Assessing the effects of drug price reduction policies on older people in Taiwan.

This study investigates the initial effects of the government's prescription drug price reduction policies on outpatient hypertension treatment for the elderly in Taiwan. The National Health Insurance scheme has taken a number of steps in recent years to reduce drug prices. The data used in the study comprises the medical records of approximately 137,000 hypertension patients aged 65 and above. Regression analysis is used to determine whether the average cost of prescription drugs has declined as a result of the policy. In addition, the probit model is used to examine changes in physicians' prescribing behaviour for reduced-price and full-price drugs and the effect of drug substitution on health outcomes. We find that the average cost per prescription increased slightly despite the implementation of the price reduction policies. In addition, we found that physicians do substitute full-price drugs for reduced-price drugs. However, they appear to be reluctant to reduce the use of essential drugs, even when facing rate reductions. The evidence suggests that physicians consider the profit they can derive by prescribing certain drugs; hence, health policy officials should monitor the effects of possible drug substitutions when they design policies for their own countries.

A study of a nursing department performance measurement system: using the Balanced Scorecard and the Analytic Hierarchy Process.

The health care industry is under pressure from government and private entities as well as from market conditions to contain costs. In an effort to respond to these pressures, the case hospital in this study implemented a Balanced Scorecard (BSC) in January 2003 and integrated it with the hospital's formal incentive plan for non-physicians in January 2005. The nursing department's performance improved in the 2 years following the introduction of the plan. This study contributes to the literature by demonstrating the performance improvement that results from integrating the BSC with an incentive plan in the nursing field. The results provide insight into the current BSC performance metrics applied by the case nursing department, and could be used as guidelines by other health care organizations that wish to implement BSC-based incentive plans.

Effect of participating in Taiwan Quality Indicator Project on hospital efficiency in Taiwan.

OBJECTIVE: To examine the effect of participating in Taiwan Quality Indicator Project (TQIP) on hospital efficiency and investigate why hospitals participate in TQIP. METHODS: Our sample consists of 417 private not-for-profit hospitals in Taiwan during the 2001-2007 period. A simultaneous-equation model was performed to examine if hospitals that participated in TQIP were more efficient than hospitals that did not and investigate which variables affected the probabilities of hospitals' participation in the project. RESULTS: Our findings indicate that participating hospitals are more efficient than hospitals not participating in TQIP. In addition, hospital efficiency, hospital size, teaching status, and hospital age are positively related to participation in the project. These empirical results can be used as supporting evidence of success in improving performance through creating quality for hospitals that have participated in the project and offer insights into the value and strengths of the project. In addition, in recent years, reimbursement systems worldwide have partly moved payment methods to a pay-for-performance mechanism. In an attempt to control costs and improve quality, the policy makers should consider participating in Quality Indicator Project (QIP) as being one of the criteria to be reimbursed for performance.

Changes in prescribing behaviors after implementing drug reimbursement rate reduction policy in Taiwan: implications for the medicare system.

Prescription drug costs are the fastest rising component of health care spending worldwide. To control drug costs, the Bureau of the National Health Insurance in Taiwan has taken a series of actions over the years to reduce drug reimbursement rates. The purpose of this study is to investigate changes in physicians' prescribing behaviors after initial implementation of drug reimbursement rate reduction policy in Taiwan. For the study, variance cost analysis was used to investigate how physicians reacted after implementation of a policy that reduced selected drug reimbursement rates. The results indicate that the existence of financial benefits from prescribing drugs seems to create an incentive for physicians to increase prescription duration and drug items per prescription. In addition, differences in drug reimbursement rates may create incentives to prescribe drugs with higher revenue instead of lower revenue. From Taiwan's experience, we know that price is merely one of the many factors that influences drug expenditures. Taiwan's experience may offer lessons for the future of the Medicare system, as well as for non-US health policy officials when they design similar policies for their own countries.

Does capitated contracting improve efficiency? Evidence from California hospitals.

