Docstoc

Armutsorientierte Diakonie – Ziel_ Auftrag oder Utopie

Document Sample
Armutsorientierte Diakonie – Ziel_ Auftrag oder Utopie Powered By Docstoc
					  Good Governance and
    Service Provision

Financing Health Care Institutions

               Steffen Flessa, PhD
     Professor of Health Care Management,
   Ernst-Moritz-Arndt-University of Greifswald
                        Contents

1 Good Public Governance and Provider
  Financing
2 Alternatives of Provider Financing
   2.1 Pooling of Risks
   2.2   Input- vs. Output-based Financing
   2.3   Monistic versus Dual Financing
   2.4   Fee-for-Service, Daily Rate and Flat Rate
   2.5   External Budgeting
3 Conclusions
                     Health Care Provider Financing
           1. Good Public Governance
             and Provider Financing
• Good public governance should safeguard that
  major objectives of the health sector are
  achieved:
  –   Effective health care, quality
  –   Efficient health care
  –   Accessible health care (financial and spatial)
  –   Sustainable health care
  –   Participatory health care, partnership



                      Health Care Provider Financing
            Dimensions of Good Public
                  Governance
• Setting rules and regulations so that health care
  providers can fulfill their function
  –   Licencing and approbation
  –   Financing
  –   Recruitment, training
  –   Supervision, control, auditing
  –   Payments
  –   …



                     Health Care Provider Financing
               Regulating Financing
• Financing regulations should
  – Enhance quality,
      • for instance connecting financing and performance
  – Improve efficiency,
      • for instance by allocating the funds where they produce maximum health
  – Increase accessibility,
      • for instance by providing funds for institutions located where people live
  – Increase accessibility,
      • for instance by safeguarding financial support for the poor
  – Make health care provision viable,
      • for instance by paying proper maintenance
  – Involve all providers,
      • for instance by making funds available to all health care institutions
         irrespective of ownership

                            Health Care Provider Financing
              Regulating Financing
• Financing regulations should
  – Enhance quality,
      • for instance connecting financing and performance
  – Improve efficiency,
                         What financing
      • for instance by allocating the funds where they produce maximum health
  – Increase accessibility,
      • for instance by alternatives will where people live
                        providing funds for institutions located

                          help achieving
  – Increase accessibility,
      • for instance by safeguarding financial support for the poor
                      these objectives?
  – Make health care provision viable,
      • for instance by paying proper maintenance
  – Involve all providers,
      • for instance by making funds available to all health care institutions
         irrespective of ownership

                           Health Care Provider Financing
            2. Alternatives of Provider
                     Financing

• Contents:
 2.1   Pooling of risks
 2.2   Input- vs. output-based Financing
 2.3   Monistic versus Dual Financing
 2.4   Fee-for-Service, Daily Rate and Flat Rate
 2.5   External Budgeting
• Approach: dimensions of financing
 mechanisms that can be combined
                   Health Care Provider Financing
             Financing Mix


            GOVERNMENT


      SOCIAL HEALTH                 PRIVATE HEALTH
        INSURANCE                      INSURANCE



                 Outpatient                  Paramedical
HOSPITALs         services                     services


            Health Care Provider Financing
              Financing Mix
            Governance: are private insurance
                allowed? Is a social health
            insurance established? How much
                      does it cover?
            GOVERNMENT


      SOCIAL HEALTH                  PRIVATE HEALTH
        INSURANCE                       INSURANCE



                  Outpatient                  Paramedical
HOSPITALs          services                     services


             Health Care Provider Financing
              Financing Mix


            GOVERNMENT


      SOCIAL HEALTH      PRIVATE HEALTH
             Governance: Is the government
        INSURANCE           INSURANCE
              providing financial support for
                health care providers? For
                        insurances?
                Outpatient       Paramedical
HOSPITALs        services          services


             Health Care Provider Financing
             Financing Mix


            GOVERNMENT


      SOCIAL HEALTH                 PRIVATE HEALTH
        INSURANCE                      INSURANCE



                 Outpatient                  Paramedical
HOSPITALs         services                     services
            Governance: What is the mode of
                      payment?
            Health Care Provider Financing
             Financing Mix


            GOVERNMENT


      SOCIAL HEALTH                 PRIVATE HEALTH
        INSURANCE                      INSURANCE



                 Outpatient                  Paramedical
HOSPITALs         services                     services


