How hospital autonomy affects provider payment reform effectiveness

• Published in: The International journal of health planning and management Vol. 39; no. 5; pp. 1350 - 1369
• Main Authors: Tsuei, Sian Hsiang‐Te, Yip, Winnie (Chi‐Man)
• Format: Journal Article
• Language: English
• Published: England Wiley Subscription Services, Inc 01.09.2024
• Subjects: Autonomy; China; Control equipment; Cooperation; Cooperative control; Effectiveness; Expenditures; global budget; Health care; Health care policy; Hiring; Hospitalization; Hospitals; Incentives; Intervention; organizational autonomy; Payments; Policy making; Procurement; Profiteering; provider payment reform; Purchasing; Reforms; organizational autonomy; global budget; China; provider payment reform
• ISSN: 0749-6753; 1099-1751; 1099-1751
• DOI: 10.1002/hpm.3806

Background Provider payment reforms (PPRs) have demonstrated mixed results for improving health system efficiency. Since PPRs require health care organisations to interpret and implement policies, the organizational characteristics of hospitals may affect the effectiveness of PPRs. Hospitals with more autonomy have the flexibility to respond to PPRs more efficiently, but they may not if the autonomy previously facilitated behaviours that counter the PPR's objective. This study examines whether hospitals with higher autonomy responds to PPRs more effectively. Methods We used data from a matched‐pair, cluster randomized controlled PPR intervention in a resource‐limited Chinese province between 2014 and 2018. The intervention reformed the reimbursement method from the publicly administered New Cooperative Medical Scheme (NCMS) from fee‐for‐service to global budget. We interacted measures of hospital autonomy over surplus, hiring, and procurement (drugs, consumables, equipment, and overall index) with the difference‐in‐difference estimator to examine how autonomy moderated the intervention's effect. Results Autonomy over surplus (p < 0.01) and procurement of equipment (p < 0.01) were associated with relatively faster NCMS expenditure growth, demonstrating worse PPR response. They were also associated with higher expenditure shifting to out‐of‐pocket expenditures (p > 0.05). Post hoc analysis suggests that hospitals with surplus autonomy had higher OOP per admission (p < 0.01), suggesting profiteering tendencies. Other dimensions of autonomy demonstrated imprecise association. Discussion Hospitals with more autonomy may not necessarily respond more effectively to PPRs that incentivise efficiency when they had previously been encouraged to maximise profit. Policymakers should assess the extent of perverse incentives before granting autonomy and adjust the incentives accordingly. Highlights Hospitals with more autonomy over surplus and equipment procurement may respond worse to provider payment reforms (PPRs). At least surplus autonomy may have driven profiteering tendency at baseline, resulting in worse adaptation to reforms that target expenditure control. Before granting organizational autonomy, policymakers should assess extant incentives and consider adjusting incentives or withholding operational autonomy. Future research can unpack theoretically relevant organizational characteristics to identify additional opportunities to improve PPRs.