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Reimbursement schemes for hospitals: the impact of case and firm characteristics

Research output: Contribution to journalArticle

  • Eberhard Feess
  • Helge Müller
  • Ansgar Wohlschlegel
We contribute to the debate on high-powered versus low-powered incentives in
regulation by studying their heterogeneous impacts on different subpopulations,
using data from the introduction of a high-powered prospective payment system
(PPS) for hospital reimbursement in Germany. While no overall effect on quality
or cost saving is found, our results support hypotheses drawn from an incentive and selection perspective: PPS reduces the length of stay of older relative to younger patients, of more severe relative to less severe cases, and in smaller relative to larger hospitals. Hospitals which adopted PPS earlier provide higher quality under PPS as proxied by the case-specific readmission rate. Our study also contributes to the health economic literature on hospital reimbursement as our data permits us to identify the treatment effect via different timings of adoption of PPS and to use a more accurate quality measure by following patients even when readmitted to other hospitals.
Original languageEnglish
JournalApplied Economics
Early online date10 Nov 2018
Publication statusEarly online - 10 Nov 2018


  • Hospital_AppliedEcon_Accepted

    Rights statement: This is an Accepted Manuscript of an article published by Taylor & Francis in Applied Economics on 10/11/2018, available online:

    Accepted author manuscript (Post-print), 360 KB, PDF document

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