            Health Care Provider Financing
          2.1 Pooling of risks

• Individual risk pooling (family)
• Governmental risk pooling
• Community based risk pooling
• Social health insurance
• Private insurance
•…
→ Thursday!
                Health Care Provider Financing
    2.2 Input- vs. output-
       based Financing
                                            Service
  Client           service                  Provider

                                      Complete input



      Health Care Financer
(e.g. Government, Insurance, …)
           Health Care Provider Financing
      Output-based Financing
                  Present
                  certificate                      Service
   Client                                          Provider
                      service
                                                      Reimburse
Certified right                      claim            ment
to receive                                            according to
                                                      services

         Health Care Financer
   (e.g. Government, Insurance, …)
                  Health Care Provider Financing
                    Output-based Aid
                                   Voucher                  Voucher
               Client                                       Service
                                     service
                                                            Provider
Voucher                     pays
                                                                       Reimburse-
                                                Claim
                                                                       ment

             Distributor
   Voucher



                  Voucher Management Agency

                           Health Care Provider Financing
      2.3 Monistic versus Dual
      Financing
• Monistic financing
  – Definition: a financing system where the entire
    financial responsibility is in the hands of one
    single unit
  – Germany until 1972: Insurances were fully
    responsible to cover all expenditure
• Expenditure
  – initial cost: buildings, equipment
  – running cost: materials, personnel, etc.

                 Health Care Provider Financing
                Monistic Financing

                  GOVERNMENT


            SOCIAL HEALTH                    PRIVATE HEALTH
              INSURANCE                         INSURANCE



                         Outpatient                Paramedical
HOSPITALs                 services                   services
Initial Cost,          Initial Cost,               Initial Cost,
Running cost           Running cost                Running cost
                  Health Care Provider Financing
                Dual Financing

• Definition: a financing system where different
    bodies are responsible for financing
•   Provider Financing:
    – Initial cost of equipment and buildings: Government
    – Running cost: Insurance
• Rationale:
    – Government has responsibility for provision of health
      care services
    – Insurances cannot fully finance providers

                     Health Care Provider Financing
                              Dual Financing


                               GOVERNMENT


                            SOCIAL HEALTH                  PRIVATE HEALTH
equipment
Buildings,




                              INSURANCE                       INSURANCE
                  drugs,…
                   Staff,




                                       Outpatient               Paramedical
             HOSPITALs                  services                  services

                               Health Care Provider Financing
          Problems: empirical findings

• Increase of running cost
• Low investments
   – if State has financial problems: low
   financing
   – investments not based on economic
   rationale, but on political power
   – high political influence
   – discontinuity of funding



                Health Care Provider Financing
          Problems: empirical findings

• Low autonomy
   –Decision-making is divided between
   establishment and running of
   buildings/equipment
   – rationalization is inefficient
• Strong bureaucracy
• Tendency to increase beds
   –Lump sums were proportional to
   number of beds, not services provided


               Health Care Provider Financing
          2.4 Fee-for-Service, Daily Rate
                  and Flat Rate
• Fee-for-Service:
   – Definition: The revenue of the provider is the total of the prices
     of the services delivered
   – Usually: Cost weights (points per service) * base rate (monetary
     value of points)
   – Calculation:
      • Floating points: ex-post determination of base rate
      • Fixed points: ex-ante determination of base rate
   – Problem:
      • extremely complicated system!
      • budgeting becomes difficult

                        Health Care Provider Financing
        2.4 Fee-for-Service, Daily Rate
                and Flat Rate
• Daily Rates:
  – Definition: The revenue of the provider is a function
    of the length of stay
  – Usually: fee per day
  – Calculation:
     • Usually individually for each provider
     • ex post: daily rate = total cost of last year /
       number of beddays
     • ex ante: daily rate = expected total cost of year /
       expected number of beddays
                    Health Care Provider Financing
Revenue
per day




                       Daily Rate




                                                    Time [days]
   Total revenue




                              Total Revenues




                   Health Care Provider Financing   Time [days]
            Problem: length of stay
Daily revenues
and cost

                    Operation

                           ICU
        Diagnosis

                                               normal care
Daily
Rate




                                                             time [days]
                           Health Care Provider Financing
                  Daily rates: problem

• Strong tendency to increase length of stay
   • Average length of stay 1990:
        • Germany: 14 days
        • France: 9 days
        • Great Britain: 7 days
 •   Low incentive to invest in a technology that can
     reduce length of stay
 •   Inefficiency, high cost per service unit



