Using fees to reduce bed-blocking: a game between hospitals and long-term care providers

Area of Science:

• Health Economics
• Healthcare Management
• Public Policy

Background:

• Hospitals face challenges with 'bed-blocking,' where patients occupy beds longer than medically necessary.
• Several countries have implemented financial penalties (fees) for hospitals to incentivize reduced patient length of stay.
• The strategic interactions between hospitals and long-term care providers under such policies are not fully understood.

Purpose of the Study:

• To analyze the strategic implications of hospital bed-blocking fees on hospital and long-term care provider decisions.
• To model the impact of these fees on treatment times and overall bed-blocking rates.
• To empirically test the theoretical predictions using data from a real-world policy reform.

Main Methods:

• Development of a Stackelberg game model with hospitals as leaders and long-term care providers as followers.
• Theoretical analysis of how the fee policy affects strategic choices and patient flow.
• Empirical analysis of data from the Norwegian Coordination Reform (2012).

Main Results:

• The fee policy can reduce hospital treatment times.
• The net effect on bed-blocking is contingent on pre-reform treatment times and occupancy levels.
• The Norwegian Coordination Reform resulted in a substantial decrease in hospital bed-blocking.
• Hospitals' earlier reporting of patient discharge readiness amplified the observed reduction in bed-blocking.

Conclusions:

• The study provides a theoretical framework and empirical evidence on the effects of hospital bed-blocking fees.
• The Norwegian reform demonstrated a significant positive impact on reducing bed-blocking, partly due to strategic reporting adjustments.
• Findings suggest that hospital service levels may have been operating near minimums prior to the reform, influencing the policy's effectiveness.