Datum: 24 mei 2005
Subject: changes in hospital finance
Agenda
• Motivation reforms• Starting points• Development• Implementation• Related issues
Datum: 24 mei 2005
Subject: changes in hospital finance
Hospital finance reforms, motive 1:Problems with current financing system
• Supply driven: doesn’t motivate production• Too much bureaucracy, obstruction of initiatives • Undesired incentives in the current financing
system • No transparency: value for money?• No incentive for efficiency• Only weak relation between actual costs and
budget• Unfunded differences in income medical doctors
Datum: 24 mei 2005
Subject: changes in hospital finance
Hospital finance reforms motive 2: Changing roles and responsibilities
• Withdrawing government• Change from supply to demand driven health care• Performance based payment• Competition between suppliers• Competition between insurers• Transparency• Realistic price development
Datum: 24 mei 2005
Subject: changes in hospital finance
Point of interest new financing system
1. Demand driven, control focused on content of health care
2. Contracts concerning content of health care (no roughly defined parameters as number of outpatient clinics)
3. Costs of care are directly linked to the expenditures of care
4. Transparency and responsibility are essential
Datum: 24 mei 2005
Subject: changes in hospital finance
Cause for change
•System was successful in terms of macro cost containment•But: waiting lists and low innovation and micro efficiency•More money went into the current system…..•Health expenditure: 14% BBP in 2040 •(22% labour force working in health care in 2025
Datum: 24 mei 2005
Subject: changes in hospital finance
Necessary shift of responsibilities• Less price and capacity regulation• More incentives for insured and insurers to control costs• More instruments for insured and insurers to demand
better value for money• More competition between insurers and providers• Improved market regulation
Insured
Provider Insurer
Datum: 24 mei 2005
Subject: changes in hospital finance
Summarised: Main goals of hospital finance reforms
• Transparancy• Performance based payment• Competition
Datum: 24 mei 2005
Subject: changes in hospital finance
Dutch health insurance system
• Dual system: Publicly funded and private health insurances
• Health insurance budgeting based on characteristics insurer population
• Health insurer specific nominal premium (competition)• Increasing responsibility, ‘health care director’,
translated in e.g. more financial risks• Coming reforms for 2006: merge public and private
health insurance
Datum: 24 mei 2005
Subject: changes in hospital finance
Health Insurance Companies
Insured person can choose and switch
- premium- quality- content of contracts
* NEED FOR INFORMATION* PATIENT EMPOWERMENT
Datum: 24 mei 2005
Subject: changes in hospital finance
* Need for transparency in performance* Instruments to determine the value for money* Negotiations on volume, price and quality
Health InsuranceCompany
To compete health insurers have to contract sufficient care of good quality for a reasonable price.
Datum: 24 mei 2005
Subject: changes in hospital finance
Former and current functional Budget
Based on:
• fixed parameters (e.g. buildings)
• semi-variable parameters (e.g. number of beds, medical doctors)
• variable parameters (e.g. number of outpatient clinics, number of day care treatments, hospital days)
Datum: 24 mei 2005
Subject: changes in hospital finance
DBCs
• Patient classification system• DBC: Diagnosis Treatment Combination• Uniform defined health product/ process
description• Description of the total health path
Datum: 24 mei 2005
Subject: changes in hospital finance
Example of a DBC: Knee surgery
Hospital Information System
StartDBC
EndDBC
Poli bezoeken
kliniek
diagnostische aktiviteiten
Operatieve verrichtingen
RadiologieOver. therapeutische verr.
CTG 039411 arthroscopie knie icm heelkundige ingreep
CTG 038642 kruisbandplastiek met transplantatie
CTG 089402 knie en/of onderbeen
CTG 193001 fysiotherapeutische behandeling
CTG 411000 herhaalbezoeken
Onderdelen zorgtraject
Specialist
CTG 190011 eerste polikliniekbezoek
CTG 190204 verpleegdag klasse 3A
Datum: 24 mei 2005
Subject: changes in hospital finance
Summary of unique aspects DBCs
• Episode management / medical process description • DBCs are applicable for all hospital activities (including
outpatient and daycare)• DBCs include the remuneration of medical specialists• Registration during the health care process
Datum: 24 mei 2005
Subject: changes in hospital finance
Spin Off DBCs
• Incentive for improvement of efficiency
• Vehicle for benchmarking
• Starting point for quality policy development
• Provide insight in capacity requirements
• Provide new control information
• Starting point for financing of integrated care
• Enabler for the Electronic Patient File
Datum: 24 mei 2005
Subject: changes in hospital finance
DBC development in the Netherlands
• Started slowly in mid 90’s
• Initiated by providers and insurers
• Adopted by government in 2000
• Steering committee with all relevant parties
• ICT development financially stimulated
Datum: 24 mei 2005
Subject: changes in hospital finance
Phases DBC implementation
• Phase 1: DBC experiment• Phase 2: DBC implementation• Phase 3: Full introduction of market
principles
Datum: 24 mei 2005
Subject: changes in hospital finance
Phase 1DBC Experiment (2003 - 2004)
• Implementation of a limited set of DBC’s• Characteristics: simple, waiting list and labour
related• Free negotiations on price, volume and quality• Voluntary participation• Objectives:
• Incentives for production?• Ability of insurers to realise good contracts (good
care/sharp prices)?• Lessons for market parties?
Datum: 24 mei 2005
Subject: changes in hospital finance
Phase 2 DBC implementation (2005-2006)
• Two segments:• Segment A: 90% fixed DBC prices• Segment B: 10% free DBC prices
• Budgeting based on existing parameters• Financing based on DBCs• Including remuneration medical specialists
Datum: 24 mei 2005
Subject: changes in hospital finance
Phase 3 Full introduction of market principles(2007 - )
• Budgeting = Financing• Local/individual DBC agreements• Free negotiations• Reallocation between hospitals
Datum: 24 mei 2005
Subject: changes in hospital finance
Preconditions phase 3
• All hospital costs integral part of the DBC prices or incorporated in separate budgets
• Sector specific market authority• Proper relation with the insurer budgeting model• Full risk for insurers • Sufficient competition between providers• Free entry to the market• Market transparency• Level playing field
Datum: 24 mei 2005
Subject: changes in hospital finance
DBC related issues
• Academic care, acute care, education, patient medication, capital costs (interest, depreciation)
• Privacy• Fraud: validation module, administrative
procedures• DIS: DBC information system• Control of total hospital care expenditures
Datum: 24 mei 2005
Subject: changes in hospital finance
DBC impact health insurer
• Enormous administrative operation• Rebuilding benchmark information• Delay in declaration (structural and non-structural)• New fraud possibilities• Relatively low market power (scarcity Dutch market)• Guiding possibilities (soft versus hard)
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