national strategies in federated health systems dr mark britnell chairman and partner global health...
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National strategies in federated health systems
Dr Mark Britnell
Chairman and Partner Global Health Practice KPMG
@markbritnell
2© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Mark Britnell – over 60 countries, 170 occasions.
3© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
A
The exam question
QIs it possible to have a national healthcare strategy in a federated political system?
It is probably not desirable to have a comprehensive national strategy but it makes sense to have some national strategies.
4© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
My argument
‘Most systems adopt transactional not transformative strategies for change but there is a growing realisation that integration might lead to more sustainable systems.
Many national strategies aspire to this but many barriers, including fragmentation and misalignment, hinder laudable and lofty ambitions.
So, federate where necessary, localise where possible.’
5© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Health systems require major change; integration will be an important tool for achieving this
Healthcare strategies the world over tend to have a lot in common
How do these common themes play out in practice in other federated health systems?
This presentation
1
2
3
6© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
43%
32%
30%
25%
24%
21%
21%
20%
18%
15%
13%
12%
10%
10%
6%
3,000 CEOs from all industries see the importance of transformational change but focus their attention on short term transactional efficiency.
Changing business operations to realize cost efficiencies
Improving cash and working capital management
Exploiting growth opportunities through successful transactions
Preparing your organization for major business model changes
Managing and retaining the right people within the organization
Addressing risk throughout the organization
Looking for growth in emerging markets
Innovation through product development
Adapting to take into account changing customer and stakeholder behavior
Using information to forecast response to uncertain times
Refinancing or seeking capital
Using technology as a strategic enabler, not just an operational facilitator
Embedding sustainability in the business model
Responding to regulatory change
Seizing opportunities offered by increasing public/private sector interaction
KPMG research: Transaction trumps transformation.
Note: (a) Due to rounding up and down total figure may vary from 300%
Source: KPMG ‘Succeeding in a Changing World’ 2012
Total adds up to 300% all respondents had three votes(a)
7© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Healthcare
27%
50%
15%
33%
15%
18%
18%
17%
20%
10%
12%
27%
17%
17%
5%
32%
43%
21%
30%
15%
25%
4%
21%
18%
12%
10%
24%
13%
20%
10%
Total Healthcare
Healthcare leaders are even more focused on the urgent issues of today and less on the important ones of tomorrow.
Note: (a) Due to rounding up and down total figure may vary from 300%
Source: KPMG ‘Succeeding in a Changing World’ 2012
Total adds up to 300% all respondents had three votes(a)
Improving cash and working capital management
Changing business operations to realize cost efficiencies
Addressing risk throughout the organization
Exploiting growth opportunities through successful transactions
Using information to forecast response to uncertain times
Preparing your organization for major business model changes
Seizing opportunities offered by increasing public/private sector interaction
Looking for growth in emerging markets
Adapting to take into account changing customer and stakeholder behavior
Using technology as a strategic enabler, not just an operational facilitator
Embedding sustainability in the business model
Managing and retaining the right people within the organization
Refinancing or seeking capital
Innovation through product development
Responding to regulatory change
8© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
KPMG in Rome, 2012. Over 40 senior executives and clinicians from 22 countries debated major global challenges of today.
