The socio-economic reforms launched in China in the late 1970s led to rapid economic growth and, with it, health sector resources expanded rapidly. The rural health services have benefited from the policies of economic reform, but not in an optimal way, particularly in poor areas. This article uses a case study of a poor county--Donglan--to illustrate that the fiscal decentralization combined with the financial responsibility system have resulted in a weakening of financing and provision of rural health services in poor areas. The need for health facilities to generate revenue has had unfortunate consequences for the style of medical care, such as over-prescription. In addition, the collapse of the cooperative medical system and the weakening of the three-tier network of rural health care in Donglan have jeopardized preventive programs and threaten access to basic health care for the peasants, especially the poor. The study found evidence that preventive programs have deteriorated over the past years, the poor had financial difficulty in access to services, particularly hospital care, health facilities at township and village levels have been run down, and less training and supervision have been provided by upper-level health facilities. The article concludes with recommendations for a strategy for rebuilding and strengthening the three-tier network of rural health care, and for establishing a cooperative medical and health care scheme to ensure that the majority of peasants in Donglan can be guaranteed access to basic health services. Limited health resources will therefore be better used.
The Republican takeover of Capitol Hill suggests that the payer-driven forces of managed care and the regional networks will serve as the centerpieces to improve the organization, financing, and delivery of our nation's health services. The "voluntary" alliances that are now being forged may stumble when attempting to restrain the inflationary spiral of Medicare and Medicaid expenditures and when seeking to finance the care of an increasing number of uninsured working poor and their dependents. The American health industry can anticipate experiencing increasingly monopolistically competitive environments. The public will eventually demand the formation of state health services commissions to foster a semblance of control. Within this framework, the German decentralized, multipayer, multitier approach, which is self-governing and allows for negotiating reimbursement rates between insurers and providers, offers a preferred model to the traditional American public utility model.
New evidence on the quality of health care from public services in Niger is discussed in terms of the relationships between quality, costs, cost-effectiveness and financing. Although structural attributes of quality appeared to improve with the pilot project in Niger, significant gaps in the implementation of diagnostic and treatment protocols were observed, particularly in monitoring vital signs, diagnostic examination and provider-patient communications. Quality improvements required significant investments in both fixed and variable costs; however, many of these costs were basic input requirements for operation. It is likely that optimal cost-effectiveness of services was not achieved because of the noted deficiencies in quality. In the test district of Boboye, the revenues from the copayments alone covered about 34% of the costs of medicines or about 20% of costs of drugs and administration. In Say, user fees covered about 50-55% of the costs of medicines or 35-40% of the amount spent on medicines and cost-recovery administration. In Boboye, taxes plus the additional copayments covered 120-180% of the cost of medicines, or 75-105% of the cost of medicines plus administration of cost recovery. Decentralized management and legal conditions in the pilot districts appeared to provide the necessary structure to ensure that the revenues and taxes collected would be channelled to pay for quality improvements.
OBJECTIVE: In 1990 the state of Arkansas shifted financial responsibility for state hospital services to community mental health centers; through a policy known as "bed buy-back," centers now authorize all state hospital admissions and prospectively purchase bed days for their patients. Characteristics of patients hospitalized before and after implementation of the policy were examined to determine how the policy affected hospital admission rates, types of patients admitted, and the amount of contact between CMHC and hospital staff about admitted patients, as well as how these elements were affected differently in rural and urban areas. METHODS: Changes in the types of patients admitted over the 13 months before and 14 months after the change in financing were studied through retrospective chart review of 648 patients. Administrative data were used to examine changes in numbers of admissions for 30 months before and 26 months afterward. Data were analyzed by piecewise regression, least-squares, and logistic regression analyses. RESULTS: After financial decentralization, state hospital use was reduced in both urban and rural areas, although the reduction in urban areas was proportionally greater. Contrary to expectation, admissions were not limited to the most severely ill, disruptive, or substance-abusing patients, nor were they more likely to be readmitted. For patients who were admitted, communication between the community and the state hospital was greater than before financial decentralization. CONCLUSIONS: Shifting financial responsibility for patient care significantly reduced state hospital use, did not affect patient mix, and apparently increased coordination of care between community and hospital. Whether bed buy-back has affected the kind or quality of services delivered in the community awaits further study.
