To strengthen the incentive for hospitals to avoid making mistakes, public hospitals in Australia received no funding
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To strengthen the incentive for hospitals to avoid making mistakes, public hospitals in Australia received no funding after July 1, 2017, for sentinel events (for example, operating on the wrong body part, incompatible blood transfusions, medication errors leading to the death of a patient, instruments or other foreign matter left inside a patient after surgery). Financial penalties for hospital-acquired complications and avoidable hospital readmissions are also being considered. Is this new policy designed to deal with adverse selection or moral hazard? Is it likely to help? Explain.
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