Vrangbæk K, & Bech M, (2004)

‘County Level Responses to the Introduction of DRG Rates for “Extended Choice” Hospital Patients in Denmark’

Health Policy 67(1): 25-37

Discusses the effect of introducing DRG payments for patients seeking health care across county borders.
The Danish health care system is decentralised (delivery and financing are county level responsibilities), politically managed (elected councillors control budgets) and free at the point of delivery.
Hospitals are mostly financed by pre-agreed annual budgets with negotiated performance targets - not on a ‘per-case’ DRG basis.
In 1993 ‘extended choice’ was introduced, allowing patients to seek care across county borders. The response was disappointing (very little take-up by patients), so incentives were sharpened in 2000 by introducing DRG rates for cross-border payments.

The authors find that patient choice is predominantly viewed by councils as a threat to budgetary stability, not a market opportunity. This is put down to the fact that the possible economic gains from patient choice are relatively modest while the potential political problems (from budget overruns and loss of control due to patient exodus) could be large.
In 2001 funds from cross-border patients represented less than 1% of the budgets of most counties.
Competition may (paradoxically) be resulting in increased uniformity of delivery structures in Danish health care. This is attributed to collusion (or ‘co-operation’) between councils. By choosing service levels similar to neighbouring counties, budget losses from patients going elsewhere are minimised.