The Impact of Medicare's Prospective Payment System on Psychiatric Patients Treated in Scatterbeds

Richard G. Frank, Judith R. Lave, Carl A. Taube, Agnes Rupp, Howard H. Goldman

NBER Working Paper No. 2030
Issued in September 1986
NBER Program(s):Health Economics

Medicare's Prospective Payment System (PPS) for hospitals was phased-in during the 1884 Federal Fiscal Year. While many providers of psychiatric inpatient care were exempted from PPS patients treated in general hospital beds outside of psychiatric units (scatterbeds) were not. This allows for an initial assessment of the impact of PPS on psychiatric patients. We use a single equation model of hospital length of stay to estimate the impact of PPS. We allow for the possibility of both anticipating behavior and slow adjustment to the new payment scheme. The results indicate a substantial response to PPS over the first year of implementation. The estimated response includes sizable anticipatory and slow adjustment components. The findings suggest that policy discussions may be weighted too heavily in the direction of concern over hospital financial status given the ability of hospitals to change their behavior.

download in pdf format
   (267 K)

download in djvu format
   (199 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w2030

Published: in T. G. McGuire and R.M. Scheffler, editors, The Economics of Mental Health Services. Advances in Health Economics and Health Services Research, Volume 8, JAI Press, 1987.

Users who downloaded this paper also downloaded* these:
Klenow and Rodríguez-Clare The Neoclassical Revival in Growth Economics: Has It Gone Too Far?
Arias, Azuara, Bernal, Heckman, and Villarreal w16554 Policies To Promote Growth and Economic Efficiency in Mexico
Salkever, Steinwachs, and Rupp w1633 Hospital Cost and Efficiency Under Per Service and Per Case Payment in Maryland: A Tale of the Carrot and the Stick
Cutler and Madrian w5525 Labor Market Responses to Rising Health Insurance Costs: Evidence on Hours Worked
Alvarez and Shimer w13772 Search and Rest Unemployment
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us