ABSTRACT
In this paper we examine the relationship between inpatient length of stay and the patient's type of health insurance. The data consist of discharges in seven diagnosis-related groups (DRGs) from community hospitals in Minneapolis and St. Paul during 1982. After controlling for the effects of the patient's age, sex, medical condition, and severity of illness, as well as the hospital's size, teaching and ownership status, and average annual occupancy rate, we must reject the null hypothesis that the patient's type of health plan is unrelated to inpatient length of stay in Twin Cities community hospitals. We find that, in most cases, patients in prepaid group practices and independent practice associations exhibit significantly shorter lengths of stay than similar patients in Blue Cross and commercial health insurance plans, while Medicare and Medicaid patients exhibit significantly longer lengths of stay than those of similar commercially insured patients.
Subject(s)
Insurance, Health , Length of Stay/economics , Blue Cross Blue Shield Insurance Plans , Diagnosis-Related Groups , Fees, Medical , Group Practice, Prepaid , Health Maintenance Organizations , Hospitals, Community , Medicaid , Medicare , MinnesotaABSTRACT
Cost-shifting, the practice by hospitals of raising their prices to make up for reimbursement shortfalls from payers that do not pay full charges, is an important and controversial issue. Concerns about cost-shifting, particularly its effects on payment equity and cost escalation, have led many insurers, business groups, and legislators to advocate rate-setting regulation for hospitals. This article seeks to clarify the definition of cost-shifting, and quantifies its magnitude in Minneapolis/St. Paul. We believe that cost-shifting is the consequential result of the failure of both public and private payers to structure payment policies that reward cost-effective hospitals, and we outline a market-oriented alternative to rate-setting to address the discount dilemma caused by cost-shifting.