Abstract
We examine how public sector third-party purchasers and hospitals negotiate quality targets when a fixed proportion of hospital revenue is required to be linked to quality. We develop a bargaining model linking the number of quality targets to purchaser and hospital characteristics. Using data extracted from 153 contracts for acute hospital services in England in 2010/2011, we find that the number of quality targets is associated with the purchaser’s population health and its budget, the hospital type, whether the purchaser delegated negotiation to an agency, and the quality targets imposed by the supervising regional health authority.
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Notes
The national targets were for risk assessment of admitted patients for venous thromboembolism and for patient satisfaction.
The target level of quality for the venous thromboembolism national goal was set nationally.
More generally, but equivalently for model specification purposes, we can assume that the choice of the number of targets has a monotonic increasing effect on quality and consequently on patient benefit.
Here and elsewhere subscripts on functions denote partial derivatives, so, for example, B n = ∂B/∂n, B nx = ∂(∂B/∂n)/∂x.
Hospital revenue R includes the CQUIN incentive payment which is a fixed proportion of the total payment for treating patients.
V and U are concave in n so that lnV and lnU are also concave in n and, since the sum of concave functions is concave, the first order condition is also sufficient.
Proof available from authors on request.
The assumption that B nh = B hn > 0 implies that B h (n *;·) > B h (0;·).
This covers 91 % of acute hospitals. Details of CQUIN contracts for the other 16 English acute hospital trusts were not available.
If an agency negotiated the contract we take the total expenditure of the PCTs for whom it negotiates.
Letting I k = (0,..,1,… 0) denote a vector with 1 in the kth position and 0 elsewhere, the coefficient on the kth explanatory variable is
$$\ln \left( {\frac{{\mu ({\mathbf{x}} + {\mathbf{I}}_{k} )}}{{\mu ({\mathbf{x}})}}} \right) = \ln \left( {\frac{{\exp (({\mathbf{x}} + {\mathbf{I}}_{k} ){\varvec{\upbeta}})}}{{\exp ({\mathbf{x\beta }})}}} \right) = \ln \left( {\exp (\beta_{k} )} \right) = \beta_{k}.$$
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Acknowledgments
The research was funded by a grant from the Department of Health Policy Research Programme. The views expressed are those of the authors and not necessarily those of the funders. The authors are grateful for helpful comments from the Editor and referee and from participants in the Royal Economic Society (RES) conference in Cambridge, 2012.
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Fichera, E., Gravelle, H., Pezzino, M. et al. Quality target negotiation in health care: evidence from the English NHS. Eur J Health Econ 17, 811–822 (2016). https://doi.org/10.1007/s10198-015-0723-8
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DOI: https://doi.org/10.1007/s10198-015-0723-8