Alles gecombineerd healthcare purchasing

IZA goal

Shift away from purely market-based competition towards more cooperative and coordinated healthcare environment

IZA agreements on:

• Health expenditure

• Appropriate care + focus on prevention

• Concentration of specialized care

• Regional provider networks

• Care pathways

Which purchasing tools are used by ZK

• Selective contracting (but low take-up)

• Financial incentive for patients to use preferred providers (elective care in specific hospital + only specific drugs)

• Clinical guidelines and protocols

• Measuring care efficiency of hospitals

Types of care contracts

• Contract sum (global budget)

• Expenditure ceiling (closed-ended cost-per-case)

• Subsequent calculation (open-ended cost-per-case)

Insurer incentives to steer on quality - license to operate

+social mission

+legal obligation

-legal hurdles (legal restrictions on selective contracting)

Insurer incentives to steer on quality - competitive advantage

+consumer preferences

+employer preferences

-lack of transparency (information on quality is often missing)

-patients insensitivity to steering on quality (limited influence cause often referred by GP)

Insurer incentives to steer on quality - financial results

+positive business case (improving quality to avoid costs)

-negative business case (will result in higher premium)

Examples of value based purchasing

• Pay for performance

• Bundled payments

Why is value based purchasing not regularly used (Steinmann)

• Lack of legitimacy (insurers can’t judge quality → professional self-regulation)

• Misleading prices (negotiations still mainly about the total budget)

• Consensual constraints (e.g. IZA restricts freedom to negotiate fully independently)

• Restricted market (insurers feel responsible for financial survival of hospitals)

Disadvantages basic healthcare model

1. no access to care for low income people

2. No risk sharing

Advantage risk sharing healthcare model

1. Equal access to healthcare

2. Risk sharing between patient and insurer

What makes an healthcare supply chain different from other supply chains

1. downstream + upstream referral

2. provider-provider relationship

3. purchaser-provider relationship

Challenges in healthcare purchasing for chronic care

1. task division

2. collaboration (information integration, operational integration, relational integration)

Goals of a purchaser

1. access to care for all citizens

2. effective care for better health outcomes

3. efficient use of resources

4. high-quality services

5. responsiveness to patient concerns

Why is purchasing separated from provision

1. more cost-effective care

2. better meeting population health

3. improvement of provider-performance

4. providers focus only on provision

5. competition among providers increases health-outcomes

why strategic purchasing fails

1. information asymmetry

2. political power asymmetry

3. market power asymmetry

4. financial asymmetry

dimensions Bohm healthcare systems

regulation, financing, provision

National health service

state-state-state (UK)

National health insurance

State-state-private (Canada)

Etatist social health insurance

state-societal-private (NL)

Social health insurance

societal-societal-private

private health system

private-private-private (USA)

Beveridge system

government most prominent responsibility in the healthcare purchasing system

bismarck system

health insurance or sickness funds responsible for purchasing care

Goal of healthcare reform in 2006

improve healthcare performance by introducing regulated competition

Problems before the healthcare reform in 2006

1. lack of efficiency

2. lack of innovation

3. unfair distribution of financial burden

Positive outcomes healthcare reform in 2006

1. Increased efficiency (more efficient use of resources)

2. Expanded coverage (more equal access to care)

Challenges after healthcare reform in 2006

1. Selective contracting (limited patient choice)

2. Cost control issues (healthcare expenditures continue to rise)

Dimensions framework Kim (buyer-supplier relationship)

Relational intensity → arms-length - closely tied

Relational posture → adversarial - cooperative

4 types of relationships - framework Kim

Sticky (closely-tied, adversarial)

Deep (closely-tied, cooperative)

Transient (arms-length, adversarial)

Gracious (arms-length, cooperative)

Contract function + frame (Dohmen)

function = what the clause does

frame = how the clause is interpreted

Two functions of contracts

• control (rights and obligations)

• coordination (joint objectives, allocate responsibilities)

Two frames of contracts

• Prevention (targets defined as minimum thresholds)

• Promotion (performance targets as maximum achievements)

Orchestration logic (Noort)

Achieve chain-wide improvement, striving for better health outcomes and lower long-term costs

Bookkeeping logic (Noort)

Controlling short-term costs and focus on managing individual providers

Stakeholder pressures that explain shift between orchestration and bookkeeping logic

1. Relationship pressures (maintain relationships with different providers)

2. Cost pressures (manage healthcare expenditures)

3. Medical demands (healthcare system requires high-quality of care)

4. Public health demands (societal expectations that healthcare systems focus on good population health)

5. Uncertainty (the unpredictable nature of healthcare environments may lead to a switch)

Goal new sales model UMCG

allocate revenues to organizational entities

• allocation per core task

• performance indicator per core task

• measuring performance

• allocate revenues per entity

Activity based budgeting (UMCG)

If activity changes the budget may also change

Contracting in healthcare is complex

• demand is uncertain

• output is heterogeneous

• care processes are independently and multi-actor

• outcomes only partially observable

Transaction costs in contracting

Ex ante = search, information, negotiating

Ex post = monitoring and enforcement

Contract types

• Open-ended cost per case → most risk for insurer

• Global budget → shared risk

• Closed-ended cost per case → most risk for provider

Advantages long term contracts

• Enables making investments

• Encourage cooperation

• Mutual trust → less risk skimping

• increase incentive for innovation

Disadvantages long term contracts

• Inflexible

• possibly new risks

• lack of incentive to improve performance

Three steps of the reimbursement process (Lee)

