ABSTRACT
Hospitals and physicians treat patients who are covered by public and private insurance policies that utilize an array of payment designs. Healthcare payers vary in both the level of payments provided and the structure of those payments. This chapter primarily focuses on Medicare payments for hospital services; however, a parallel set of issues is relevant for physician payments. It provides information on types of payment structures and the incentives intrinsic to those structures. The chapter considers the evolution of strategies to control cost and strengthen healthcare quality. It uses data from one short-term general hospital to examine the implications of current payment systems for hospital operations and strategy. The chapter considers the implications of public and private payment systems using one-year of de-identified patient-level information on inpatients from one short-term general acute care hospital located in a small city.