                     Health Care Provider Financing
                      Flat Rates
• Definition: The revenue per service unit of the
    provider is constant and does not depend on the
    length of stay. Usually the rate is paid for a
    success, e.g. discharge of a patient
•   Variants: Flat rate for
    – special procedures (e.g. operations) in combination
      with daily rates for the rest
    – comprehensive flat rate: covers all cost from
      admission to discharge
• Calculation: fixed rate for a region / country, i.e.
    not individually for each provider
                     Health Care Provider Financing
         Daily rate and flat rate
Total revenues,
total cost                          Daily rates


                                                       Flat Rate
                  total cost




                                   Average length
                                   of stay
                                                        Time [days]
                      Health Care Provider Financing
       2.5 External Budgeting
• External Budget: The financial resources
  given to a provider by an external funding
  agency (health insurance, district, …) in a
  period.
• Typology
  – Fixed Budgets
  – Variable Budgets



                Health Care Provider Financing
                 Fixed Budgets
• Content: Budget is fixed and will not be adjusted
    to changes of occupancy / services
•   Idea: quantity of services is given by catchment
    area
•   Advantage: if a provider can produce the
    services with lower cost than the budget, it can
    make a profit
•   Disadvantage: if demand increases (e.g.
    epidemic), provider runs blamelessly in a loss

                   Health Care Provider Financing
Revenues and Budget
             Total daily rates



                                       Budget




        Planned                      Occupancy
      occupancy
    Health Care Provider Financing
                Revenues and Budget
                                  Total daily rates
                                                       Hospital has to pay
                                                         back difference at
                                                        the end of the year
                                                           Budget
Insurance has to
pay difference at
the end of the year



                              Planned                   Occupancy
                      Healthoccupancy
                             Care Provider Financing
                Fixed Budget

• Assumption:
  – linear cost function
  – no fixed cost
• Quite unrealistic in providers!




                 Health Care Provider Financing
                Flexible Budget
• Content: The budget of a provider
  depends on the occupancy
• Reasons
  – Risk of higher service load:
     • provider is not always responsible for higher
       demand and service load (e.g. epidemics)
  – Cost structure:
     • up to 75 % of cost are fixed. Fixed budget does
       not reflect real cost function

                    Health Care Provider Financing
        Flexible Budget
                             Daily rates


                                           Cost


Fixed
 cost



                    planned
                   occupancy               occupancy
          Health Care Provider Financing
                Alternatives

• Different assumptions about fixed cost
  – e.g. 75% of total cost at planned occupancy
• Different behaviour of variable cost before
 and after planned occupancy
  – e.g. lower increase after planned occupancy




                Health Care Provider Financing
        Flexible Budget
                                     revenues



100 %                                     Flexible Budget =
                                          planned costs with
75 %                                        75% fixed cost
50 %

25 %


                     planned
                                                   occupancy
                    occupancy
         Health Care Provider Financing
        Flexible Budget (Germany 1999)

                                      daily rates
                                                planned cost

100 %
                                         flexible budget
75 %

40 %
25 %


                          planned
                                                           occupancy
                         occupancy
              Health Care Provider Financing
                        3 Conclusions
•       Good public governance in health care does not
        necessarily mean health services provision by
        governmental institutions
•       Good public governance in health care financing
        means regulating and „setting the rules“
    –     This necessarily includes regulating the mode of financing
          health care providers
•       The number of alternatives and combinations is high
    –     There is not one single, optimum system of provider financing
•       Decision depends on
    –     Administrative capacity
    –     Cost of system
    –     Transparency and accountability
    → depends on Good Governance!
                          Health Care Provider Financing
                       Experiences
•       If we want to have high quality and efficiency, we
        need
    –     provider diversity and competition,
    –     output-based funding.
•       If we want to have equitable health care, we need
    –     government subsidy for certain areas or groups
•       If we want to have an efficient administration, we
        need
    –     a simple financing mechanism.
•       If we want to have a smooth transition from one
        financing scheme to another, we need
    –     intensified training of provider managers.

                        Health Care Provider Financing
              Further step

• Some argue that Diagnosis Related
  Groups are the „magic bullet“ of health
  care financing
• What is it?
• Is it „the“ answer to our problems?
→ next lecture!


               Health Care Provider Financing

				
DOCUMENT INFO