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Physician Payment Mechanisms, Hospital Length of Stay and Risk of Readmission: a Natural Experiment

Author

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  • Damien Échevin
  • Bernard Fortin
Abstract
We provide an analysis of the effect of physician payment methods on their hospital patients' length of stay and risk of readmission. To do so, we exploit a major reform implemented in Quebec (Canada) in 1999. The Quebec Government introduced an optional mixed compensation (MC) scheme for specialist physicians working in hospital. This scheme combines a fixed per diem with a reduced fee for services provided, as an alternative to the traditional feefor-service system. We develop a simple theoretical model of a physician's decision to choose the MC scheme. We show that a physician who adopts this system will have incentives to increase his time per clinical service provided. We demonstrate that as long as this effect does not improve his patients' health by more than a critical level, they will stay more days in hospital over the period. At the empirical level, using a large patient-level administrative panel data set from a major teaching hospital, we estimate a model of transition between spells in and out of hospital analog to a difference-in-differences method. The model is based on a two-state Mixed Proportional Hazard approach. We find that the hospital length of stay of patients treated in departments that opted for the MC system increased on average by 10.8% (0.71 days). However, the risk of readmission to the same department with the same diagnosis does not appear to be overall affected by the reform. Cet article présente une analyse de l'impact du mode de rémunération des médecins spécialistes sur la durée de séjour de leurs patients à l'hôpital et sur leur risque de ré-hospitalisation. À cette fin, nous exploitons une réforme majeure mise en place au Québec en 1999. Le gouvernement du Québec a introduit un mode de rémunération mixte optionnel pour les spécialistes travaillant en établissement. Ce mode de paiement combine un per diem fixe et une rémunération à l'acte partielle, comme alternative à la rémunération à l'acte traditionnelle. Nous développons d'abord un simple modèle théorique de la décision du médecin de choisir ou non la rémunération mixte. Nous montrons qu'un médecin qui adhère à la rémunération mixte sera incité à accroître le temps qu'il consacre par acte. Nous démontrons que dans la mesure où cet effet n'améliore pas la santé du patient au-delà d'un certain niveau critique, ce dernier séjournera plus longtemps à l'hôpital au cours de la période. Au niveau empirique, à l'aide d'une vaste base de données longitudinales dénominalisées portant sur des patients du Centre Hospitalier de l'Université de Sherbrooke, nous estimons un modèle de durée à l'hôpital et hors hôpital analogue à une approche différence-en-différences. Notre méthode d'estimation se fonde sur un modèle de risque proportionnel mixte à deux états. Selon nos résultats, la durée de séjour des patients traités par des médecins qui ont passé à la rémunération mixte se serait accrue en moyenne de 10,8 % (0,71 jour). Cependant, le risque de ré-hospitalisation dans un même département avec le même diagnostic n'aurait pas été affecté par la réforme au niveau global.

Suggested Citation

  • Damien Échevin & Bernard Fortin, 2011. "Physician Payment Mechanisms, Hospital Length of Stay and Risk of Readmission: a Natural Experiment," CIRANO Working Papers 2011s-44, CIRANO.
    • Handle: RePEc:cir:cirwor:2011s-44
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    Cited by:

    1. Brosig-Koch, Jeannette & Kairies-Schwarz, Nadja & Kokot, Johanna, 2014. "Sorting into Physician Payment Schemes – A Laboratory Experiment," Ruhr Economic Papers 529, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    2. Jeannette Brosig-Koch & Nadja Kairies-Schwarz & Johanna Kokot, 2014. "Sorting into Physician Payment Schemes – A Laboratory Experiment," Ruhr Economic Papers 0529, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    3. repec:zbw:rwirep:0529 is not listed on IDEAS

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    More about this item

    Keywords

    Physician payment mechanisms; mixed compensation; hospital length of stay; risk of re-hospitalisation; duration model; natural experiment.; Mécanismes de rémunération des médecins; rémunération mixte; durée du séjour à de l'hôpital de séjour; risque de re-hospitalisation.;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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