Abstract
How healthcare providers in New Zealand responded to the payment system reform that reintroduced the capitation scheme, which pays providers a fixed amount per enrolee, regardless of the actual usage of healthcare services. Using over 10 million observations, which comprise every publicly funded hospital discharge over 1999–2011, it is found that capitation decreased the transfer of patients between districts, especially those whose conditions are severe. Overall, the decline in inter-district transfer seems to have negative effects on patient outcomes, as readmission to healthcare facilities increased, whilst length of hospital stay decreased. However, outcomes for transferred patients improved, implying that the decrease in inter-district transfer may be detrimental to the health sector.
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Availability of data and material
Raw data were generated at Ministry of Health in New Zealand. Derived data supporting the findings of this study are available from the author on request.
Code availability
Code for data cleaning and analysis is available from the author on request.
Notes
The impact of capitation is widely researched in the primary care setting: see, for example, Iversen and Luras (Ellis et al. 2009) for review. The current literature review focuses on studies investigating the impact in the hospital setting.
There are over 600 DRG codes.
Recall that the growth rates of funding were higher for non-tertiary DHBs under capitation.
I have also used another complexity measure, Complications and Co-morbidity Level (CCL), but the key findings remain unchanged.
The overview can be accessed from http://www.oag.govt.nz/2013/regional-services-planning.
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Acknowledgements
I would like to thank Dr Lorenzo Ductor, Professor Christoph Schumacher, Professor Peren Arin, participants of the 2014 New Zealand Econometric Study Group participants, participants of the 13th Annual International Conference on Health Economics, Management & Policy, and participants at the brown bag seminars in Massey University for their valuable comments.
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Shin, S. Healthcare provider response to payment system reform: evidence from New Zealand. SN Bus Econ 1, 154 (2021). https://doi.org/10.1007/s43546-021-00159-1
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DOI: https://doi.org/10.1007/s43546-021-00159-1
Keywords
- Health system reform
- Payment reform
- Healthcare reimbursement
- Capitation
- Transfer
- Health outcome
- New Zealand