Transcript International public health governance strategies Dr. Giampiero Favato presented at the University Program in Health Economics Ragusa, 26-28 June 2008

International public health governance strategies
Dr. Giampiero Favato
presented at the University Program in Health Economics
Ragusa, 26-28 June 2008
Health system defined
 By the ‘health system’ in a country we mean the set of
agencies and relationships that lead to the delivery of health
care.
– In the USA, this is a system which uses many different agencies and a
variety of relationships to deliver health care. Many parts make up a
single whole.
– Similarly, in the NHS-dominated UK, there is one system: a large
government monopoly as one major agent with private insurers, private
hospitals and alternative health providers, linked by a variety of
relationships.
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Factors influencing health systems
 Government responses, past and present, to market failure.
 Attempts to change the country’s health care system in
response to equity and/or efficiency considerations.
 The operation of market forces on both the supply and the
demand side of health care.
 The historical factors which have shaped the main institutions
involved in health care financing and provision.
 Political pressures, e.g. different attitudes to equity and
efficiency
 The wealth of the country.
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Reasons for collective finance and provision of
health care
 Reasons for market failure:
– Uncertainty about the incidence of disease, both its diagnosis and its prognosis.
– Uncertainty about the likelihood of recovery after treatment, that is, the
effectiveness of care.
– Health is fundamental to people’s lives and their demand for health care is
derived from their demand for health. Many illnesses carry the risk of death,
along with the risk that people’s social and working lives will be impaired.
– Illness is costly in itself. For example, someone may lose their earnings due to
illness.
– The conduct expected of doctors is often seen as setting the market apart from
those for other goods and services. There is a strong element of trust in the
doctor-patient relationship and patients delegate many decisions to their doctor.
This is often referred to as an agency relationship.
– Doctors face a code of ethical restrictions on their practice.
– There is an ethical tradition of treating patients according to their medical need,
rather than their ability to pay.
– There are many barriers to entry to the market.
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Finance and provision of health care
 Health care fund raising;
 Provision of health care services;
 Payments for health care services.
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Health care fund raising
 Tax-funding means that the majority of the cost of collectively
provided health care is paid for out of direct and indirect taxes;
 Social insurance means that funds are raised through mutual or
nongovernmental public bodies, with fixed membership charges or
membership charges linked towages. Membership is often by region
or by occupation;
 Private insurance includes conventional market insurance, with
premiums linked to risks, and controlled private insurance, in which
the market is manipulated in an attempt to achieve more socially
beneficial outcomes;
 Co-payments refer to the many different payments that patients
must make for care. These can be found even in tax-funded
systems with a strong focus on equity, though the amounts are
generally relatively small.
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Provision of health care services
 Public and charitable hospitals and services providing free
or subsidised services through employed or fee-earning
clinical staff;
 Private sector, for-profit organisations including hospitals
and pharmacies;
 Clinical professionals, in particular doctors, working
independently, either full or part time in groups or singlehanded practices, for fees or block grants;
 Clinical professionals working for salaries.
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Payments for health care services
 By fee per patient or other unit of activity (e.g. day in hospital,
test given). Payments may be made to hospitals and/or individual
clinicians. They can be fixed prospectively as well as charged
retrospectively;
 By capitation funding, based on the population to be served rather
than the exact level of service;
 By block grants and broad contracts covering a range of services
and service levels;
 By direct payments from the patient to the clinical providers. Such
payments typically make up a small part of total spending on
collective and complex health care in industrialised countries;
 Individual clinicians may receive a salary or they may receive fees
per item of service or be paid by a capitation system linked to
the number of patients covered for services. The latter model is
particularly common in primary care.
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Framework for classifying health systems




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Stewardship;
Financing;
Provision;
Resource generation.
The four basic functions of health systems
 Stewardship. Those financing health care are likely to be
very interested in standards of provision and the governance
of health care quality. They are less likely to leave it all to
providers.
 Resource generation is important for those agencies
financing health care because it may affect the future cost of
provision, a key concern of those raising the finance.
 Financing:
– Revenue collection - collecting the funds to pay for health care for large
groups of people;
– Fund pooling - pooling funds to share risks;
– Purchasing - deciding what services to pay for and how to pay;
 Provision - providing health services.
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Models of health systems integration




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The Slab model;
The Tube model;
The Chunky model;
The Mosaic model
The “Slab” model: fully integrated
 Strictly, this model applies when a
health agency raises the funds, pools
them, plans to obtain a package of
health care for all and provides that
package.
 The ‘Slab’ model is a completely
integrated health system, in which all
activities are both horizontally and
vertically integrated.
 The UK National Health Service,
before the Thatcher reforms of the
1990s and the recent reintroduction of
an internal market, is often described
as being like this (though some
elements, e.g. self-employed GPs, do
not fit this model).
