Paying for efficiency: Incentivising same-day discharges in the English NHS

• Published in: Journal of health economics 2019-12, Vol.68, p.102226-102226, Article 102226
• Main Authors: Gaughan, James, Gutacker, Nils, Grašič, Katja, Kreif, Noemi, Siciliani, Luigi, Street, Andrew
• Format: Article
• Language: English
• Subjects: Activity based funding; Adolescent; Adult; Aged; Aged, 80 and over; Control methods; Cost analysis; DRGs; Efficiency, Organizational - economics; England; Female; Health economics; Health services; Hospital incentives; Hospitals; Humans; Male; Middle Aged; Patient Discharge - economics; Pay for performance; Policy evaluation; Prospective payment systems; Reimbursement, Incentive; State Medicine; Statistical analysis; Synthetic control method; Young Adult
• ISSN: 0167-6296; 1879-1646
• DOI: 10.1016/j.jhealeco.2019.102226

We study a pay-for-efficiency scheme that encourages hospitals to admit and discharge patients on the same calendar day when clinically appropriate. Since 2010, hospitals in the English NHS are incentivised by a higher price for patients treated as same-day discharge than for overnight stays, despite the former being less costly. We analyse administrative data for patients treated during 2006–2014 for 191 conditions for which same-day discharge is clinically appropriate – of which 32 are incentivised. Using difference-in-difference and synthetic control methods, we find that the policy had generally a positive impact with a statistically significant effect in 14 out of the 32 conditions. The median elasticity is 0.24 for planned and 0.01 for emergency conditions. Condition-specific design features explain some, but not all, of the differential responses.