Frances DiverExecutive Director, Victorian Department of Health
Chris RexCEO, Ramsay Health Care
Dr. Claudio Luiz LottenbergChairman & President, Hospital Israelita Albert Einstein
Prof. Axel EkkernkampCEO, Unfallkrankenhaus, Berlin
Glenna RaymondPresident and CEO Ontario Shores Centre for Mental Health Sciences
Dr. Kevin SmithPresident and CEO, St. Joseph's Health System
Prof. Shan WangCEO, Peking University Peoples Hospital
Christian BoelVice Healthcare President in Region Midtjylland
Filippo Monteleone Managing Director, General de Santé
Prof. Dr. Udo JanssenChairman, German Hospital Institute
Prof. Anupam SibalMedical Director, Apollo Hospital
Dr. Terry McWadeDeputy CEO, Royal College of Surgeons in Ireland
Carlo PerucciHead of the National Outcomes Programme, National Healthcare Agency
Dr. Giancarlo RuscittiCEO Fondazione "Opera San Camillo"
Paolo Rolleri Director General IRCCS San Raffaele Pisana – Istituto di Ricovero e Cura a Carattere Scientifico
Dr. Masami SakoiPlanning Policy Director, Ministry of Health, Labour and Welfare
Dr. Chul LeeCEO, Yonsei University Health System
Prof. Dr. Hans BüllerCEO, Erasmus Medical Centre
Prof. Dr. Bastiaan BloemMedical Director, Radboud University Nijmegen Medical Center
Dr. Pieter Hasekamp CEO, Dutch Health Insurers Association (ZN)
Unni HembrePresident, European Federation of Nurses Associations (EFN)
Isabel VazCEO, Espírito Santo Saúde
Bala KrishnanDirector of Development Office of Chairman, Aspetar Scientific Advisory Board
Orsida GjebreaSenior Policy Advisor, Supreme Council of Health
Prof. Benjamin OngCEO, National University Health System
Dr Brian RuffHead of Risk Intelligence and Access Innovating Divisions, Discovery health
Martin GerberCFO, Universitätsspital Basel
Dr. Jennifer DixonDirector, Nuffield Trust
Sir Ian CarruthersCEO, NHS South of England
Sir Jonathan MichaelCEO, Oxford University Hospitals NHS trust
Sir Robert NaylorCEO, University College London Hospitals NHS Foundation Trust
Valerie MichieGlobal Head of Health, SERCO
Tim HarfordSenior Columnist at the FT and Author of Adapt: Why Success Always Starts with Failure
Sir Bruce KeoghMedical Director of the NHS and NHS Commissioning Board
Gary KaplanCEO, Virginia Mason Medical Center
Dr. Arthur SouthamExecutive Vice President, Kaiser Permanente
Ron WilliamsFormer Chair & CEO of Aetna Inc. and member of President Obama’s Management Advisory Board
Anne McElvoyPublic Policy Editor, The Economist
Paul Cummings Director of Finance, Northern Ireland Health and Social Care Board
Lord Nigel Crisp
Independent Crossbench Member of the House of Lords
9© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The paradox.
Most people believe that their health sectors need substantial change but think their own organisational plans are robust.
They can’t all be right. Transformational change requires the majority to have a new vision. That's why change is hard.
Focus remains on transactional change not transformational reforms.
Leading hospitals, health plans and life sciences executives believe their
business models are ‘somewhat sustainable’
From volume to value (USA):
Source: Transforming Healthcare: From Volume to Value – New Research on Emerging Business
Models KPMG 2012
HC Systems (104) Health Plans (51) Pharma (54)
8% 8%17%
25% 20%
19%
40% 53% 43%
18%18% 20%
9%
2% 2%
Not very sustainable
Somewhat sustainable
Very sustainable
Extremely sustainable
Not sure
Sustainability of current business models over next 5 years:
But they don’t feel their industries will stay the same…
…with moderate to major change coming in their
sectors
HC Systems (104) Health Plans (51) Pharma (54)
65%
41%
24%
33%
53%
63%
2% 4% 13%
Moderate changesMajor changesNot sure
Source: Transforming Healthcare: From Volume to Value – New Research on Emerging Business
Models KPMG 2012
Extent of changes to your industry over next 5 years:
12© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Healthcare leaders in Rome also demonstrate the paradox.
‘Most (75%) think that current business models are somewhat sustainable but almost all (95%) expect moderate (30%) or major (65%) business model change in the sector’
Question – The current business models operated by hospitals are:
Somewhat sustainable
Question – How much change do you expect to see in the shape of the
provider system and in their business models in the next 5 years?
Major changes
Source: Pre-conference survey Something to teach, Something to learn, KPMG Rome 2012
They believe that integrated care will…
Source: Pre-conference survey Something to teach, something to learn, KPMG Rome 2012
…offer new possibilities for quality and cost
Reduce costs
(75%)
Improve outcomes (90%)
14© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
21st century healthcare is a chaotic combination of 20th century acute care and 19th century general practice.
