Title: Does the introduction of a prospective payment system influence the length of stay in hospitals? A quantitative analysis using aggregated data from Germany
Supervisor: Andreas Schmid (University of Bayreuth)
This paper investigates whether the introduction of a prospective payment system in the German inpatient sector in 2004 had an effect on the average length of hospitalizations. A depiction of the features of the new reimbursement system and its predecessor is followed by a discussion of the relevance and development of the average length of hospital stays. Providing a short overview of relevant aspects of principal-agent theory rounds of the introductory chapters. An extensive literature review on the theoretical and empirical findings on the impact of the introduction of prospective payment systems builds the foundation on which an economic model for hospitals under prospective payment is constructed. According to the results of the review and the implications of the economic model, the hypothesis was formulated that the DRG introduction led to the politically intended decrease of length of stay in German hospitals. The analysis continues with summarizing key elements of the aggregated data set on the full sample of German hospitals from 2000 to 2012, utilized to test this hypothesis. The econometric approach and the used truncated Poisson model are described in detail before the general results are presented and discussed. These results allow the conclusion that there has been a small reduction of the length of hospitalizations due to the DRG introduction. However, several limitations, mainly attributed to the used data, have to be considered when interpreting the results. The depiction of these limitations and a subsumption of the results in a broader context complete this paper.
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