Effects of the Medicare prospective payment system on hospital cost containment: an early appraisal.
In 1983 federal efforts to contain hospital costs were coalesced under the Medicare prospective payment system (PPS)--a "self-interest" approach to administered prices. Diagnosis-related groups (DRGs) and the tougher peer review organizations (PROs) serve to define "products"; PPS sets the price on each. The effects of PPS go beyond Medicare; they have been system-wide. Differential impacts on hospital utilization, substitution of capital for labor, and quality are examined through a variety of data sources and descriptive as well as regression analyses. The greatest cost savings are attributed to a reduction in hospital admissions per capita.
Sloan
F A
FA
Vanderbilt University.
Morrisey
M A
MA
Valvona
J
J
D003363:Cost Control / Q000706:statistics & numerical data; D004469:Economics, Hospital / Q000706:statistics & numerical data*; D006788:Hospitals, Voluntary / Q000191:economics; D006278:Medicare; D015397:Program Evaluation; D011445:Prospective Payment System / Q000191:economics*; D011787:Quality of Health Care; D012044:Regression Analysis; D014481:United States