Competing and conflicting business and care models destroy value.
Some hospitals are beginning to understand they need to change their value proposition and integrate.
■ A clearly defined population
■ The ability to do reliable risk stratification and develop registries
■ Accountability for outcomes, supported by aligned contracts and incentives
■ Systematic clinical care
■ Staff and systems to support coordination
■ Shared records
■ Shared quality governance arrangements between participants
■ Payment mechanisms that support these arrangements
■ The development of a workforce with new skills including the ability to manage multiple morbidity including dementia and work in multidisciplinary teams
Prerequisites for an integrated system
Integration.
15© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Consensus on major trends.
Payers are becoming ‘activist’. 1
Some hospitals are transforming into health systems.2
Patients becoming active partners.3
High growth health systems, providing new perspectives on health reform.4
Innovative integration and partnership.5
16© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Health systems require major change; integration will be an important tool for achieving this
Healthcare strategies the world over tend to have a lot in common
How do these common themes play out in practice in other federated health systems?
This presentation
1
2
3
17© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Same strategy, different country – there are core elements that we see repeated in most healthcare strategies throughout the developed world
Coordinated / integrated care
Stratifying and segmenting patient populations
Designing systems & processes around patients’ needs, not existing structures
Co-ordination across a broad continuum of care rather than independent silos
Strengthening the capacity and capability of primary and community care
Flexible workforce, fit for the future
Developing new roles &responsibilities; staff working to the limit of their licences
Teams that cross organisational boundaries
Paying for quality, not volume and cost containment
Creating pricing and payment structures that support co-ordination & quality
18© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Same strategy, different country (continued)
E-Health and technology
Making better use of data to understand and target patient populations
Providing better access to diagnostics, often in less acute settings
Provider networks
Consolidating the most specialised services, potentially through networks
Collaboration between public and private sectors
Patient information and transparency
More easily accessible information about outcomes and patient feedback
Patients taking control of their own health information
Creating portable electronic patient data to improve continuity of care
19© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
These recurring themes resonate with what Don Drummond found here in Ontario
“What we have is a series of disjointed services in many silos. Ontario needs to integrate these silos ... that impede efficient and effective service”
“Our health system developed to deal with acute care and largely remains in that mode. Today, the key health issues are increasingly shifting to chronic care questions”
“All health services in a region must be integrated”
A workforce trained (and structured) to meet the needs of complex patients:
A health system coordinated around the needs of patients – particularly those who use it the most:
“Physicians’ primary goal should be prevention and keeping people out of hospitals.”
“Medical schools should educate students on “system issues” so that they better understand where physicians fit in the whole health care system.”
20© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
These recurring themes resonate with what Don Drummond found here in Ontario
“Extensive use of IT is key to pushing the health care system to operate in a co-ordinated fashion.”
“Accelerate the adoption of electronic records, working from the bottom up.”
Organisational structures that promote quality and efficiency:
A health system that makes the best use of technology:
“Centralize all back-office functions such as IT, human resources, finance and procurement.”
“Hospitals are paid on the basis of average costs ...so there is no incentive to increase efficiency. ... A blend of activity-based funding (i.e., funding related to interventions or outcomes) and base funding would work best.”
Payment mechanisms that incentivise quality & efficiency, not volume:
21© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The strategic goals in other federated health systems – Australia
Payment reform
Setting a national price for activity-based funding for hospitals, through a government agency, the Independent Hospital Pricing Authority
The Commonwealth Government to fund 50% of the efficient cost of hospital care
A more coordinated system with a stronger role for primary care
Establishing Medicare Locals to coordinate and integrate primary healthcare and to provide the link between primary health and the hospital networks
eHealth
Rolling out Personally Controlled Electronic Health Records
Australia’s 2011 reform agenda aims to create a more uniform, national system.
Some of the core elements of these reforms make for familiar reading
22© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The strategic goals in other federated health systems – Australia
A shift towards prevention rather than cure
The Australian National Preventive Health Agency was established in January 2011
Structural reforms to the acute sector
Creating networks of hospital providers through the LHNs
...continued...
23© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The strategic goals in other federated health systems – South Africa
Funding and payment reform – National Health Insurance
Achieving universal coverage and reform of the funding and payment system is at the heart of a whole suite of health reforms
Costing services accurately and creating payment models that encourage efficiency
Pricing to allow private sector involvement in National Health Insurance system
A more coordinated system with a stronger role for primary care
Linking primary and secondary care facilities
New structures for primary care that are more flexible and closer to the patient
The Federal Government is rolling out fundamental reforms to the national health system. Despite a less well-developed starting point, many of the reforms mirror those of more developed systems.
24© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The strategic goals in other federated health systems – South Africa
New organisational structures
Networks of providers to improve continuity of care and management capability
Public / Private collaboration to build capacity and improve quality of acute care
Workforce reform
Defining new roles and strategic planning to meet a serious workforce shortage
... continued ...
25© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The strategic goals in other federated health systems – Germany
There have been a series of reforms in Germany, legislated between 2009 and 2012, aimed at:
Payment reform
Creating a new model of financing for social health insurance, moving towards per-capita flat-rate financing, reducing geographic health inequalities
A more coordinated system with a focus on quality
Allowing payers to pay hospitals based on outcomes, not volumes; establishing a new body to define quality metrics to support this
eHealth
Rolling out new electronic patient information cards and expanding their scope
26© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The strategic goals in other federated health systems – Germany
...continued...
Controlling costs
Reforming the relationship with pharmaceutical companies to ensure best value and efficacy for the drugs sold into the public health system
A central role for patients
Strengthening patients’ rights, particularly in the relationship between provider and patient; and creating a statutory duty to provide information to patients upon request
27© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Health systems require major change; integration will be an important tool for achieving this
Healthcare strategies the world over tend to have a lot in common
How do these common themes play out in practice in other federated health systems?
This presentation
1
2
3
28© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Three federated systems with different characteristics
Strong role for the States – even in policy making
Different masters for different parts of the patient journey
Subsidiarity and ‘corporatism’
Little direct government control, either as payer or provider
Clear National / Provincial distinction for policy & strategy
Silos for priority areas of delivery
29© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The federal / provincial split in Australia, Germany and South Africa
AustraliaDivided responsibilities for most aspects
GermanyDecentralised with many autonomous agents
South AfricaClear division of policy & delivery ... with exceptions
Funding & payment
Primary = CommonwealthSecondary = C’th &State
Capex = StatesActivity = ABDRGs & pricing = AB
Pricing = NationalBudgeting = Provinces
Delivery C’wealth = Primary & agedStates = Acute
AB payers and provider associations
Tertiary = NationalSecondary = ProvincesPrimary = Districts
Policy & strategy
C’wealth govt passes legislation; States tweak and implement (COAG)
Federal government National government
Workforce & training
Primary = CommonwealthSecondary = States
(w/ universities)
Regional 3rd parties Education = NationalTraining = Provinces
Drugs Commonwealth Govt ALB National Government
AB = Autonomous BodyALB = Arm’s Length Body (Govt Agency)
30© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The 2011 Australian health reforms aim for a more uniform, national approach to pricing and performance
Public funding is currently split 60/40 between Commonwealth and States
Independent price setting authority and activity-based funding – will increase ‘clout’ of the Commonwealth Govt
The creation of government agencies is central to this reform – some operate at a local level, such as LHNs and Medicare Locals
Funding & payment
Workforce & training
Currently a C’wealth agency runs GP training; States plan acute education & training
Policy & strategy
C’wealth passes legislation; COAG tweaks it ...then States implement in different ways
Primary care is a national issue; hospital care is a State issue
Delivery
National Health Performance Authority established to oversee performance
Some governance is being devolved to 136 LHNs and 60 Medicare Locals
31© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Lessons from Australia
The States need a voice in the policy process (the COAG) but this doesn’t ensure harmony
Local flexibility is needed even when there is national agreement ......New South Wales is nothing like W. Australia
