Marginal revenue and length of stay in inpatient psychiatry

This study examines the changes in marginal revenue during psychiatric inpatient stays in a large Swiss psychiatric hospital after the introduction of a mixed reimbursement system with tariff rates that vary over length of stay. A discrete time duration model with a difference-in-difference specification and time-varying coefficients is estimated to assess variations in policy effects over length of stay. Among patients whose costs are fully reimbursed by the mixed scheme, the model demonstrates a significant effect of marginal revenue on length of stay. No significant policy effects are found among patients for whom only health insurance rates are delivered as mixed tariffs and government contributions are made retrospectively. The results indicate that marginal revenue can affect length of stay in inpatient psychiatry facilities, but that the reduction in marginal revenue must be sufficiently large.