The effect of funding policy on day of week admissions and discharges in hospitals: the cases of Austria and Canada

Abstract

This paper compares two different funding policies for inpatients, the case-based approach in Austria versus the global budgeting approach in Canada. It examines the impact of these funding policies on length of stay of inpatients as one key measure of health outcome. In our study, six major clinical categories for inpatients are selected in which the day of the week for admission is matched to the particular day of the week of discharge for each individual case. The strategic statistical analysis proves that funding policies have a significant impact on the expected length of stay of inpatients. For all six clinical categories, Austrian inpatients stayed longer in hospitals compared to Canadian inpatients. Moreover, inpatients were not admitted and discharged equally throughout the week. We also statistically prove for certain clinical categories that more inpatients are discharged on certain days such as Mondays or Fridays depending on the funding policy. Our study is unique in the literature and our conclusions indicate that, with the right incentives in place, the length of stay can be decreased and discharge anomalies can be eliminated, which ultimately leads to a decrease in healthcare expenditures and an increase in healthcare effectiveness.

Introduction

In light of continuing increases in health care costs and budgetary shortage world-wide, scarce health care resources need to be planned efficiently and effectively. As the hospital sector consumes a considerable amount of health care expenditures, 43.2% on average in the OECD countries [1], cost containment has a great savings potential [2]. In order to analyse and evaluate the impact of funding policies on costs, the mean length of stay (LOS) of inpatients is used as a major performance indicator for hospitals, representing hospital's care efficiency [3].

The mean LOS of inpatients can be reduced in several ways: through more effective care methods [4], [5], [6], [7] and experienced staff [5], [8]; new or revised non-surgical and surgical procedures [4], [5], [9]; better drugs [9], [10], [11]; and improved planning of general procedures, devices, and equipment in hospitals such as laboratory, radiology and information systems [5], [9], [10]. On the contrary, a longer average LOS (ALOS) usually characterises complicated and involved treatments, where the severity of the ailment, the number of specialists available, the amount of medical attention required and a number of other influence variables result in a longer, less predictable LOS. Discharging inpatients earlier, thereby lowering LOS, is an important intervention employed to cut hospital costs. International studies have shown that funding policies impact the performance of hospitals and hence also the LOS of inpatients [2], [12], [13], [14], [15], [16], [17].

Nevertheless, a short-term reduction in LOS without accompanying controlling measures may not decrease, but, on the contrary, may even increase, hospital costs. For example, splitting an inpatient's care episode into several shorter care episodes by hospitals decreases the mean LOS of inpatients per care episode. Transferring inpatients to other care facilities more frequently or discharging inpatients for home health care also lowers the mean LOS of inpatients. Further, the expensive admission of short-stay patients such as outpatients, who are then treated as inpatients, results in a shortened LOS of inpatients. This latter situation might occur if inpatients are better reimbursed than outpatients.

Many researchers have investigated funding policies’ effects on hospitals by examining the impact of reimbursement schemes on specific diseases or specific types of inpatients in a specific country. Studies in the USA (see, e.g. [14], [18], [19], [20], [21], [22], [23]), Sweden [24], Italy [25], and Austria (see, e.g. [26], [27], [28], [29], [30], [31]) have concluded that the inpatients’ LOS significantly dropped after the introduction of a case-based payment strategy or due to negotiated contracts.

Few studies have compared different funding policies between two countries, let alone among more than two countries. For example, Ho et al. [32] investigated the difference in surgical queues and hospital outcomes between the US and Canada for inpatients with hip fractions. In addition, the “Technological Change in Health Care Project”, a cross-country, longitudinal study of the factors influencing technological change in health care, has begun to analyse the diagnoses and treatment of heart attack in several countries [33], [34]. Such studies can play an important role in benchmarking and further improving countries’ funding policies, which will subsequently lead to more efficient and effective health care systems internationally.

To help bridge this gap in the literature, we have chosen two countries with different funding policies: Austria with a case-based approach versus Canada with a global budgeting approach. The two countries are comparable because they have rather similar annual hospital expenditure rates as compared to total health care spending and similar universal health insurance coverage rates [1]. While about 47% of the health care budget was spent for Austrian hospitals, Canadian hospitals consumed about 44.5% of their budgets [1], [15]. Both Austria and Canada ensured that at least 99% of their citizens had health insurance coverage in 1998 [1].

In our study, we compare inpatient data for several major clinical diagnoses in Austria and Canada by a strategic statistical analysis to disclose a potential for a reduction in the mean LOS and for an elimination of discharge anomalies of inpatients due to divergent funding policies. Herein, we concentrate on admission and discharge days. The results prove that funding policies have a significant impact on the expected inpatient's LOS. For all six clinical categories, Austrian inpatients stayed longer in hospitals compared to Canadian inpatients. In both countries, inpatients were not admitted and discharged equally throughout the week. For specific clinical categories, more inpatients were discharged on certain days such as Mondays or Fridays depending on the funding policy. Our study is unique in the literature and can be seen as a systematic, quantitative analysis tool in support of rational policy and decision making to solve the cost-containment problem [35], [36].

The paper is organised as follows: In Section 2, we first give a short, general overview of general types of funding policies for hospitals and their underlying problems as well as a detailed description of the Austrian and Canadian systems. In Section 3, we then present the design of our study and the methodology used. The results and policy implications of our strategic statistical analysis are illustrated in Section 4. Finally, we conclude the paper and refer to issues for further research.