 A more appropriate example might be
Eastern European systems before the
fall of the Iron Curtain.
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The “Tube” model:
vertically integrated- horizontally segmented
 In the ‘Tube’ model, different
organisations each compete to
provide an integrated approach to
revenue collection, pooling,
purchasing and provision.
 Consumers are locked into one
system for all their funding and
care.
 Models of this kind include:
–
–
–
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Some of the segmented systems of
Latin American countries;
Some of the local authority systems in
Scandinavia, where a local agency is
responsible for elements of funding as
well as delivery (though without direct
competition);
US HMOs operating alongside a more
fragmented model of the insurance
market, such as the Mosaic model.
The “Chunky” model:
vertically segmented- horizontally integrated
 In the ‘Chunky’ model, organisations
have a high degree of horizontal
integration but no vertical integration.
 With the exception of provision, the
model is to a degree like the NHS in
England and public health care in
Ireland.
–
–
–
–
Funds are collected by the Treasury;
They are distributed after risk pooling by the
Department of Health;
Purchasing is carried out by relatively strongly
integrated agencies;
Provision is much less integrated than shown,
with a Mosaic of hospital and community
trusts and GPs.
 There are also aspects of the systems
in Colombia, Australia and Spain that
fit this model. However, this model is
not frequently found.
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The “Mosaic” model:
vertically and horizontally segmented
 In the ‘Mosaic’ model, all four elements
are fragmented: both vertically and
horizontally.
 Multiple agencies are involved in
revenue collection, fund pooling,
purchasing and provision.
 The US system has many of the
features of a Mosaic model:
–
–
–
–
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Employers, government bodies and
individuals make payments to a variety of
insurance and quasi-insurance bodies (such
as HMOs);
Funds may be pooled by cross payments for
cover of different kinds for members of
different schemes. Payments from taxation
allow vulnerable people to be enrolled in
various private insurance schemes or HMOs;
Purchasing may be relatively decentralised or,
as in US managed care models, relatively
tightly defined;
Provision comes from many unintegrated
physicians and facilities, including some large
group practices of collaborating doctors and
some corporate hospital chains.
The Italian system
Primary Care
Hospital Care
State/
Regions
State/
Regions
State
State
Regions
Regions
Public Hospitals
GPs
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Methods of raising funds for collective health
care
ITALY
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Funding and purchasing of health care
ITALY
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Forms of fund pooling schemes
 In public, vertically integrated, systems it is unlikely that total
spending will be controlled centrally. Rather, funds are likely to
be pooled and then delegated down to subordinate bodies:
–
–
–
–
in England, Strategic Health Authorities and Primary Care Trusts;
in Australia, State Departments of Health and local Health Boards;
in Scandinavia, local councils;
in Italy, the SSN.
 To allocate funding to different subordinate purchasers, the
responsible organisation needs to know:
– How many people are in each separate pool;
– How ill these people are likely to be;
– How much it will cost to treat their illnesses efficiently, in the light of
either current practice or guidelines and protocols on treatment.
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Allocative equity
 Horizontal equity is concerned with equal treatment of
individuals who are equal in all relevant respects.
 Vertical equity is concerned with unequal treatment of
individuals who are unequal in some relevant respects.
 If the risk pooling system shifts a lot of resources towards
those with the worst health, these resources may be unable to
achieve major gains in health, for example, because such
patients are close to death;
 Funding will then be less readily available for routine
treatments which can extend quality of life.
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Two approaches to equity
 Health gain maximisation. In such a situation:
– All health gains are seen to be of equal value regardless of who gains
them;
– The system only spends more on cases who benefit most in health
improvement achieved per unit of resource spent.
 Maximise the health of the worst off. Society should aim to
maximise the position of the worst off in distributing income
and opportunity (termed the Difference Principle).
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Funding in practice: risk equalisation
 The estimated number of patients in each area (or fund)
expected to get each medical condition at each relevant level
of severity;
 The treatment for each condition as specified by the health
funding agency;
 The cost of providing the planned treatment to the expected
number of cases.
 Countries with tax-funded, social or controlled market
insurance schemes employ similar mechanisms to pool funds.
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Cost differences between patients create
problems for fund pooling
 Funds need to be redistributed, based on what members of each
age/sex group cost.
 In government-run systems like the NHS, more detailed analysis of
population characteristics and technical adjustments for supply and
availability of services can provide an alternative.
 In health care systems using social and controlled market insurance,
fund pooling continues to pose major challenges.
 In Switzerland, concern with the ability of funds to selectively recruit
good risks has led insurers to fear the introduction of a single
national insurer.
 South American countries such as Chile and Colombia have
adopted controlled insurance systems as part of a move to managed
competition.
 In Belgium, risk equalisation is seen as not yet strong enough to
prevent cream skimming, leaving the social insurance system open
to cream skimming and increased costs from provider inefficiencies.