This study examines the effect of capitated contracting on hospital efficiency to better understand strategies related to the recent financial crisis in the California health care market. Our findings indicate that less efficient hospitals are more likely to participate in capitated contracting. As a result, hospitals with capitated contracts are, on average, less efficient than hospitals without capitated contracts. Hospital efficiency generally increases with respect to the degree of capitation involvement. The efficiency improvement, however, becomes insignificant when capitation exposures are already high. Thus, hospital executives should not be overly optimistic about efficiency gains obtained in capitated contracting and should control the degree of capitation involvement.

The initial effects of Physician Compensation Programs in Taiwan hospitals: implications for staff model HMOs.

This paper examines whether a Physician Compensation Program (PCP), which was based on the responsibility centers system, improved departmental efficiency in a large Taiwan teaching hospital. PCPs in Taiwan may have implications for staff-model HMOs. Monthly financial data and related information for 58 departments in the 5 months following the introduction of the program (the PCP period) and the corresponding 5 months before the introduction of the program (the pre-PCP period) were provided by the case hospital. The Data Envelopment Analysis (DEA) model is used to measure the operational efficiency of each department in the case hospital over the two periods. We first use asymptotic DEA-based tests to examine whether differences in efficiency scores between the two periods are significant. Then, a multi-factor tobit model is used to examine factors that might explain the observed differences in efficiency. The data of each month in the PCP period (November 1996-March 1997) and the pre-PCP period (November 1995-March 1996) are used to calculate efficiency scores and control for monthly effects. We find that average efficiency improves after the implementation of the PCP, with or without controlling for other related factors. Physicians' seniority and percentage of physicians' service time in the department are associated with improved efficiency. Finally, departments with higher profits and fewer numbers of employees are associated with higher efficiency. The findings suggest that to achieve an increase in hospital efficiency in Taiwan, responsibility centers should be integrated with formal physician compensation programs. Such results have implications for staff model HMOs in the US and their variants in countries with national health insurance.

Does the implementation of responsibility centers, total quality management, and physician fee programs improve hospital efficiency? Evidence from Taiwan hospitals.

OBJECTIVES: This study evaluates whether the implementation of various types of hospital-physician integration strategies, such as the responsibility centers system, total quality management, and physician fee programs, enhance efficiency for Taiwan hospitals. Because hospitals in Taiwan are structurally similar to staff-model HMOs, the study has implications beyond Taiwan. RESEARCH DESIGN: The Data Envelopment Analysis model is applied to measure hospital efficiency. Hospital efficiency refers to the ability to produce more outputs (eg, ambulatory and emergency visits, inpatient days, and inpatient visits) with the same inputs (eg, physicians, nurses, ancillary labor, and hospital beds). The sample consists of 90 general hospitals in Taiwan from 1994 to 1996. In addition, multitobit regression analysis is used to simultaneously estimate the effects of the hospital-physician integration strategies and provide better control for the effect of other factors (eg, size, degree of competition, ownership structure, teaching status, and the change in regulatory regime) that may also affect hospital efficiency. RESULTS: When evaluating the hospital-physician integration strategies individually, hospitals that implemented the responsibility centers system, total quality management, and physician fee programs were more efficient than hospitals that did not. Controlling for other factors using the multitobit model, hospitals that implemented physician fee programs remained significantly more efficient than others. In addition, hospitals that implemented total quality management were more efficient when they had implemented the strategy for at least 2 years. Hospitals that implemented the responsibility centers system were more efficient but only when integrating the system with formal incentive schemes. CONCLUSIONS: Physician fee programs seem to provide the most direct and robust incentives to enhance hospital efficiency under a fee-for-service regime like that in Taiwan. Because of time-lagged effects, hospitals that implemented the total quality management programs were more efficient but only when the programs had been implemented for at least 2 years. The responsibility centers system can also be effective when the system was associated with formal incentive schemes. The results indicate the importance of having both the individual-based and team-based incentives in place. Finally, the hospital-physician integration strategies appear to be effective individually, but the results change significantly when they are evaluated simultaneously, together with other control variables, in the tobit model. This indicates the importance of investigating hospital-physician integration strategies as a portfolio instead of a single tool.