Why Bundled Payments May Not Reduce Costs
…[T]he results of this analysis show that the case for bundled hospital payments for the privately insured is much weaker — post-acute care and other ancillary services account for a relatively small share of overall spending on hospitalization episodes, and they account for almost none of the variation in episode spending from one hospital to another.
Study. HT: Austin Frakt.
Do bundled payments work in other cases?
From the article it does not appear so
The problem with Medicare bundling as a new idea is that Medicare Part A hospital payments already are bundled via the Diagnosis Related Groups (DRGs). What Medicare calls bundling is just extending the current bundle to include more services. It is not really conceptually the same as allowing hospitals to bundle and re-bundle services in response to demand.
Would the services end up cheaper in the long run?
From the article it does not appear so
“But the results of this analysis show that the case for bundled hospital payments for the privately insured is much weaker—post-acute care and other ancillary services account for a relatively small share of overall spending on hospitalization episodes, and they account for almost none of the variation in episode spending from one hospital to another.”
Ahhh, there it is.
Say it isn’t so!
“Spending on Knee and Hip Replacement Episodes Varies Widely”
The variation on that graph is simply amazing to witness
Which is why economists hate the healthcare system so much
What are ways we can make our healthcare cheaper then?
Price controls? Which PPACA provides in section 3403.