Party-political difference between States and Commonwealth can undermine reform
Different masters for primary and secondary care make integration very difficult
32© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Ostensibly the South African system appears to separate strategy from operations but there are silos of National Government top-down control
Source:: 1 - The Lancet, Nov 2012, ‘Health in South Africa: changes and challenges since 2009’,
The National Govm’t sets prices and Provincial budgets; Provinces administer budgets
The National Govm’t also regulates private health system but struggles to control prices
Funding & payment
Workforce & training
National Govmt’ drives national strategy and is responsible for medical education
Provinces are responsible for training but have no control over no. of graduates
Policy & strategy
National Government sets strategy, legislates and defines norms & standards
Delivery
Provinces manage secondary hospitals; Districts manage primary care
Some high-priority services have been ‘prioritised’ creating operational silos (HIV, TB)
National Govt recently took on direct management of the 10 Academic Hospitals
33© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Lessons from South Africa
Federal action has a positive impact where Provinces don’t have scale (antiretroviral coverage, for example 2)
But knee-jerk political responses to disease crises create delivery silos
Source: 1: The Lancet, Nov 2012, ‘Health in South Africa: changes and challenges since 2009’, http://dx.doi.org/10.1016/ S0140-6736(12)61814-52. World Health Organisation (2011 & 2013)
Provinces have little opportunity to tailor reforms(KZN is very different to Gauteng but has the same systems)
Different masters for primary and secondary care create disjointed care
34© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
The German system is characterised by numerous autonomous bodies representing different interests – this undermines Federal / State action
Sources: 1. Civitas, ‘Healthcare Systems: Germany’, Jan 2013
Hospital investment is funded by the Länders; activity is funded through G-DRGs
Payroll-tax-funded but payers are autonomous sickness funds
The sickness funds contract providers through regional physician associations
Funding & payment
Workforce & training
Physicians’ chambers are responsible for training & education and standards.
They are regional organisations but are coordinated nationally
Policy & strategy
Federal Govmt responsible for reform; legislation at Federal and Länder level
Highly collaborative system – the Fed. Joint Committee is a ‘negotiation platform’ including sickness funds, hospital associations and physician organisations1
Delivery
Länders own most University hospitals but the Government (State or Federal) has virtually no role in the direct delivery of health care 1
35© 2013 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Lessons from Germany
Continuum of care paid for by the same payer (the sickness funds) so they have an incentive to buy efficient, integrated care
However, it is still possible for Government to drive care reform through regulation of the internal insurance market
Central Health Fund now allocates money to sickness funds based on risk1, intended to drive competition based on quality & efficiency
Sources:1. Civitas, ‘Healthcare Systems: Germany’, Jan 2013
Multiple independent actors representing different interests – doctors, insurers, pharma – make it...
“difficult for any one group to change the rules ...without the consent of the other parties ... as required changes can come up against vested interests.”1
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The paralysis caused by a lack of cohesion and perverse incentives is not unique to the German system
“The health care system is not really a system: What we have is a series of disjointed services in many silos.”
“The public debate has been poisoned in recent decades by a widespread failure to comprehend the trade-offs that must be made; by knee-jerk reactions to worthy but complex ideas for change; by politicians (and media outlets) who have been too willing to pander to fear-mongering; by stakeholders in the health care system who, wishing to cling to the status quo, resist change; and generally by a lack of open-minded acceptance of the reality that change is needed now and that money alone will solve nothing.”
“The government should remove perverse incentives that undermine care: physicians are penalized when one of their patients goes to another walk-in clinic but not when the patient goes to the emergency department of a hospital.”
Don Drummond on Ontario:
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Final thoughts
Federate where necessary, localise where possible;
The developed world isn't so different; we have broadly similar strategies;
Nation building and political context always make it look different;
The federal / state divide is sometimes overcome through 'arms length bodies';
Some areas like financing, education, workforce supply and pricing seem to be centralised;
Often, fragmentation within health systems is a bigger problem than political division;
What makes sense from a patient and population health point of view?
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