Commentary: Nudging hospitals to better quality

All developed countries are searching hard to eke more value out of the money spent on healthcare. First in line for analysis is hospital care—the most costly part of healthcare, accounting for 50% of costs in the NHS in England in 20011-12. One tool for controlling costs is the way that healthcare is paid for. Payments matter: they influence the services on offer, the viability of hospitals, the cost effectiveness of treatments, and how physicians practise medicine.

Western countries have been developing payments for hospital care over the past 20 years in similar ways. Busse and colleagues set out how and why payments for the care of homogeneous groups of patients (diagnosis related groups, DRGs) have evolved, their broad impact, and future likely direction.1

In the United States DRG payments curbed growth in Medicare hospital expenditures, partly through reduced inpatient stays.2 In Europe (including England) DRG payments have also been associated with reductions in the length of stay (and assumed …