Paying for efficiency: Incentivising same-day discharges in the English NHS

We study a pay-for-efficiency scheme that encourages hospitals to admit and discharge patients on the same calendar day where clinically appropriate. Since 2010, hospitals in the English NHS receive a higher price for patients treated as same-day discharge than for overnight stays, despite the former being less costly. We analyse administrative data for patients treated for 191 conditions for which same-day discharge is clinically appropriate — of which 32 are incentivised — during 2006-2014. Using interrupted time series, differences-in-differences and synthetic control methods, we find that the policy generally had a positive effect on planned conditions with a statistically significant effect in about a third of conditions. The results are more mixed for emergency conditions. The median elasticity (across all 32 conditions) is 0.09 but above one for six conditions. Condition-specific design features explain some, but not all, of the differential responses.