Provider responses to a global budgeting system: The case of drug expenditures in Taiwan hospitals.

In July 2002, a global budgeting system was imposed on hospitals in Taiwan. This system set a fixed budget for all hospitals within a region but included special provisions that sheltered reimbursements for drug expenditures. We study the size and nature of changes in hospital physicians' use of drugs for outpatient care following this budgetary change and find that drug expenditures for outpatient care increased by 11.7%. Our results suggest that physicians began prescribing more expensive drugs, more drugs, and drugs for longer periods but that these different responses did not all occur at the same time. The overall response was strongest in for-profit hospitals, but drug-related decisions changed in all hospital types.

Uterus at a price: Disability insurance and hysterectomy.

Taiwanese Labor, Government Employee, and Farmer Insurance programs provide 5 to 6 months of salary to enrollees who undergo hysterectomies or oophorectomies before their 45th birthday. These programs create incentives for more and earlier treatments, referred to as inducement and timing effects. Using National Health Insurance data between 1997 and 2011, we estimate these effects on surgery hazards by difference-in-difference and bunching-smoothing polynomial methods. For Government Employee and Labor Insurance, inducement is 11-12% of all hysterectomies, and timing 20% of inducement. For oophorectomies, both effects are insignificant. Enrollees' behaviors are consistent with rational choices. Each surgery qualifies an enrollee for the same benefit, but oophorectomy has more adverse health consequences than hysterectomy. Induced hysterectomies increase benefit payments and surgical costs, at about the cost of a mammogram and 5 pap smears per enrollee.

Strengthening or Weakening? The Impact of Universal Health Insurance on Intergenerational Coresidence in Taiwan.

In this article, we exploit a unique natural experiment-the implementation of National Health Insurance (NHI) in Taiwan in 1995-to examine how the introduction of universal health insurance increases or decreases the likelihood of intergenerational coresidence. Five waves of surveys from the Survey of Health and Living Status of the Elderly in Taiwan between 1989 and 2003 are employed, and models with various specifications are estimated. Our results indicate a mixed relationship between the likelihood of intergenerational coresidence and the enactment of NHI. Although NHI on average reduces the probability that elderly parents live with their adult children by approximately 6.6 %, the likelihood of intergenerational coresidence increases among families benefiting most from NHI, such as those with unhealthy elderly mothers and fewer children.

Hospital ownership and drug utilization under a global budget: a quantile regression analysis.

BACKGROUND: A global budgeting system helps control the growth of healthcare spending by setting expenditure ceilings. However, the hospital global budget implemented in Taiwan in 2002 included a special provision: drug expenditures are reimbursed at face value, while other expenditures are subject to discounting. That gives hospitals, particularly those that are for-profit, an incentive to increase drug expenditures in treating patients. METHODS: We calculated monthly drug expenditures by hospital departments from January 1997 to June 2006, using a sample of 348 193 patient claims to Taiwan National Health Insurance. To allow for variation among responses by departments with differing reliance on drugs and among hospitals of different ownerships, we used quantile regression to identify the effect of the hospital global budget on drug expenditures. RESULTS: Although drug expenditure increased in all hospital departments after the enactment of the hospital global budget, departments in for-profit hospitals that rely more heavily on drug treatments increased drug spending more, relative to public hospitals. CONCLUSIONS: Our findings suggest that a global budgeting system with special reimbursement provisions for certain treatment categories may alter treatment decisions and may undermine cost-containment goals, particularly among for-profit hospitals.

Surgeon and hospital volume as quality indicators for CABG in Taiwan: examining hazard to mortality and accounting for unobserved heterogeneity.

OBJECTIVE: To investigate whether provider volume has an impact on the hazard of mortality for coronary artery bypass grafting (CABG) patients in Taiwan. DATA SOURCES/STUDY SETTING: Multiple sources of linked data from the National Health Insurance Program in Taiwan. STUDY DESIGN: The linked data were used to identify 27,463 patients who underwent CABG without concomitant angioplasty or valve procedures and the surgeon and hospital volumes. Generalized estimating equations and hazard models were estimated to assess the impact of volume on mortality. The hazard modeling technique used accounts for bias stemming from unobserved heterogeneity. PRINCIPAL FINDINGS: Both surgeon and hospital volume quartiles are inversely related to the hazard of mortality after CABG. Patients whose surgeon is in the three higher volume quartiles have lower 1-, 3-, 6-, and 12-month mortality after CABG, while only those having their procedure performed at the highest quartile of volume hospitals have lower mortality outcomes. CONCLUSIONS: Mortality outcomes are related to provider CABG volume in Taiwan. Unobserved heterogeneity is a concern in the volume-outcome relationship; after accounting for it, surgeon volume effects on short-term mortality are large. Using models controlling for unobserved heterogeneity and examining longer term mortality may still differentiate provider quality by volume.

Global budgets and provider incentives: hospitals' drug expenditures in Taiwan.

