Health Services Management Research > Volume 21, Number 2 > Pp. 106-116

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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

Correspondence to: Jung-Hua Hung Email: jhung{at}cc.ncu.edu.tw

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.

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