Activity-Based Funding of Hospitals and Its Impact on Mortality, Readmission, Discharge Destination, Severity of Illness, and Volume of Care: A Systematic Review and Meta-Analysis

Abstract

BackgroundActivity-based funding (ABF) of hospitals is a policy intervention intended to re-shape incentives across health systems through the use of diagnosis-related groups. Many countries are adopting or actively promoting ABF. We assessed the effect of ABF on key measures potentially affecting patients and health care systems: mortality (acute and post-acute care); readmission rates; discharge rate to post-acute care following hospitalization; severity of illness; volume of care.MethodsWe undertook a systematic review and meta-analysis of the worldwide evidence produced since 1980. We included all studies reporting original quantitative data comparing the impact of ABF versus alternative funding systems in acute care settings, regardless of language. We searched 9 electronic databases (OVID MEDLINE, EMBASE, OVID Healthstar, CINAHL, Cochrane CENTRAL, Health Technology Assessment, NHS Economic Evaluation Database, Cochrane Database of Systematic Reviews, and Business Source), hand-searched reference lists, and consulted with experts. Paired reviewers independently screened for eligibility, abstracted data, and assessed study credibility according to a pre-defined scoring system, resolving conflicts by discussion or adjudication.ResultsOf 16,565 unique citations, 50 US studies and 15 studies from 9 other countries proved eligible (i.e. Australia, Austria, England, Germany, Israel, Italy, Scotland, Sweden, Switzerland). We found consistent and robust differences between ABF and no-ABF in discharge to post-acute care, showing a 24% increase with ABF (pooled relative risk = 1.24, 95% CI 1.18–1.31). Results also suggested a possible increase in readmission with ABF, and an apparent increase in severity of illness, perhaps reflecting differences in diagnostic coding. Although we found no consistent, systematic differences in mortality rates and volume of care, results varied widely across studies, some suggesting appreciable benefits from ABF, and others suggesting deleterious consequences.ConclusionsTransitioning to ABF is associated with important policy- and clinically-relevant changes. Evidence suggests substantial increases in admissions to post-acute care following hospitalization, with implications for system capacity and equitable access to care. High variability in results of other outcomes leaves the impact in particular settings uncertain, and may not allow a jurisdiction to predict if ABF would be harmless. Decision-makers considering ABF should plan for likely increases in post-acute care admissions, and be aware of the large uncertainty around impacts on other critical outcomes.

Leaders’ experiences and perceptions implementing activity-based funding and pay-for-performance hospital funding models: A systematic review

“…This passage of time may have allowed for the refinement of the DRG fees to more accurately represent actual costs thereby deriving greater real and perceived benefits from ABF. Another possible explanation for this finding is that the US concomitantly implemented companion quality or efficiency improvement measures or incentives that made it more likely that jurisdictions and leaders attributed benefits to ABF (or P4P) [17]. One must consider that the incumbent financing system in the US was cost-based reimbursement rather than global budgets so cost containment may have influenced perception of benefits in American leaders more than in leaders from other countries.…”

“…The term ABF is used synonymously in the literature with such terms as volume-based funding, patient-based funding, servicebased funding, case-mix funding, and payment by results (PbR) [16]. ABF systems vary, but typically offer hospitals a fixed amount per bundle of care ordinarily delivered to clinically similar patients (based on diagnosis) [17]. In order to quantify each unit of care and its associated costs, hospitals rely on classification systems, the most common being diagnostic related groups (DRGs).…”

“…ABF systems have been implemented in various jurisdictions with the intent of achieving a variety of different policy objectives, the most common being to increase productivity, enhance transparency [20,21], and increase efficiency while decreasing costs [22,23]. Nevertheless, the evidence reveals inconsistent findings that vary from significant benefits to negative consequences, and importantly, decision makers should be aware of these inconsistencies prior to ABF implementation [17].…”

“…In summary, the literature clearly reveals significant challenges [20,32,42,44], complexities [19,24,35] and lack of clarity [5,17,35,[38][39][40][41] surrounding the implementation of ABF and P4P models. This represents an enormous challenge for health care leaders who are responsible for implementing and maintaining the funding models that have been placed upon them.…”

Heterogeneity of European DRG systems and potentials for a common EuroDRG system Comment on "Cholecystectomy and Diagnosis-Related Groups (DRGs): patient classification and hospital reimbursement in 11 European countries"

“…DRGs have been introduced worldwide, and especially in Europe, in a large number of countries with very different health systems. However, effects of DRG systems and DRGbased hospital payment systems -and in particular knowledge about optimal design features of these systems -remain fragmented and often difficult to compare (8). Consequently, there is no agreed consensus on how best to design DRG systems, because the differences between countries' systems remain poorly understood and systematic but detailed comparisons of the main building blocks of DRG systems are rare.…”