Abstract
It is a consensus that Fee-for-Service (FFS) is a traditional medical insurance payment scheme with significant disadvantages, namely the waste of health care resources. However, the majority of the prior works that draw such conclusions from the perspective of social welfare while analyzing the impacts of FFS on operation outcomes of hospitals still lack attention from the existing literature, considering the fact that the majority of public hospitals are self-founding. Under this motivation, we collected operation data of 301 public hospitals with different grades (grade II and III) in central China. Here, we present a novel statistical evaluation framework on the impact of FFS on hospital operation outcomes from four dimensions (financial income, efficiency, medical service capacity, and sustainability) using fixed-effects multivariate regression. With verification by the robustness test, our results indicate that: (i) The classification of the hospital (COH) significantly affected the impacts of FFS on hospitals’ operations. (ii) For grade III hospitals, FFS leads to higher financial income, medical service capacity (MSC) and longer length-of-stay (LOS). (iii) However, as for grade II hospitals, hospitals with FFS adoptions achieve lower financial income, lower MSC and shorter LOS, which violates the common sense from previous works. (iv) FFS has a significant negative impact on public hospital’s sustainable development; however, there is lack of evidence showing that sustainability would be affected by the interaction effects between FFS and COH. We believe these new findings from the perspective of hospital operation provide insights and could serve as a reference for the healthcare payment hierarchical reform by COH in low and middle-income countries (LMICs), which are going through the primary stage of the healthcare reform.
Highlights
In the medical market, the provider payment method is a fundamental approach to organize healthcare resources and guide the behaviors of healthcare providers [1].Nowadays, the post-payment system, Fee-for-Service (FFS), is still the most prevailing payment method of health providers in low and middle-income countries (LMICs) [2], e.g., central Asia and Eastern Europe [3,4]
Significantly affected the impacts of FFS on hospitals’ operations. (ii) For grade III hospitals, FFS leads to higher financial income, medical service capacity (MSC), and longer length-ofstay (LOS), which is similar to the prior works. (iii) regarding grade II hospitals, they achieve lower financial income, lower MSC, and shorter LOS, which violates the common sense in previous works. (iv) There is lack of evidence showing that sustainability would be affected by the interaction effects between FFS and classification of the hospital (COH).These new findings from the perspective of hospital operations provide insight and could serve as a reference for the healthcare payment hierarchical reform by COH in low and middle-income countries (LMICs), who are going through the primary stage of the reform of health care
We evaluate the effects of FFS from a new perspective, namely hospital operation outcomes, and leads to some counter-intuitive conclusions that FFS is not an alldisadvantages scheme when considering COH
Summary
The provider payment method is a fundamental approach to organize healthcare resources and guide the behaviors of healthcare providers [1].Nowadays, the post-payment system, Fee-for-Service (FFS), is still the most prevailing payment method of health providers in low and middle-income countries (LMICs) [2], e.g., central Asia and Eastern Europe [3,4]. Prior works [5,6] reported that healthcare providers are financially incentivized to prescribe more expensive and profitable medications or diagnostic tests, which may not always be necessary to patients under FFS scheme [7]. This leads to increased health care costs and waste of public healthcare resources. The higher-grade hospitals with a larger corresponding construction scale, more detailed department settings, more advanced equipment, and more mature technical levels can provide higher overall quality of medical services, thereby attracting more patients [15]
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