Before World War II, Czechoslovakia was among the most developed European countries with an excellent health care system. After the Communist coup d'etat in 1948, the country was forced to adapt its existing health care system to the Soviet model. It was planned and managed by the government, financed by general tax money, operated in a highly centralized, bureaucratic fashion, and provided service at no direct charge at the time of service. In recent years, the health care system had been deteriorating as the health of the people had also been declining. Life expectancy, infant mortality rates, and diseases of the circulatory system are higher than in Western European countries. In 1989, political changes occurred in Czechoslovakia that made health care reform possible. Now health services are being decentralized, and the ownership of hospitals is expected to be transferred to communities, municipalities, churches, charitable groups, or private entities. Almost all health leaders, including hospital directors and hospital department heads, have been replaced. Physicians will be paid according to the type and amount of work performed. Perhaps the most important reform is the establishment of an independent General Health Care Insurance Office financed directly by compulsory contributions from workers, employers, and government that will be able to negotiate with hospitals and physicians to determine payment for services.
The British National Health Service (NHS) has, since its inception, aimed to make health care available to all regardless of income, and it has managed to achieve this goal while keeping costs lower as a proportion of the gross domestic product than many Western countries and at the same time assuring equitable distribution of resources regionally. Until the reforms introduced by the 1989 White Paper, the NHS was characterized by centralized financing and regulation; despite some problems in the delivery and management of care, the system was a popular one. The new reforms hope to enhance efficiency in the NHS by stimulating competition and further decentralizing the management of health care. However, it is not at all certain that in practice the reforms will have the desired effect. Initial costs will be high, people may not respond to incentives as predicted, and the quality of care and access to it could well deteriorate. Nations planning to use the U.K. system as a model are advised to use caution.
Various ways of financing health care expenditures by communities are studied in this chapter. The first method is direct payments by patients for drugs. Application of this method presupposes that other health care expenditures are financed by other agents such as international donors and central, district or local government. A fee-for-service arrangement constitutes the second method. This is more general in that fees may cover other recurrent expenditures as well as drug expenditures. Salaries of health personnel and depreciation allowances may also be included in a fee-for service system. The third method consists of prepayments for health care or decentralized forms of health insurance. Finally, we consider community labour as a means of financing health expenditures. In the last section, evaluation criteria for projects in community financing are examined.
Healthcare Policy and Management
Pharmaceutical Economics and Policy
Health Systems, Economic Evaluations, Quality of Life
James D. Bentley, J Chusid, G D'Antuono, Joyce V. Kelly ยท 5 authors
The contemporary academic medical center is a complex organization providing medical and other professional health education, biomedical and behavioral research, and a comprehensive range of patient care services. This paper presents data from the Association of American Medical Colleges' 1989 survey of 125 member faculty practice plans. The survey data showed that 62% of the 74 responding plans were units or associations within the medical school corporate structure. Plans were organized along a broad continuum from the autonomous, departmental model with decentralized governance and management to the group model with centralized governance and management. The growth of managed care, increased competition, and a greater reliance by the medical school on clinical practice income as a financing source are causing the practice plan to expand beyond billing of professional fees. The survey data showed that 75% of the practice plans operated satellite centers, and 61% planned to build new ambulatory care facilities in order to expand and improve services to patients. The practice plans also have adapted to changes in third-party reimbursement and are establishing mechanisms to negotiate managed care contracts involving multiple clinical departments to increase referrals and maintain patient shares; 86% of the plans participate in at least one managed-care organization. The role of the practice plan will continue to evolve in response to the needs of the academic medical center for a cooperative and supportive environment in which to conduct its traditional missions of teaching, research, and patient care.
In 1980 Ronald Reagan swept into the presidency on a wave of antigovernment sentiment after promising deregulation, decentralization, and restoration of individual responsibility and opportunity. This pro-competitive, antiregulatory temperament was captured in legislative proposals to stimulate competition in the financing and delivery of health services.1 In the 96th and 97th Congresses from 1979 to 1983, several bills were introduced to create financial incentives to expand consumer choice in purchasing health services, induce greater price competition among health care professionals and institutions, improve efficiency in the organization and delivery of services, and ultimately lower the costs of health care. The moment appeared ripe for an earnest attempt at structural reform of the health care system: national health care expenditures continued to increase at a pace well above the costs of other consumer goods and services, with ho-spital expenditures leading the way. The highly regulatory hospital cost containment program offered by President Jimmy Carter had gone down to defeat in 1979.
