Getting Incentives Right? The Impact of Hospital Capitation Payment in Vietnam

Abstract

This paper evaluates the impact on cost and utilization of a shift from fee-for-service to capitation payment of district hospitals by Vietnam's social health insurance agency. Hospital fixed effects analysis suggests that capitation leads to reduced costs. Hospitals also increased service provision to the uninsured who continue to pay out-of-pocket on a fee-for-service basis. The study points to the need to anticipate unintended effects of payment reforms, especially in the context of a multiple purchaser system. Copyright © The World Bank Health Economics © 2015 John Wiley & Sons, Ltd.

Navigating Complexity in Policy Implementation

“…Vietnam experimented with paying district hospitals on a capitation basis, rather than using fee for service (FFS). Results from a pilot study suggest that while capitation payments resulted in lower costs, hospital managers were found to have increased the volume of services provided to the uninsured who continue to pay out of pocket on an FFS basis (see Nguyen et al 2017). Newer tools to monitor such moral hazard and ensuring these cohere with the existing reforms are another source of complexity.…”

Improving Efficiency in the Health Sector

“…District hospitals are also responsible for treatment costs incurred by insured members at CHSs under their jurisdiction. An added challenge is that patients are free to choose where they seek care; district hospitals cannot prevent patients from bypassing them and going directly to higher-level facilities (Nguyen et al 2017).…”

The Remarkable Healthcare Performance in Singapore

“…The challenge, however, remains how to harness synergies and complementarities in using these tools. Far too many reform efforts in healthcare have resulted in failures or caused more harm than good due to the inadequate or contradictory use, not to mention misuse, of these tools (Blumenthal and Hsiao 2005;Bali and Ramesh 2015;Nguyen et al 2015;Powell-Jackson et al 2015). In Singapore, however, the government met this challenge, and was able to develop a policy mix of tools that harnessed these synergies and complementarities (Howlett et al 2015).…”