Activity-based Funding Research Articles

Are English treatment centres treating less complex patients?

Activity-based funding involves remunerating healthcare providers a fixed price per patient in each payment category. However, no categorisation system can account perfectly for differences in patient complexity. Differences may be systematic if providers routinely attract high-risk patients or engage in patient selection. Such differences may be evident in the English National Health Service (NHS) following the introduction of treatment centres that concentrate on providing a small number of high-volume procedures. We analyse data for more than 3.3 million patients to assess whether the complexity of those treated in hospitals and treatment centres differs within twenty-nine payment categories, defined by Healthcare Resource Groups (HRGs). We find that patients treated in hospitals were more likely to come from more deprived areas, to have more diagnoses and to undergo significantly more procedures than patients seen by treatment centres, suggesting that hospitals are treating more complex cases. If these observed differences between hospitals and treatment centres drive costs, then payments should be refined to ensure fair reimbursement.

Payment by results and mental health services

SummaryPayment by results is likely to be applicable to mental health services, with the exception of specialist services, next year. Its introduction will completely change the way mental health services are funded. It has three main components: national tariffs for treatments, codings or currencies for treatments according to resource use, and diagnosis and activity-based funding. This article describes payment by results, how ‘currencies’ are being developed for mental health, and outlines some of the problems and advantages of introducing this new system.

Activity-based funding for National Health Service hospitals in England: managers’ experience and expectations

Activity-based funding of hospital services has been introduced progressively since 2003 in the National Health Service (NHS) in England, under the name 'Payment by Results' (PbR). It represents a major change from previous funding arrangements based on annual "block" payments for large bundles of services. We interviewed senior local NHS managers about their experience and expectations of the impact of PbR. A high degree of 'NHS solidarity' was apparent, and competition between NHS hospitals was muted. PbR has been introduced against a background of numerous other efficiency incentives, and managers did not detect a further PbR-specific boost to efficiency. No impact on care quality, either positive or negative, is yet evident.

Managing chronic illness in Europe: a comparative analysis

Many countries are experimenting with new models of care delivery involving enhanced integration and coordination of services to better meet the needs of those living with chronic illness. However, the available evidence on the relative value of different forms of integration remains uncertain. This paper will present the findings of a study undertaken in close collaboration with and co-funded by the European Observatory on Health Systems and Policies. It will provide an overview of strategies to chronic disease management that have been developed andyor implemented in five European countries (Denmark, England, France, Germany, Sweden) and Australia. It will also assess some of the contextual factors that enable or hinder implementation of strategies to address chronic illness. It illustrates the immense diversity among European countries in their approaches to address the rising burden of chronic disease. Approaches not only vary between but also within countries, and reflect to considerable degree the general approaches of health care financing and organisation taken. Thus, in many countries where strong primary care teams exist there has been a progressive shift in the management of many chronic diseases to nurse-led clinics in primary care, for example in England, Sweden and the Netherlands. The involvement of the non-medical profession in France or Germany is low, partly because of legal and professional restrictions on the deployment of nurses outside hospital. Instead, Germany has introduced dedicated disease management programmes which patients and providers can join voluntarily, while France is incentivising the formation of provider networks so as to improve coordination and multidisciplinary working along the continuum of care. The role of patient self-management is being acknowledged as a key component of effective chronic disease management in many countries; yet, systems that support self-management systematically remain relatively weak in many settings. The sustainability of chronic care models faces considerable challenges in all health care settings. These include administrative and financial obstacles to enhance the coordination andyor integration of health and socialycommunity care services; underymis-investment in suitable information systems; conflicting policies (e.g. pursuing activity-based funding vs. aiming to shift care into the community); a focus on cost reduction; and the potential impact of electoral cycles. An effective response to the rising burden of chronic disease requires a health system environment that allows for the development and implementation of structured approaches to chronic disease management. Experience suggests that systems that are characterised by fragmentation of health services are facing considerable challenges in the successful implementation of system-wide strategies to provide care for patients with chronic illness.

Activity-based hospital funding: boon or boondoggle?

It is a health care funding model with more names than a mobster on the run. In the United Kingdom it's known as activity-based funding or payment by results. Americans call it pay for performance, P4P for short. The moniker most often attached to the concept in Canada is patient-based funding.

Payment by results: qualified ambition?

The commentaries on our original paper are interesting and informative. Thatof Malcomson illustrates nicely the costing and case-mix issues that are criticalto the successful design of activity-based funding arrangements. The secondcommentary describes some more general issues and the scope for reformersto learn from international experience.The policy documents put out by the English Department of Health (DoH)relating to Payment by Results list an array of ‘key’ objectives that the fundingreform is designed to achieve (Miraldo et al., 2006), which are listed in Table 1together with some qualifying statements. Of course, if activity-based fundingwas easily able to achieve all of these objectives, no country would be slow inadopting it – yet England is fully 20 years behind the United States in introdu-cing these payment arrangements. It is also notable that many other policyinitiatives cite a similar list of desirable objectives. Rarely are these objectivesranked by priority and often insufficient consideration is given to the possibilitythat policies that advance some objectives may frustrate others.Activity-based funding does have advantages over the alternatives of cost-based reimbursement and global budgets, notably in linking hospital revenuemuch more closely to activity and in allowing greater transparency in fundingarrangements.But the extent to which these advantages improve efficiency depends on thespecific form that activity-based funding takes, and how prices are set. Prices(tariffs) could simply reflect the (average) costs of existing practice, as they doin England. In this case, activity-based funding would encourage hospitals toensure that their costs were below average. As we have argued, this pricingrule would take the existing mix of services as given and appropriate.But tariffs could play a more extensive role, so that they are analogous toprices in most markets. Usually (market) prices provide important signals toproducers about the demand for particular services – if there is under-provision,

Centralized or decentralized? A case study of Norwegian hospital reform

In recent years, decentralization of financial and political power has been perceived as a useful means to improve outcomes of the health care sector of many European countries. Such reforms could be the result of fashionable policy trends, rather than being based on knowledge of “what works”. If decentralization is the favored strategy in health care, studies of countries that go against the current trend will be of interest and importance as they provide information about the potential drawbacks of decentralization. In Norway, specialized health care has recently been recentralized. In this paper, we review some of the evidence now available on the economic effects of recentralization. Although recentralization has been associated with improvements in both cost efficiency and technical efficiency this may have been caused by the increasing role of activity-based funding methods used in the allocation of health care resources. However, recentralization was also associated with an increase in the rate of growth of real resources and the proportion of total costs being met by supplementary funding. As a result, recentralization failed to address the issues of cost containment and reductions in budget deficits.

Does more choice reduce waiting times?

This paper develops a model of the supply of elective treatments within a duopolistic market structure where patients can be referred to the hospital with the lowest waiting times. We investigate the effect of a higher degree of substitutability among the two hospitals on equilibrium supply, waiting time and the size of the waiting list. The degree of substitutability is interpreted as the degree of choice or the extent to which patients can switch from one hospital to the other. We show that the greater the degree of substitutability among hospitals, the lower is the supply and the higher the waiting time. The effect on waiting list size is ambiguous. This result holds either when the hospital is remunerated with a fixed budget or with activity-based funding. However, the reduction in supply and the increase in waiting time generated by higher substitutability are higher when hospitals are remunerated with fixed budgets. The main implication of the model is that, under certain assumptions, policies aimed at increasing provider choice may fail to reduce waiting times.