The empirical evidence available for OECD countries suggests that economic factors play a major role and that demographic factors play a minor role in explaining differences in health care spending across countries. When countries are grouped on the basis of their health care systems, some significant cross-country differences result: countries with higher transfer rates (a larger share of collective financing) are not generally characterized by higher health care expenditures, and conversely, countries with a larger share of private financing (including higher coinsurance rates) do not have lower expenditures. Rather, the opposite holds true. Similar conclusions apply to the share of public versus private production of health goods. Furthermore, the results do not support the claims of those critics of universal public insurance systems who consider the expansion of the coverage to be a major source of expenditure growth. These findings cast serious doubt on the claim that cost containment can be achieved via market reforms that rely heavily on direct consumer payments and cost sharing as instruments of financing. A comparative analysis of the historic record of the United States, Canada, and the Federal Republic of Germany generally supports these conclusions; it also suggests that a greater degree of public penetration offers a better chance for control of health spending, particularly in periods of austerity. There is a strong presumption that health care systems relying on some overall control of spending generally are more cost-effective than those relying more on decentralized mechanisms of control. Services are more equitably distributed in relation to health and payment for health services is far more progressive in the former type of system.
Hospitals came into the twentieth century as creations of local, usually altruistic, interests and wrestled with accelerating change throughout the decades. Their success brought third-party financing, employee health plans, and government guarantees for charity care. Success seemed to breed success, and they raced ahead with capital investment in bricks, mortar, and high technology, only to find themselves in increasing trouble as 1990 approached. Writing from the precarious perch of the year 2000, the author views the worsening hospital situation and raises questions about the contradictions of federal interventions, the efforts to create "systems," the plight of small hospitals, and the love-hate role of medical staffs. Offered for consideration is a scenario of a health care crisis in the early 1990s comparable to the savings and loan crisis of 1988. However, this time the federal intervention is not simply in dollars, but, instead, brings on a "health for all" program with national financing and decentralized "district health" management. As in other nations of the world, hospitals become an integral part of the commitment to attack the root causes of ill health.
Although both are publicly owned and financed, the health care systems of England and Sweden are widely different in levels of funding, patterns of resource allocation, and types of planning and management. In England, control is more closely tied to national government; in Sweden, it is shared between national and local governments. A comparative analysis of decision making in the two systems reveals critical differences in determinations of how resources are allocated among competing interests, and how resources are used. Interestingly, as the English move toward more decentralization, the Swedes are considering greater central controls, but, in any event, convergence is unlikely.
In the current environment of general budget stringency in developing countries it is unrealistic to push for more spending for health services. The answer to this health crisis is to relieve government of much of the responsibility for financing those kinds of health services for which the benefits to society as a whole (as opposed to direct benefits to the users of the service) are low freeing resources to finance those services for which benefits are high. The intent is to relieve government of the burden of spending on health care for the rich freeing resources for more spending for the poor. Individuals with sufficient income should pay for their curative care. The financing and provision of these private health services should be shifted to a combination of the nongovernment sector and a sector reorganized to be more financially self-sufficient. A shift such as this would increase the resources available for those types of health services which are goods and currently are underfunded public health programs such as immunization vector control some prenatal and maternal care sanitary waste disposal and health education. Also such a shift would increase the resources available for simple curative care and referral for the poor who now only have limited access to low quality services of this nature. Government efforts to cover the full costs of health care for everyone from general revenues have contributed to 3 sets of problems in the health systems of many countries: an allocation problem -- insufficient spending on cost-effective health activities; an internal efficiency problem -- inefficient programs; and an equity problem -- inequitable distribution of benefits from health services. 4 policies for health financing are proposed to raise revenues for important health programs increase the efficiency of health services and make the system better serve the poor. These are: charging users of health facilities; providing insurance or other risk coverage; strengthening nongovernmental health activities; and decentralizing government health services. A table summarizes the effects of each of the 4 options for reform in alleviating health sector problems.
A Health Sector Financing and Expenditure (HSFE) survey was conducted in Swaziland against a background of growing concern about resource constraints on policy implementation. It sought to provide basic financial information which could be used when discussing policy options for addressing these constraints. Under a wide definition of the health sector, expenditure in 1984/85 was found to be equivalent to 9.8% of GDP and E73 ($US35) per capita. Recurrent expenditure dominated sectoral expenditure, at 86.7% of the total; 57% of recurrent expenditure was for primary health care (PHC) activities, but only 17.9% for the core preventive programmes which the policy emphasizes. Moreover, the Ministry of Health's own expenditure was biased in favour of curative care. Out-of-pocket payments largely supported general PHC activities and the core programmes were predominantly funded by foreign aid. Policy calls for increased PHC funding, therefore, are justified on the grounds of existing inappropriate allocations. If this is to be achieved there must be improved efficiency of resource use within services and improved coordination with other sources of finance in the sector. It is especially important to address efficiency issues within the Ministry. Particular attention should be paid to strengthening the role and effectiveness of decentralized management structures in resource allocation. The Ministry should also address concerns about the quality of care provided by its services, especially the poor availability of drugs. Increased PHC funding may, further, be made possible through the recruitment of additional finance. More discussion of alternative financing arrangements is necessary, but their efficacy may be dependent on improving the quality of care provided within public facilities.
