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α: calibrated so average coauthorship-adjusted count equals average raw count
Diagnosis Related Group (DRG) payment systems are a common means of paying for hospital services. They reward greater activity and therefore potentially encourage more rapid treatment. This paper uses 15 years of administrative data to examine the impact of a DRG system introduced in England on hospital lengths of stay. We utilize different econometric models, exploiting within and cross jurisdiction variation, to identify policy effects, finding that the reduction of lengths of stay was greater than previously estimated and grew over time. This constitutes new and important evidence of the ability of financing reform to generate substantial and persistent change in healthcare delivery.