Does prospective payment encourage nursing home efficiency

The health-care field is increasingly sensitive to the effect of third-party reimbursement policies on health-care organization performance. The ability to attain low costs and high net income, for example, is particularly affected by prospective reimbursement. Theoretically, prospective payments should provide an incentive to health-care organizations to implement better control overperformance. These ideas are examined in a study of nursing homes. Results of this analysis indicate that management controlpractices contribute to efficient performance. The association of thisfinding with prospective reimbursement is discussedfrom theperspective of implicationsfor health-care organizations.