Two Prospective Difficulties with Prospective Payment of Hospitals, Or, It's Better to Be a Resident Than a Patient with a Complex Problem

Published in: Journal of Health Economics, v. 2, no. 3, Dec. 1983, p. 269-274

by Joseph P. Newhouse

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Medicare payment policy has stimulated important health services research on hospitals. Health services research provided the foundation for the original PPS system. Since its implementation, health services research has influenced subsequent decisions at the margin. This research has highlighted limitations in these measures--particularly measures of teaching activity and hospital policy. It is important to implement any payment system as good as possible at the outset. Once a system is in place, any change will lead to an identifiable set of winners and losers, and the more powerful the losers, the less likely the change. Health services research will lead to minor changes. However, it will take political will to make major changes.

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