Impacts of Outpatient Payment Reforms on Volume and Expenditures in Public Hospitals: Evidence from a Quasi-Experimental Analysis in Zhejiang, China

PURPOSE: China developed an innovative episode-based payment scheme for outpatient care, namely “Ambulatory Patient Groups (APGs) + capitation” payment, to constrain inflation in outpatient expenditures. This study aimed to assess the effects of this payment method on volume and expenditures in Chinese public hospitals. METHODS: A quasi-experimental study was conducted with 7 municipal and 12 county hospitals from Jinhua as the intervention group and 15 municipal and 24 county hospitals from three neighbouring cities as the control group. The payment reform was introduced to municipal and county hospitals in the intervention group in January 2020 and January 2021, respectively. Monthly data on volumes and outpatient expenditures were collected from each hospital from January 2019 to December 2021. Controlled interrupted time-series analyses were performed to determine the effects of the funding reforms. RESULTS: Outpatient visits in municipal hospitals decreased by 1417.54 (p=0.048) per month on average compared with control ones after the reform was implemented, whilst that in county hospitals increased by 1058.04 (p=0.041) per month on average. The trend of drug expenditures (β(7)=−1.41, p=0.019) in municipal hospitals dropped, which was accompanied by an immediate reduction in consumable expenditures (β(6) =−6.89, p=0.044). The funding reform also led to the significant declines in drug (β(6)=−10.96, p=0.009) and consumable (β(6)=−4.78, p=0.041) expenditures in county hospitals. Municipal hospitals experienced the drop in the trend of total outpatient expenditures (β(7)=−3.99, p=0.018) over the same period. CONCLUSION: The strength of the “AGPs + capitation” payment for outpatient care lies in its ability to control the excessive growth of medical expenses through correcting inappropriate incentives. However, minimising potential cost-shifting and risk-shifting to uninsured service items should be given attention.