ABSTRACT
This study investigates the spillover effects of a city-wide global budget and case-based payment reform (known as the DIP reform) on non-resident patients from another city in the same province. By developing a theoretical model, I hypothesize that nontrivial deviation costs from reform-driven standard patient journeys could lead to reduced charges for patients who seek care in the reform city but are not subject to its payment reform policies. To test this hypothesis, I employ a difference-in-differences approach using discharge records to compare outcomes between patients from a non-reform outbound city hospitalized in the reform city, where DIP was implemented, and those hospitalized in other non-reform cities within the same province. The results indicate that the DIP reform significantly reduced total hospital charges for non-resident patients, without compromising care quality as measured by readmission rates. Notably, high-cost hospitals experienced more pronounced charge reductions compared to low-cost hospitals, highlighting the need to manage heterogeneous impacts on different healthcare providers to ensure equitable healthcare delivery.
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