Coding - Biling - Payment

Complexity of reimbursement (two aspects)

Detail complexity -→ systems exist of many parts/details

Dynamic complexity → things are constantly changing

Detail complexity

Coding → number and variety of providers in care delivery team

Billing → number of steps within claim procedures

Payment → number of separate reporting systems

Dynamic complexity

Coding → missing care information in the medical records

Billing → uncertainty of format of bills

Payment → timing of payment

Design options to improve hospital payment systems (Quentin)

• Information basis (diversify information basis, not only focus on quantity but also on quality)

• Scope of payment (also inclusion of readmissions in DRG payment, take responsibility over the whole patients treatment)

• Adequacy of payment (payment based on what it really costs to deliver high-quality care)

• Fineness of payment (better adjustment for severity of illness, create detailed payment categories)

• Quality (link payment to quality)

Budgeting methods (van Leeuwen)

• Activity based budgeting (based on actual costs)

• Direct budget distribution (direct allocation of the budget)

• Incremental budget (based on the budget of last year)

Lowest payer risk —> highest payer risk (traditional payment systems)

Budget —> capitation —> FFS

Budget payment (definition + advantage/disadvantage)

predefined number for fixed period of time

+predictable costs (based on historic trends)

+reimbursement is secure

-creates waiting lists

-no incentives to save

Capitation

fixed amount of money per patient for a period of time

+promotes prevention

+promotes efficiency+cost-control

-only selecting healthy patients

-dumping patients when costs are high

Fee for service

payment based on the actual delivered services

+deliver suficcient services (reduces waiting times)

+incentive to innovate

-overproduction/over-treatment

-high cost variation

-quality not taken into account in payment

DRG

Single payment for episode of care for specific disease of inhospital care

+cost control

+increased transparency

-cherry picking patients

-reduced quality

Pay for performance (definition + advantage/disadvantage)

financial incentives for reaching targets

+can improve qualty

-patient selection (gaming)

-teaching to the test

-intrinsic motivation

shared savings

+Incentive for efficiency + innovation

-stimulates risk selection

bundled payment

payment for one series or episode of care (e.g. all aspects of hip surgery)

+improved collaboration

+better task division

-organizational complexity

-high transaction costs

Population payment

pay for a group of patients with a specific disease or all patients within a demographic area

+stimulates collaboration

+less complex than bundled payment

-difficult to incorporate all stakeholders

Dutch healthcare reform → consequences on care delivery

• Decrease in number of hospitals

• Increase in number of independent treatment centers

• No evidence on care quality

Dutch healthcare reform → consequences on financing

• Consumers are sensitive to premium differences

• Insurers aim for low-risk patients

Barriers to payment reform (de Vries)

1. information asymmetry

2. worsening reputation of insurers

3. lack of trust

4. misaligned hospital incentives

5. hesitation to accept financial accountability

6. lack of start-up funding

Why rather absolute targets than relative targets in P4P (Eijkenaar)

• Greater transparency

• Less uncertainty

• Exactly knowing what to achieve

• Less dependence on competitors

Goals of switching from self-employed physicians to hospital employed (Gifford)

• Control over costs and resource use

• Improve coordination between physicians

• Align physician with hospital goals

Switching from self-employed physicians to hospital employed → effects on care

• from production focus to patient focus

• improved collaboration between physicians

Switching from self-employed physicians to hospital employed → effects on individual domain

• defending the common good (shifted away from money focus)

• loss of autonomy (especially organizational)

Switching from self-employed physicians to hospital employed → effects on the organization

• Worsened relationship between physicians and the hospital

• Overall transition was difficult

Purchasing stages (van Weele)

1. Tactical purchasing

   1. specifying

   2. selecting

   3. contracting

2. Operational purchasing

   1. ordering

   2. expediting

   3. follow-up

Thomson purchasing mechanisms to improve health care administration and delivery

1. Consumer mobility between insurers

2. Insurers bear financial risks —> risk -adjustment

   1. ex ante

   2. ex post

Strategies to improve the portfolio for an insurer

1. Voluntary health insurance

2. targeted marketing

3. contracting limited number of care providers

Reasons low uptake of purchasing tools

1. Legal restrictions (especially in Germany + Switzerland)

2. Consumer choices

3. Technical difficulties

4. Lack of information (quality'/costs)

5. Stakeholder resistance

Comparing purchasing countries (UK)

State-based system —> focus on cost containment and coordination

Comparing purchasing countries (NL)

market-based system —> focus on cost-control through price negotiations

Comparing purchasing countries (SW)

mixed system —> focus on collaboration

Purchaser competition in UK, SW and NL (Noort)

UK - low

SW - moderate

NL - high

Purchaser governance in UK, SW and NL (Noort)

UK - clinically informed

SW - both managerial + clinically informed

NL - managerial

Patient choice in UK, SW, NL (Noort)

UK - low

SW - high

NL - low to moderate