Prospective payments and hospital efficiency

Published

Journal Article

This paper examines the effects of the Prospective Payment System on the behavior of hospitals with respect to their capital allocations and the efficiency with which they produce in-patient care. A theoretical model adapted from Pope [1989] yields the testable hypotheses that as a hospital's Medicare population increases the hospital will supply greater levels of capital and produce in-patient care using less technically efficient methods. A two stage test of these hypotheses is run on a sample of US non-federal hospitals. Results from patient demand functions and a stochastic profit frontier are consistent with the theoretical model. © 1996 Kluwer Academic Publishers.

Duke Authors

Cited Authors

  • Bradford, WD; Craycraft, C

Published Date

  • December 1, 1996

Published In

Volume / Issue

  • 11 / 6

Start / End Page

  • 791 - 809

International Standard Serial Number (ISSN)

  • 0889-938X

Citation Source

  • Scopus