China’s transition to DRG-based hospital reimbursement

China has been transitioning from a fee-for-service (FFS) payment system to a Diagnosis-Related Group (DRG) payment system for hospitals in various cities. Under the FFS model, hospitals were reimbursed for each individual healthcare service provided, which created incentives to increase the number of services during a patient’s hospitalization. In June 2019, the National Healthcare Security…

Merchants of Death

That is the clever title of recent American Economic Review publication by Cyrus Aghamolla, Pinar Karaca-Mandic, Xuelin Li, Richard T. Thakor. The abstract is below. This study examines the link between credit supply and hospital health outcomes. We use bank stress tests as exogenous shocks to credit access for hospitals that have lending relationships with…

FTC erects additional administrative barriers to hospital mergers

Last week, the Federal Trade Commission (FTC) increased their required premerger reporting requirements for any healthcare providers such as hospitals. Healthcare Dive reports: Thursday’s update marks the first time the FTC has revised its Hart-Scott-Rodino Act premerger notification form in nearly 50 years.The law is intended to alert officials of companies’ intent to merge and…

340B costs Medicaid $32b per year

The 340B Drug Pricing Program is a federal initiative designed to help certain healthcare providers, known as “covered entities,” stretch their resources to better serve vulnerable and underserved patient populations. Created in 1992, the program requires pharmaceutical manufacturers to sell outpatient drugs at significantly discounted prices (typically 25% to 50% off) to eligible hospitals, clinics,…

Does private health insurance reduce public hospital procedure wait times?

In countries that have universal health insurance, but limited patient out-of-pocket costs for public hospital services, non-urgent hospital treatment often has a waiting list in public hospitals. To address this issue, some countries (e.g., UK, Canada) use strategies such as setting maximum wait targets, monitoring provider performance, or adding public funding; other countries (e.g., Australia,…

Are hospital quality metrics causal?

That is the question asked by a recent NBER working paper by Chandra et al. (2023). This question is important for a variety of reasons. First, quality measure data collection is expensive. Saraswathula et al. 2023 found that Johns Hopkins Hospital had to report 162 unique quality metrics, and the cost for collecting these data…

Who are 340B third-party administrators?

That is the question asked by a recent paper by Nikpay et al. (2023). The authors begin by describing the magnitude of the 340B program: The 340B drug discount program is designed to lower drug costs and increase drug profits for safety-net providers, called “covered entities,” by entitling them to discounts on drugs for all…