moldova 2011 health system reform

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HEALTH SYSTEM REFORM

Dean M. Harris, J.D.

Department of Health Policy and ManagementUNC Gillings School of Global Public Health

University of North Carolina at Chapel Hill

March 3, 2011


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Outline of this presentation

The importance ofvalues in health system

reform

Reform ofspecific functions:1. Organizational reform

2. Financing reform

3. Payment reform

4. Leadership and governance reform

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Health reform and the fundamental

values of health systems

Every country that accomplished the goals of

universal access to care and financial security

had to give up something.

Most people in those countries believe the trade-

off was worth it.

The best way to make these difficult trade-offs is

to begin by identifying the fundamental values ofa countrys health system.

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Many countries have based health

reforms on their fundamental values

Mexicos 2003 health reform created a publicinsurance system, based on the principle thathealth care is a social right (not a privilege or

commodity). Canada has a tax-supported, single-payer systemof universal coverage, based on five fundamentalvalues of universality, public administration,comprehensiveness, portability, and accessibility.

The values of the UKs national health systeminclude financing by taxation and free care at thepoint of service.

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In the US, the struggle for reform is

a debate about values and ethics

As in other countries, the ongoing debate overhealth reform in the US is fundamentally aconflict among values and ethical principles.

The value ofsolidarity is crucial in many healthsystems (including social insurance, nationalhealth insurance, and local community-basedinsurance systems in developing countries).

In contrast, social solidarity is not yet an integralpart of the value system in the US, which insteadprioritizes values ofindividualism andautonomy.


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1. Organizational reform

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Organizational reform

in health care systems

Organizational reform within the publicsector (reinventing government):

autonomization

corporatization

decentralization

Organizational reform by means of

privatization (transferring ownership orcontrol to the private sector)

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Autonomization: Giving the

management more independence

Hospital managers are given authority tomake particular decisions.

Hospital managers will be accountable formeeting measurable performance targets.

If the hospital generates a surplus byincreasing its revenue or by cutting its

costs, the hospital may be allowed to keepthose surplus funds.

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Corporatization: An independent

corporation owned by the government

The advantage of corporatization is giving

more flexibility to hospitals by removing

them from the existing bureaucracy.

Some examples: Corporatization in Hong Kong (reform of public

hospitals by establishing a government-owned

Hospital Authority) Corporatization in Singapore (the government

reformed the system but kept control of the hospitals).

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Distinguish decentralization within

the public sector (devolution)

Another possible reform within the public sectoris called decentralization or devolution.

In decentralization, authority for health facilities

is transferred from the national government tothe provincial or local levels of government.

This could have the positive effects of increasinglocal accountability and responsiveness.

But, decentralization will not succeed if theprovincial or local government cannot providefinancial support for their health facilities.

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Privatization is another type of

organizational reform

Privatization is the transfer of ownership or

control of a facility or a function from the public

sector to a private organization.

Privatization can reduce governmentexpenditures for ongoing operations, raise

money for government by selling public assets,

and use private capital for hospital expansion.

The new private owner of the facility could be a

for-profit corporation, or it could be a private,

non-profit organization (an NGO).

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How does government privatize a

public service such as a hospital?

Selling government assets (such as selling theassets of a public hospital); or

Contracting out a function orservice that had

been performed directly by the government(such as contracting out the management of apublic hospital, which would still be owned bythe government);

Leasing a public hospital or some of itsservices to a private entity (such as the lease oflaboratory and radiology services at a publichospital in Romania).

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What are the issues of public policy

in hospital privatization?

Will the new owner provide care to peoplewho cannot afford to pay for their care?

Will the new owner meet the needs of thelocal community?

Will the people receive fair market value forthe sale of their hospital?

Will the selling agency use the proceeds ofthe sale to meet health care and public healthneeds of the local community?

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Organizational reform for the

delivery of public health functions

The agency that handles public health functions

should not be part of the same agency that pays

for medical care for poor people. (In a time of

budgetary crisis, it is inevitable that the agencywould take funds away from public health.)

The agency that delivers clinical services to

patients should not also be responsible for

public health functions, unless health care

professionals would also be compensated for

performing public health functions.

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2. Financing reform

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Financing refers to methods of

raising money for health services

Methods of financing health services:

Social insurance systems

Community-based health insurance (CBHI)

General taxation

Employee health plans

Private health insurance

Payment out-of-pocket at the point of service Designing a fair health insurance system

requires making trade-offs.

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Which method of health financing

is the most fair?

The answer depends on how we definefairness in the context of healthfinancing.

The World Health Organization (WHO)has developed a useful concept offairness in financial contribution to

the health system.Source: World Health Organization, The World Health Report

2000: Health Systems; Improving Performance. (Geneva,Switzerland, 2000), athttp://www.who.int/whr/2000/en/whr00_en.pdf.


