Modelling the effects of the Austrian inpatient reimbursement system on length-of-stay distributions

Abstract. This paper analyses the effects of the new Austrian performance-oriented inpatient payment system on discharge strategies of hospitals by investigating length-of-stay (LOS) distributions. Using generalised linear models applied to data from 1998, we calculate the impact of day and month of admission as well as types of admission and discharge on the LOS of inpatients with major diagnoses. Hereby, we prove significant interdependencies among these variables and reveal hospital behaviour such as 1) premature discharges of inpatients or “unbundling” and 2) “patient splitting”. Hence, our findings illustrate that hospitals react to incentives set by the new system in order to maximise their revenues. Hence, the current reimbursement system still has potential for cost reduction while maintaining high quality of health care. Our strategic policy model supports decision makers in disclosing these effects and provides policy implications to close exploitable gaps within the new reimbursement system.