Reimbursement policies, incentives and disincentives to perform laparoscopic surgery in Israel

The introduction of laparoscopic surgery was believed to bestow great advantages to patients and health services. Health services and societal costs may also be affected by changes in length of hospital stay, operating room costs and return to normal activity. The aim of this paper is to examine the influence of two different reimbursement methods (per diem and DRG) on the incentives and disincentives given to different role players in the Israeli health-care system regarding two common surgical procedures: appendectomy and inguinal hernia repair. Three different perspectives are discussed: society, the hospitals and the sick funds. From the hospital's perspective, laparoscopic surgery is usually more expensive compared to open procedures, mainly due to higher operating room costs. We suggest that as far as current reimbursement methods are preserved, hospitals have no economic incentive to adopt the laparoscopic technology as benefits occur only to society. In general, sick funds would encourage hospitals to perform laparoscopic appendectomy, where the payment is per diem and would be economically indifferent regarding laparoscopic inguinal hernia repair, where hospitals are compensated on a DRG basis. It has been suggested that economic advantages to society may arise from a faster return to work after laparoscopic appendectomy and laparoscopic inguinal hernia repair. In this case, new payment arrangements should be set to give proper incentives for the adoption of laparoscopic procedures.