World in Conflict and Transition


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Healthcare Reform Checklist


1st EDITION

Sam Vaknin, Ph.D.

Editing and Design:

Lidija Rangelovska

Lidija Rangelovska

A Narcissus Publications Imprint, Skopje 2009
Not for Sale! Non-commercial edition.

© 2002, 2009 Copyright Lidija Rangelovska.

All rights reserved. This book, or any part thereof, may not be used or reproduced in any manner without written permission from:

Lidija Rangelovska – write to:

palma@unet.com.mk

Visit the Author Archive of Dr. Sam Vaknin in "Central Europe Review":

http://www.ce-review.org/authorarchives/vaknin_archive/vaknin_main.html
Visit Sam Vaknin's United Press International (UPI) Article Archive – Click HERE!
World in Conflict and Transition
http://samvak.tripod.com/guide.html

Created by: LIDIJA RANGELOVSKA

REPUBLIC OF MACEDONIA

C O N T E N T S


  1. Healthcare Reform Checklist

  2. The Dying Breed - Healthcare in Eastern Europe

  3. Better Get Sick in Germany

  4. The Sickly State of Public Hospitals

  5. Global Differential Pricing

  6. Social and Cultural Values as Guidelines for Health System Reform

  7. The Author


Healthcare Reform Checklist
POINTS FOR THE AGENDA OF THE STEERING COMMITTEE FOR THE ADVANCEMENT of HEALTHCARE in the REPUBLIC OF MACEDONIA
Presented to the Plenum of the Committee on June 15, 2009

By: Sam Vaknin, Ph.D., economist
GENERAL

Healthcare legislation in countries in transition, emerging economic, and developing countries should permit - and use economic incentives to encourage - a structural reform of the sector, including its partial privatization.

KEY ISSUES

  • Universal healthcare vs. selective provision, coverage, and delivery (for instance, means-tested, or demographically-adjusted)

  • Health Insurance Fund: Internal, streamlined market vs. external market competition

  • Centralized system – or devolved? The role of local government in healthcare.

  • Ministry of Health: Stewardship or Micromanagement?

  • Customer (Patient) as Stakeholder

  • Imbalances: overstaffing (MDs), understaffing (nurses), geographical distribution (rural vs. urban), service type (overuse of secondary and tertiary healthcare vs. primary healthcare)

AIMS

  • To amend existing laws and introduce new legislation to allow for changes to take place.

  • To effect a transition from individualized medicine to population medicine, with an emphasis on the overall welfare and needs of the community

Hopefully, the new legal environment will:

  • Foster entrepreneurship;

  • Alter patterns of purchasing, provision, and contracting;

  • Introduce constructive competition into the marketplace;

  • Prevent market failures;

  • Transform healthcare from an under-financed and under-invested public good into a thriving sector with (more) satisfied customers and (more) profitable providers.

  • Transition to Patient-centred care: respect for patients’ values, preferences, and expressed needs in regard to coordination and integration of care, information, communication and education, physical comfort, emotional support and alleviation of fear and anxiety, involvement of family and friends, transition and continuity.

The Law and regulatory framework should explicitly allow for the following:

I. PURCHASING and PURCHASERS

(I1) Private health insurance plans (Germany, Czech Republic, Netherlands), including franchises of overseas insurance plans, subject to rigorous procedures of inspection and to satisfying financial and governance requirements. Insured/beneficiaries will have the right to apply contributions to chosen purchaser and to switch insurers annually.

Private healthcare plans can be established by large firms; guilds (chambers of commerce and other professional or sectoral associations); and regions (see the subchapter on devolution under VI. Stewardship).

Private insurers: must provide universal coverage; offer similar care packages; apply the same rate of premium, unrelated to the risk of the subscriber; cannot turn applicants down; must adhere to national-level rules about packages and co-payments; compete on equality and efficiency standards.

(I11) Breakup of statutory Health Insurance Fund to 2-3 competing insurance plans (possibly on a regional basis, as is the case in France) on equal footing with private entrants.

Regional funds will be responsible for purchasing health services (including from hospitals) and making payments to providers. They will be not-for-profit organizations with their own boards and managerial autonomy.

(I12) Board of directors and supervisory boards of health insurance funds to include:

    • Two non-executive, lay (not from the medical professions and not politicians) members of the public. These will represent the patients and will be elected by a Council of the Insured, (as is the practice in the Netherlands)

    • Municipal representatives;

    • Representatives of stakeholders (doctors, nurses, employees of the funds, etc.).

(I13) The funds will be granted autonomy regarding matters of human resources (personnel hiring and firing); budgeting; financial incentives (bonuses and penalties); and contracting.

The funds will be bound by rules of public disclosure about what services were purchased from which providers and at what cost.

Citizen juries and citizen panels will be used to assist with rationing and priority-setting decisions (United Kingdom).

(I2) Procurement of medicines to be done by an autonomous central purchasing agency, supervised by a public committee (drug regulatory authority) aided by outside auditors.

All procurement of drugs and medications will be done via international tenders.

The agency will submit its reimbursement rates for drugs on the PLD to external audit in order to accurately reflect pharmacists’ overhead costs. At the same time, the profit margins on all drugs, whether on the PLD or not, will be regulated.

This agency should be separate from the Health Insurance Fund and the Ministry of Health. This agency will also maintain national drug registries. It will secure volume discounts for bulk purchasing and transparent, arm’s-length pricing.

