Purpose of study. This study is to determine whether DRG reimbursement has changed the structure of hospital costs. Due to incentives for greater output efficiency, inpatient per unit costs should fall, ceteris paribus. A countereffect for capital-intensive services is that hospitals may realize economies of scale to a lesser extent under DRGs due to inability to fully adjust in the short-run. Because outpatient services have remained under cost-reimbursement, per unit costs are not expected to decrease, ceteris paribus. However, more emphasis on outpatient services under DRGs could cause per unit costs to decrease due to greater realized economies of scale. / Procedure. A translog multiproduct cost function was used to estimate the structure of hospital costs in FY 1981-82 and 1985-86. The model included four outputs (medical-surgical discharges, outpatient visits, laboratory services, and ancillary procedures and treatments) and four annualized input prices. Other variables included fixed inputs (capital and physicians), casemix, payer mix, hospital ownership, and market structure. Product-specific economies of scale and average incremental costs were then calculated from estimation results. / Findings. Results of a joint likelihood ratio test showed that the cost structure was not significantly different in 1981-82 and 1985-86. However, t-tests regarding the difference in predicted costs evaluated at constant independent variable levels revealed that predicted costs are significantly higher in 1981-82 as anticipated. Comparative results of estimated parameters in the two years suggest hospitals are employing less capital under DRGS and physicians are inducing less demand. Further, average incremental costs for out-patient visits and laboratory services appear to be decreasing, while the average cost of discharges and ancillary procedures and treatments are increasing. Finally, unrealized economies of scale appear to be decreasing in 1985-86 for outpatient services and ancillary procedures and treatments. / Conclusion. The new DRG reimbursement system appears to have potential for reducing excess capacity, service intensity, and costs of services. / Source: Dissertation Abstracts International, Volume: 49-12, Section: B, page: 5213. / Major Professor: Gary Fournier. / Thesis (Ph.D.)--The Florida State University, 1988.
| Identifer | oai:union.ndltd.org:fsu.edu/oai:fsu.digital.flvc.org:fsu_77917 |
| Contributors | Ahern, Melissa May., Florida State University |
| Source Sets | Florida State University |
| Language | English |
| Detected Language | English |
| Type | Text |
| Format | 128 p. |
| Rights | On campus use only. |
| Relation | Dissertation Abstracts International |
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