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UnderWHOs framework, fairness

requires four essential elements

Universal protection from risk;

Prepayment, rather than payment out-of-pocket;

Progressive payment, on the basis ofability to pay; and

Widespread pooling of risks, with cross-

subsidization for the sick and the poor.NOTE: These 4 elements can be used toevaluate each countrys financial fairness.


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Universal protection from risk

Every individual and family in the society

should be protected from the financial

risks of illness.

No one should be forced into poverty

because of illness.

No one should be prevented from

obtaining access to care for financial

reasons.


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Progressive payment

on the basis of ability to pay

Contributions by individuals and families should

be progressive (the rate of payment should

increase as income increases).

Contributions should not be regressive (the rateshould not decrease as income increases).

Contributions should be based on ability to pay.

Contributions should not be based on use ofservices or risk of illness.


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3. Payment reform

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Bad payment mechanisms reduce

health system performance

Paying providers too much would waste

scarce resources for the health system

Paying providers too little may discourageproviders from participating in the program

Paying some types of providers more than

others can distort the supply of services

Paying inefficiently wastes resources on

administration and enables fraud or abuse


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Good payment mechanisms can

improve health system performance

Give financial incentives to providers to improvetheir efficiency (e.g. money for those who adoptcost-saving technology)

Give financial incentives to providers to increaseaccess to care (e.g. higher payment for treatingunderserved patients)

Give financial incentives to providers to improve

their quality of care (e.g. pay for performance) The US will try to use bundled payment for the

combined services of hospitals and physicians,rather than paying each provider separately


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Issues in designing and

implementing a payment system

How much money will really be needed,

considering pent-up demand for services and

possible underestimation of the costs?

How will you divide the available funds amongvarious services and providers?

Who will administer the payment system, and

should administration be contracted out?

How can you prevent undesirable behavior

(gaming the system)?


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How can you prevent undesirable

behavior (gaming the system)?

Each type of payment system (such as salary,

fee-for-service, capitation, etc.) has good

incentives and bad incentives for providers, and

will encourage specific types of behavior. Each payment system has some incentives for

undesirable behavior (gaming), such as over-

treatment, under-treatment, or patient selection.

Undesirable behavior can be controlled to some

extent by regulation, but cannot be eliminated.


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Pay for Performance (P4P):

Is there a business case for quality?

Most payment systems, including the US

system, now provide little incentive for quality.

The US and some other countries have begun to

experiment with ways to provide financialincentives for quality, but only on a small scale.

The UK uses P4P in its Quality and Outcomes

Framework (QOF) for primary care services.

The US will experiment with financial incentives

for organizations that combine hospitals and

physicians into Accountable Care Organizations.


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4. Leadership and

governance reform

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How to improve the performance of

leadership and governance

Build capacity for governance by providing

training in public health and leadership skills (at

the local level as well as at the national level).

Improve the systems of management andaccountability in the public sector.

Change the incentives for leaders by:

providing more autonomy for leaders (including the

authority to fire any employee who breaks the rules);

requiring more accountability from leaders; and

increasing the transparency of decision-making.

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Leaders need to make the difficult

decisions about allocating resources

How much of a societys resources will be

devoted to health, as opposed to other needs?

What is the appropriate balance between public

health interventions for the population as awhole and clinical treatment for individuals?

For those resources devoted to the treatment of

individuals, how much of each type of care will

be made available? (macrolevel decisions)

Which patients will receive each particular

service, and how much? (microlevel decisions)29


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Leaders can improve public health by

devoting more resources to primary care

Primary care has more impact on health and is

less expensive than other types of care.

Primary care provides more benefit for poor

people and residents of rural areas (whereashospital services are used disproportionately by

people who are rich or relatively rich).

Leaders can also use cost effectiveness analysis

(CEA) to make the best use of limited resources.

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Advantages of using cost

effectiveness analysis (CEA)

CEA can be used to identify the way to

obtain the greatest benefit to health from

the use of limited funds.

If the same amount of money were

devoted to each alternative, which would

produce more improvement in overall

health status?

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Problems in using

cost effectiveness analysis (CEA)

The results of CEA are affected by

assumptions, decisions about

methodology, and value judgments which

have ethical and cultural implications.

Therefore, policymakers should not simply

make allocation decisions by the

numerical calculations of CEA.

Leaders should use CEA as one important

part of their decision-making process.32


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Conclusions about

health system reform

The best way for a country to reform its health

system is to identify its basic values.

Even without privatizing their hospitals,

governments can give hospitals and hospitalmanagers more independence within the public

sector, by reinventing government.

Financing and payment systems can be

reformed, in order to be more fair and effective.

Leaders can improve public health by devoting

more resources to primary care.33

moldova 2011 health system reform

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