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Profits and Fiscal Pressure in the Prospective Payment System: Their Impacts on Hospitals

Jack Hadley, Stephen Zuckerman and Judith Feder
Inquiry
Vol. 26, No. 3 (Fall 1989), pp. 354-365
Published by: Sage Publications, Inc.
Stable URL: http://www.jstor.org/stable/29772063
Page Count: 12
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Profits and Fiscal Pressure in the Prospective Payment System: Their Impacts on Hospitals
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Abstract

For hospitals that were under Medicare's Prospective Payment System (PPS) for one and two years in their 1985 fiscal year, this paper examines how variation in the fiscal pressure PPS imposed affected expenditures and other aspects of behavior. The analysis shows that in hospitals' second as well as first year on PPS, hospitals under greater pressure experienced greater behavioral change. However, second year changes were far smaller than changes in the system's first year. Evidence that variation in pressure reflects factors in addition to hospitals' relative efficiency and may undermine rather than promote appropriate cost containment leads the authors to propose modifications in PPS methods.

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