Impact of global bundled payments on hospital costs of coronary artery bypass grafting

Abstract

The Health Care Financing Administration began the Medicare Participating Heart Bypass Center Demonstration in 1991, in which hospitals and physicians are paid a single negotiated global price for all inpatient care for heart bypass patients. This article analyzed the changes in total and departmental direct variable costs during the 1991-1993 period using micro-cost data. The results indicate that all participating hospitals had significant reductions in total direct variable costs, after controlling for preoperative risk factors and postoperative outcomes. However, the patterns in cost reductions across major departments were different across hospitals. The cost reductions primarily came from nursing intensive care unit, routine nursing, pharmacy, and catheter lab.