An Evolutionary Analysis of Hospital Payment System Strategies Based on County Hospitals-Purchasers Game

Providing rural residents with effective and affordable health services and financial protection against health risks are more or less problematic for developing countries with massive rural populations. The retrospective payment system (RPS) incurs excessive treatments, causes extreme waste of scarce medical resources and whether the payment system reform by converting to the prospective payment system (RPS) could achieve a desirable triple-win status. In this paper, a county hospital/rural medicare agency evolutionary game theoretical model in NW small-world network with EWA learning model and a corresponding computer model is formulated. We study the diffusion, conversion, and optimization of PPS and RPS, and hospitals' selection of treatments. The results show that PPS itself is a triple-win payment system that could eliminate excessive treatments, but cannot guide hospitals to choose the right intensity of treatments. The conversion from RPS to PPS relies on agencies' strict supervision, hospitals' expectation adjustment speed, and emphasis on future purchaser reimbursement. In order to optimize payment systems, the more hospitals emphasize patients' welfare, the more likely they are to provide appropriate treatments in intensity and moderation. It suggests a further need for developing countries to pursue various payment system reforms from PPS to RPS to pave the way for attaining mutual interests of three parties, especially providing appropriate treatments for rural residents.