Impacts of a New Episode-Based Payment Scheme on Volume, Expenditures, and Efficiency in Public Hospitals: A Quasi-Experimental Interrupted Time-Series Study in Jinhua, China

Purpose: Based on the diagnosis-related groups payment, China developed an innovative episode-based payment scheme, called “payment method by disease types with point counting”, to control health expenditures inflation. This study aimed to investigate the impacts of this new payment method on volume, expenditures, and efficiency in Chinese public hospitals. Methods: The study sample consisted of 7 tertiary hospitals and 14 secondary hospitals in Jinhua (intervention group) and 4 tertiary hospitals and 14 secondary hospitals in Taizhou (control group). Monthly data points were collected for each sampled hospital from June 2016 to June 2019 using a self-administered questionnaire with impact evaluation indicators. Controlled interrupted time-series analysis was employed to estimate the effect of the new payment method. Results: The significant slowing trends in inpatient expenditures per visit (tertiary hospitals: β 7 =− 123.16, p=0.042; secondary hospitals: β 7 =− 89.24, p=0.021) and out-of-pocket payments (tertiary hospitals: β 7 =− 4.18, p=0.027; secondary hospitals: β 7 =− 4.87, p=0.019) were observed after policy intervention. However, outpatient expenditures per visit in tertiary (β 7 =1.67, p=0.018) and secondary hospitals (β 7 =1.24, p=0.003) rose faster with the new payment method. Additionally, payment reform also caused an increase in the number of inpatient visits (β 7 =100.01, p=0.038) and reduced the length of stay (β 7 =− 0.10, p=0.036) in tertiary hospitals. Conclusion: The introduction of payment method by disease types with point counting causes the cost containment for inpatient care, whereas the increase in outpatient expenditures. The findings suggest this new payment scheme has the potential for rollout in other areas, but the cost-shifting from the inpatient to outpatient setting should be prevented. Keywords: episode-based payment, expenditures, public hospitals, controlled interrupted time series, China