PURPOSE: This chapter examines how drug prescribing behavior in Taiwanese hospitals changed after the government changed reimbursement systems. In 2002, Taiwan instituted a system in which hospitals are reimbursed for drug expenditures at full price from a fixed global budget before the remaining budget is allocated to reimburse all other expenditures, often at discounted prices. Providers are thus given a financial incentive to increase prescriptions. METHODOLOGY: We isolate the effect of this system from that of other confounding factors by estimating a difference-in-difference model to analyze monthly drug expenditures of hospital departments for outpatients during the years 1999-2006. FINDINGS: Our results suggest that hospital departments which use drugs more heavily as part of their regular medical care increased their drug prescription expenditures after the implementation of the global budget system. In addition, we find that the response was stronger among for-profit than not-for-profit and public hospitals. IMPLICATIONS: Hospital doctors responded to the financial incentive created by the particular global budgeting system adopted in Taiwan by increasing expenditures on drug treatments for outpatients.

Progress and compliance in alcohol abuse treatment.

Improving patient compliance with physicians' treatment or prescription recommendations is an important goal in medical practice. We examine the relationship between treatment progress and patient compliance. We hypothesize that patients balance expected benefits and costs during a treatment episode when deciding on compliance; a patient is more likely to comply if doing so results in an expected gain in health benefit. We use a unique data set of outpatient alcohol abuse treatment to identify a relationship between treatment progress and compliance. Treatment progress is measured by the clinician's comments after each attended visit. Compliance is measured by a client attending a scheduled appointment, and continuing with treatment. We find that a patient who is making progress is less likely to drop out of treatment. We find no evidence that treatment progress raises the likelihood of a patient attending the next scheduled visit. Our results are robust to unobserved patient heterogeneity.

Hospital ownership and performance: evidence from stroke and cardiac treatment in Taiwan.

This paper compares program expenditure and treatment quality of stroke and cardiac patients between 1997 and 2000 across hospitals of various ownership types in Taiwan. Because Taiwan implemented national health insurance in 1995, the analysis is immune from problems arising from the complex setting of the U.S. health care market, such as segmentation of insurance status or multiple payers. Because patients may select admitted hospitals based on their observed and unobserved characteristics, we employ instrument variable (IV) estimation to account for the endogeneity of ownership status. Results of IV estimation find that patients admitted to non-profit hospitals receive better quality care, either measured by 1- or 12-month mortality rates. In terms of treatment expenditure, our results indicate no difference between non-profits and for-profits index admission expenditures, and at most 10% higher long-term expenditure for patients admitted to non-profits than to for-profits.

Provider-client interactions and quantity of health care use.

This paper considers three types of provider-client interactions that influence quantity of health care use: rationing, effort, and persuasion. By rationing, we refer to a quantity limit set by a provider; effort, the productive inputs supplied by a provider to increase a client's demand; persuasion, the unproductive inputs used by a provider to induce a client's demand. We construct a theoretical model incorporating all three mechanisms as special cases. When the general model is specialized into one of three mechanisms, a set of empirical implications emerges. We test for the presence of each mechanism using data of patients receiving outpatient treatment for alcohol abuse in the Maine Addiction Treatment System. We find evidence for rationing and persuasion, but not effort.

Managed care, networks and trends in hospital care for mental health and substance abuse treatment in Massachusetts: 1994-1999.

BACKGROUND: Rates of inpatient care for mental health and substance abuse treatment have been reported to fall after the introduction of managed care, but the actual decline may be overstated. Almost all managed care impact studies are based on pre-post comparisons, which have two drawbacks: secular downward trends may be attributed to a managed care effect and self-selection may exaggerate the impact of managed care. Therefore it is useful to examine long-term population-based trends in use associated with the growth of managed care. AIMS OF STUDY: This paper examines trends in inpatient care for mental health and substance abuse treatment in Massachusetts between 1994 and 1999 by service provider and payer. We analyze how managed care impacts the trends in mental health and substance abuse care. METHODS: We provide an overview of the health market in Massachusetts and compare trends in mental health and substance abuse services with all inpatient services. To analyze the impact of managed care, we compare the per discharge cost of managed care and fee for service plans in Medicare and Medicaid. Finally, we examine the role played by hospital networks in managed care. RESULTS: The reduction in service costs for mental health and substance abuse, about 25% in six years, is mostly due to the decline in the average cost per inpatient episode. This is only slightly greater than the decline in costs for all inpatient care. Managed care has reduced both the quantity (average length of stay) and intensity of health care (expenditure per day). Simulations suggest that the creation of hospital networks by managed care accounts for around 50% of the differential between the average costs of the HMO and FFS sectors. DISCUSSION: We find that the cost reductions in mental health and substance abuse services are larger than for physical health, but not by much. The average length of stay and average day cost is lower for managed care plans than for FFS plans, and much of this difference is attributable to the hospitals managed care plans select to participate in their networks. The data are limited to inpatient discharges from Massachusetts and therefore our conclusions may not be readily extended to other places. Furthermore, our analysis is based on the estimated cost rather than the actual payments to hospitals. IMPLICATION FOR HEALTH CARE PROVISION AND USE: The analysis highlights the importance of hospital selection and networks in affecting the cost of care. IMPLICATIONS FOR HEALTH POLICIES: Contrary to popular belief, the analysis shows that the experience of mental health and substance abuse and non-mental health and substance abuse services is similar. Creation of networks is an important strategy in managed care. IMPLICATIONS FOR FURTHER RESEARCH: This paper provides the groundwork for extending the analysis to areas with market characteristics different to those of Massachusetts. Further research should focus on the long-term trends in health outcomes between managed care and fee for service patients.