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Italian original contribution: the ASSET
research group
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Study objective
 The primary objective of this study was to discuss the
adoption of a knowledge-based capitation model (ASSET,
Age/Sex Standardised Estimates of Treatment) and its
implications for Italian healthcare policy makers.
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Metodhs
 Integration of 2 databases:
– Pharmaceutical individual costs
– Personal data
 Sample: 3,175,691 Italian residents
 Timeframe: 24 months/12 analysed (October 04/ September 05)
 Data collected:
–
–
–
–
Age
Sex
Drugs prescribed (ATC 5° level)
Cost paid by the Italian National Health Service (SSN)
 Data privacy: all personal information were replaced by an univocal
numerical code
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ASSET’s mean cost by age group and
standardised weights for overall prescribing.
Age group
< 14
0-4
5-14
15-24
25-34
35-44
45-54
55-64
65-74
>75
Total
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Mean cost (Euro)
Males
Females
41.37
35.72
36.11
31.59
43.66
37.53
44.93
40.94
52.75
62.75
80.89
90.52
146.20
149.62
300.88
277.40
505.77
431.13
652.75
481.20
196.13
195.12
Standardised weights
Males
Females
0.21
0.18
0.18
0.16
0.22
0.19
0.23
0.21
0.27
0.32
0.41
0.46
0.75
0.76
1.54
1.42
2.59
2.20
3.34
2.46
1.00
1.00
Same average cost for males and females
 The average annual consumption of pharmaceutical
was similar for both sexes: € 196,13 for males and €
195,12 for females
 In the younger population (up to 24 years of age) the
consumption of medicines is lower for females than for
males
 In the adult population (up to 54 years) the trend reverts
 After 65, the average consumption of medicines is
significantly higher for males than for females
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Ageing
 Differently from what observed in UK, infants of age 0-4
years consume fewer medicines than the next group age
(5-14)
 On average, a 75 year old male consumes annualy 12
times more medicines than a 25 year old (8 times for a
female)
 Individuals ageing >65 years (22% of the population)
consume 56% of the national public prescribing
budget
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Cumulative pharmaceutical cost by age group
ASSET sample cumulative percent distribution by age groups
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
100% 100%
89%
78%
71%
66%
53%
44%
37%
26%
23%
13%
3%
< 14
5%
15-24
9%
25-34
16%
35-44
45-54
55-64
65-74
>75
Subjects
ASSET age groups
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Prescribing costs
Implications for the Governance of Italian
public health care
 Policy makers not only need to know the determinants of
public prescribing expenditures, but they should also have the
possibility to estimate the impact of those trends having a
significant impact on pharmaceutical demand
 The ASSET model confirms the strong, quasi-exponential
relationship between age and pharmaceutical utilization,
allowing policy makers to quantify the impact of ageing
population in terms of resources needed to satisfy the
incremental therapeutic needs
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Prescribing funding: the Lombardia example
 The intermediate scenario of the latest demographic projections for
the Lombardia region foresees in 2051 a significant decrease in the
total number of residents (8.6 million), down by 6.7% compared to
the current 9.2 million inhabitants.
 All else equal (prices, therapeutic alternatives, and public coverage
of prescription costs), we could assume that prescription costs
should progressively decline over the next forty five year period.
 The ASSET model helps policy makers and demographic
statisticians to actually demonstrate the opposite.
 The weighted population is expected to grow from 8.8 million in
2005 to 11.5 million in 2051. All else equal, the pharmaceutical
spending in 2051 is likely to be 31.3% higher than in 2005 as a
result of the ageing population.
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Allocation of resources: the Tale of the Two
Regions
 Two Italian regions, Emilia-Romagna (North) and Puglia
(South) have a similar population of 4,15 million and 4,07
million residents respectively, but a 5.7 percent points
difference in the incidence of elderly population (22.6% vs.
16.9% residents over 65 years old).
 A straight capitation formula would allocate to Puglia a
prescription budget just 2.0% lower than the one allocated to
Emilia-Romagna.
 Comparing the number of residents weighted by age and sex
(3.52 million in Puglia vs. 4.26 million in Emilia-Romagna), we
realise that Emilia-Romagna actually needs 20.9% more
prescribing funds than Puglia to cover the therapeutic
needs of its older population
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Conclusions
 The ASSET model is a knowledge-based tool, useful to support
healthcare governance to equitably allocate prescribing funding to
regional authorities
 The major limitation of demographic adjusted healthcare cost
models is represented by their tendency to lose their explanatory
power when the subset of population examined gets smaller
 The identification of a robust model capable to identify the drivers of
individual variances should be the objective of further research
 The ASSET age/sex weightings should be used as a guide, not as
the ultimate determinant, for an equitable allocation of prescribing
resources in conjunction with historic utilisation and cost data.
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