(I21) Use of reference prices for medicines. If the actual price exceeds the reference price, the price difference has to be met by the patient.

(I3) The Approved (Positive) List of Medicines will be recomposed to include generic drugs whenever possible and to exclude expensive brands where generics exist. This should be a requirement in the law. Separately, an Essential Drug List will be drawn up.

(I31) Encourage rational drug prescribing by instituting a mixture of GP and PHC incentives and penalties, or a fundholding system: budgets will be allocated to each GP for the purchase of drugs and medications. If the GP exceeds his/her budget, s/he is penalized. The GP gets to keep a percentage of budget savings. Prescription decisions will be medically reviewed to avoid under-provision.

(I4) Payments and Contracting

Payment to providers should combine, in a mixed formula:

BLOCK CONTRACTS

Capitation - A fixed fee for a list of services to be provided to a single patient in a given period, payable even if the services were not consumed, adjusted for the patients' demographic data and reimbursement for fee-for-service items.

Inflation-adjusted Global budgeting (hospitals) and block (lump sum) grants (municipalities)

COST and VOLUME CONTRACTS

Provide incentives and reward marketing efforts which result in an increase in
demand/referral beyond the limit set in a block contract.

COST PER CASE CONTRACTS

Apply Diagnosis Related Group (DRG)/ Resource-based Relative Value (RBRV) / Patient Management Categories (PMCs) / Disease Staging/Clinical Pathways

Levels of reimbursement, case-mix adjusted to be decided by external auditors.

Contracts with providers should include:

  • Waiting Times Guarantee

  • Single Contact Person (“Case Officer”) for the duration of a stay at the hospital

  • Hospital benchmarking (individual-level data on costs, diagnoses, and procedures during entire case episodes: inpatient admissions and outpatient visits; cost-effectiveness of services.

  • Performance targets in performance agreements with all healthcare facilities, both public and private.

  • All payments - wages included - will be tied to these targets and their attainment as well as to healthcare quality as determined by objective measures (internal, external, and functional benchmarking), clinical audits (sampling), as well as customer satisfaction surveys and interviews and discussions with patients.

  • Provider and Staff Bonuses and penalties tied to exceeding/under-performing targets and contract variance

  • Patients’ rights, including their rights to litigate

Selective contracting will be allowed on all levels (including specialist ambulatory care and hospitals), although all providers, private and public, will be permitted to apply for contracts with health funds and insurers. The funds will choose from among private providers either following a process of deliberation, or via an auction, or public tender (United Kingdom).

(I5) Commissioning preference will be given to the purchase of Primary Healthcare over secondary, or tertiary Healthcare.

II. PROVIDERS

The Law and regulatory framework should explicitly allow for the following:

(II1) Hospital Management

(See separate document)

The law should allow:

I. Co-location of a private wing within or beside a public hospital

II. Outsourcing of non-clinical support services

III. Outsourcing of clinical support services

IV. Outsourcing of specialized clinical services

V. Private management of public hospitals

VI. Private financing, construction, and leaseback of new public hospitals

VII. Private financing, construction, and operation of new public hospitals

VIII. Sale of public hospitals as going concerns

IX. Sale of public hospitals for alternative use

X. Consolidation of redundant public healthcare facilities by merging them or closing down some of them

XI. Privatization of Primary Healthcare (PHC) clinics within medical centers

XII. Healthcare institutions will be granted autonomy regarding matters of human resources (personnel hiring and firing); administering financial incentives or penalties, budgeting; and contracting.

XIII. Privatization pharmacies inside medical centers and hospitals.

(II2) Primary, Ambulatory, and Secondary Care and General Practitioners (GP)

(II21) Limit the number of patients per GP

(II22) Stimulate and financially incentivize the following activities, which should be declared national priorities within a National Needs Assessment:

  • Group practices and networks (for continued, around-the-clock services)

  • Day and minimally invasive surgery

  • Dispensaries

  • Home and day care services

  • Long-term care (nursing homes, visiting nurses, home I.V. and other services provided to chronically ill or disabled persons)

  • Patient hotels

  • Rehabilitation facilities and programs

  • Provision of merit goods (also through mass campaigns)

  • Conversion of hospital units to outpatient services, and day-care centers

Example of such financial incentives:

  • Physicians will be entitled to see patients who receive services free-of-cost
    in the public sector in the morning, and private patients who pay the full
    cost of the medical consultation in the afternoon.

  • Allow private beds in public hospitals and private financing of hospital stays (NHS, UK)

  • Subsidize or fully cover transaction costs (legal fees of contracting, compliance, accounting, etc.)

(II23) Allow hospitals to administer packages of outpatient services and be reimbursed by the Health Insurance Fund (or funds).

(II24) Impose an admission quota on medical schools; reduce the obligatory number of doctors per 1000 population; and make GP a medical specialty.

(II25) Strengthen the gatekeeper function of GPs and healthcare provision in outpatient settings.

Encourage gatekeeping by instituting a mixture of GP and PHC incentives and penalties, or a fundholding system (United Kingdom, Estonia, Spain):

Budgets will be allocated to each GP for the purchase of secondary and tertiary healthcare (as well as to cover salaries, premises, diagnostic tests). If the GP exceeds his/her budget, s/he is penalized. The GP gets to keep a percentage of budget savings.

Referrals will be medically reviewed to avoid under-provision.

(II26) Introduce GP target income and adjust services and fees to reach it (perhaps by using tax credits).
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