Do Closed-system Hospitals Shift Care under Case Payment? Early Experiences Comparing Five Surgeries in Taiwan

Background: Recently, Japan, Korea, and Taiwan have adopted prospective payment systems(PPS) for healthcare. Experiences of the United States Medicare showthat PPS reduces length of stay but creates incentives to shift care from regulatedto un-regulated settings. In this study we investigated whether closedsystemhospitals in Taiwan responded to case payment (CP) – one type ofPPS, and if so, how this was managed.Methods: Data were derived from three Taiwanese hospitals for five different surgicalprocedures (N = 22,327). The study period covered from October 1996through August 1999, with CP commencing on October 1, 1997. Importantdependent variables included inpatient medical claims, outpatient medicalclaims, and number of outpatient visits. Outpatient utilization from the periodfour weeks prior to admission and four weeks following discharge weremerged for each patient. Ordinary Least Square (OLS) and Poisson regressionwere used to test the study’s shifting hypotheses, controlling for gender,age, patient diagnoses, and institution attended.Results: Length of hospital stay, amount of inpatient claims, and inpatient x-ray andlab-test claims were significantly reduced after CP. Corresponding OLS coefficientsfor the second year of implementation were, respectively, –.86, –.06,–.15, and –.04 (p < 0.01). Significant forward shifting of outpatient care,(79%), was found during the second year of CP. Despite the care-shiftingeffects noted herein, the average per-capita total claims reduced by 12%.Significant institutional effects were associated with the pattern of care-shifting.Conclusions: Our results indicate that CP reduced total claims for the selected surgicalprocedures, even under evident forward care-shifting.