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The effects of the global budget system

on cost containment and the quality of

care: experience in Taiwan

ARTICLE in HEALTH SERVICES MANAGEMENT RESEARCH · JUNE 2008

DOI: 10.1258/hsmr.2008.007026 · Source: PubMed

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Retrieved on: 18 October 2015

Health Services Management Research 21: 106 –116. DOI: 10.1258/hsmr.2008.007026

# 2008 Royal Society of Medicine Press

The effects of the global budget system

on cost containment and the quality of

care: experience in Taiwan

Li Chang* and Jung-Hua Hung†

*Department of Business Administration, Shih Hsin University, Taipei; †Department of Business

Administration, National Central University, Jhongli City, Taiwan

This study is an attempt to determine whether the implementation of the Global Budget

(GB) as a method of health reform has improved cost containment and quality of care

in Taiwan. Panel-data analysis is used to investigate cost containment and quality of

care in Taipei municipal hospitals before and after the introduction of the GB. The

results suggest that there is a trade-off effect. The post-GB data indicate that cost

containment comes at the expense of health-care quality. It may, therefore, be the case

that policy-makers can more effectively balance cost containment and quality by refining

the GB so that reimbursements would be linked to standards of quality. Another way to

enhance the reforms would be a more effective monitoring and review system.

Introduction

Cost containment and quality of care represent

the most important objectives of all health-care

industries. In many industrial countries, governments have introduced health reforms over

the past few decades. These include expanded

insurance...