Balancing Efficiency and Access: Discouraging Emergency Department Boarding in a Global Budget System

Area of Science:

• Health Economics
• Healthcare Policy
• Hospital Management

Background:

• The United States faces high healthcare costs compared to similar nations.
• Maryland utilizes a unique hospital financing system called a global budget (capitation).
• This system aims to reduce costs without compromising patient care quality.

Purpose of the Study:

• To analyze the unintended consequences of Maryland's global budget system.
• To propose policy solutions for mitigating adverse effects on hospital operations.
• To offer insights for other alternative payment models.

Main Methods:

• Analysis of Maryland's global budget (capitation) payment system.
• Identification of unintended consequences, including emergency department boarding and ambulance diversion.
• Development of policy recommendations.

Main Results:

• Maryland's global budget system has led to reduced Medicare spending.
• Adverse consequences include increased emergency department boarding and ambulance diversion.
• These issues hinder hospitals' emergency care provision and safety net functions.

Conclusions:

• Policy interventions are needed to address the negative impacts of Maryland's global budget model.
• Mitigation strategies can help hospitals maintain their role in emergency care and serving vulnerable populations.
• Lessons from Maryland's experience can inform the development of other alternative payment mechanisms.