Establishing a system of family practice clinics with physicians from its medical staff enabled Mercy Hospital Medical Center, Des Moines, IA, not only to meet consumers' changing needs and wants but also to develop a long-term strategy for survival. The joint venture, which has grown to 9 clinics and 30 physicians since its inception in 1983, does not restrict the hospital from entering into similar relationships with other physician groups. Neither does it restrict physicians from entering new arrangements or using other hospitals. Each clinic operates quasi-autonomously in serving its own patients, and issues such as hiring, firing, hours of operation, and local public relations are handled in a decentralized manner. Other matters--insurance coverage, marketing programs, accounting and data processing systems--are standardized throughout the organization. Challenges involved in undertaking such a project include overcoming resistance from employees, building public awareness of the project, and creating an open, trusting relationship between physicians and administrators. It is particularly important to foster the support of physicians "outside" the partnership and to include those who remain in private practice in marketing efforts.
People in the United States have generally ignored Canada's long experience with extensive public financing and management of its health system. This is unfortunate because the two countries are similar in so many ways that Canada's experience is very pertinent to the continuing debate in the United States over increasing government involvement in health care. Two lessons emerge from Canada's experience. First, while many in the United States are dubious about more government involvement in health care, Canada's overall experience has been favorable. Second, Canada's experience suggests some specific forms that such public involvement should take to improve the performance of the health system. One important reason for Canada's favorable experience has been the decentralization of government decision-making. Constitutionally, the ten provinces have jurisdiction over most health services, so they are key decision-makers. The federal government, however, has had an important role in the shaping of Canada's health system, most importantly by offering subsidies to provinces willing to establish certain health programs that meet its standards. Canada's extensive public financing of health services is the most striking difference between its health system and that of the United States. In each province all medically necessary physician services and most inpatient and outpatient hospital services are publicly financed for all residents. Hospital services have been publicly financed for more than twenty years and physician services for more than ten years. Provincial agencies administer the programs, reimbursing physicians predominantly on a fee-for-service basis. Hospitals typically receive biweekly payments based on their provincially approved budgets. The provincial plans are financed jointly by the federal and provincial governments, largely from their general revenues. Few now bother to collect premiums or special health taxes, and minimal use is made of deterrent charges. The provinces vary considerably in the extent to which other personal health services are publicly financed. For example, some finance dental services for children; some, prescription drugs for people aged sixty-five years and over.
Today's China, still a developing country with per capita health expenditure of 50 cents to one dollar (U.S.), has established a complex network of health facilities and well-distributed health personnel through the efforts of the existing political structure. The curative health services are decentralized and provide care through a variety of plans which combine capitation prepayment and modified fee-for service. Each plan is striving for the goal of making health care accessible to all at low cost, and hence, efforts of cost containment for self-sufficiency are widely practiced. The responsibility of the preventive health services (such as health education, screening, family planning, food distribution, etc.) are assumed by the central government and they are provided without charge to encourage maximal utilization. Other features of the Chinese system discussed include self-reliance, self-sufficiency, mass orientation, regionalization and innovative utilization of existing facilities, and personnel.
W HILE debate rages on, it seems only a matter of time before some form of national health insurance becomes a reality. Aside from the central questions regarding coverage, financing, and eligibility, an important issue involves the administration of such an insurance program. A recent analysis of 13 proposed national health insurance bills found that 10 of the bills include the existing industry to one degree or another.' This strategy makes sense because of the expertise and machinery that presently exist within the health insurance industry. If such a strategy is adopted, the fundamental problem of allocating the administrative responsibility remains. There is wide disparity in the average costs of administration among the insuring organizations. Ideally, designation of responsibility for administering any national health insurance program should be based upon efficiency considerations. To the extent that economies of scale are present within the administrative function of existing health insurers, centralization in one or a few hands can be justified. In contrast, if economies of scale are not present, administrative responsibility should be decentralized on efficiency grounds. The purpose of the present paper is to examine the administrative cost experience of the commercial health insurers in an effort to determine whether economies of scale exist.