospital choices regarding the intensity of care provided.
  • To investigate the independent role of prospective payment levels on hospital admissions, beyond marginal incentive effects.

Main Methods:

  • Formulation of a theoretical model of hospital decision-making concerning care intensity.
  • Comparison of model predictions with aggregate Medicare PPS utilization data.

Related Experiment Videos

  • Validation of the model using hospital-level studies that account for variations in reimbursement rates.

    • Main Results:

    • The model indicates that the absolute level of prospective payment significantly influences hospital admissions.
    • Care intensity emerges as a key factor linking payment levels to demand for services.
    • The findings provide a more robust explanation for observed Medicare PPS utilization trends.

    Conclusions:

    • The level of prospective payment plays a crucial, independent role in shaping hospital behavior and utilization under Medicare's PPS.
    • A hospital's choice of care intensity is a critical mediator between payment policy and patient admissions.
    • This model offers enhanced explanatory power for the complex economic impacts of Medicare's Prospective Payment System.