Do Financial Incentives Trump Clinical Guidance? Hip Replacement in England and Scotland

OHE Lunchtime Seminar with Dr Irene Papanicolas and Dr Alistair McGuire, London School of Economics 
Following devolution in 1999 England and Scotland’s National Health Systems (NHS) diverged, resulting in major differences in hospital payment policies. England introduced a case based payment mechanism from 2003/4, while Scotland continued to pay through global hospital budgets. We investigate the impact this change has had on activity for Hip Replacement. In particular, we examine the differential financial reimbursement attached to uncemented Hip Replacement in England, which has been more generous than for its cemented counterpart, although clinical guidance from the National Institute for Clinical Excellence recommends the later. In Scotland, where providers are not reimbursed for cases treated, this financial incentive does not exist. We use a difference-in-difference estimator to test whether the change in reimbursement across the two countries had an influence on treatment. Our results indicate that financial incentives are directly linked to the faster uptake of the more expensive, uncemented Hip Replacement in England.
Irene Papanicolas is an Assistant Professor of Health Economics at the London School of Economics. In the past she has worked as a researcher at the Health Economics Research Centre at the University of Oxford and the Department of Economics at London Business School. 
Professor Alistair McGuire [B.A. (Econ); M.Litt (Econ); Phd (Econ)] is a Professor in Health Economics at LSE Health and Social Care, within the Department of Social Policy, London School of Economics and Political Science.
View the full invite here.
Wednesday, 29 April 2015