health system funding forum the road ahead edmonton, alberta november 25 th -26 th 2010 jason...

Health System Funding Forum

The Road Ahead

Edmonton, AlbertaNovember 25th-26th 2010

Jason Sutherland

UBC Centre for Health Services and Policy Research

• ‘Big picture issues’ that have been used to drive health system reform and ABF

• Stimulating productivity and efficiency

• Reducing lengths of stay

• Reducing hospital waiting lists

• Increasing competition between hospitals to improve quality

• Encouraging monitoring and benchmarking

• Reducing excess capacity, increasing transparency in hospital funding

• Facilitating patient choice

• Harmonizing payment mechanisms between public and private provider


Ettelt, S., Thomson, S., Nolte, E. and Mays, N. Reimbursing highly specialised hospital services: the experience of activity-based funding in eight countries. London : London School of Hygiene and Tropical Medicine, 2006.

• Over $50 billion per year

• What isn’t working with current system?

• Possible provincial issues?– Perceived inefficiencies– Unexplained variation– Transparency– ‘Bending the cost curve’


• Why are you here?– Knowledge exchange– Learn more about activity based funding

• What are your big picture issues?– Foster transparency in hospital funding– Increase value for money for hospital spending

– Specific quality outcomes– Improve timeliness of access


• Hospital funding reform:– Some of the key ‘levers’ to induce changes in hospital

behavior• ABF, P4P

– How would these funding policies ‘fit’ with existing provincial funding programs and strategies?

• Who’s reportedly in favor of activity based funding?– CMA, BCMA, OHA, Kirby Commission (v.6)


• What is attractive about activity-based funding?– Using funding as a ‘lever’ to increase technical

efficiency• Economic incentives• Political incentives

– Many problems are known:• No incentive to coordinate care, fragmented care• Over-provide profitable services• Upcoding ….


• Activity-based funding, the evidence:• Tends to shorten lengths of stay• Tends to increase the volume of hospitalizations• Little evidence of effect on hospital quality

– Mixed effects:• Efficiency• Total spending

– Other potential impacts:• Geographic access• Equity of access


• No evidence:• Improves evidence-based care• Improves effectiveness or appropriateness• Impact on other sectors• Provider engagement


• What do the stakeholders think?

– Health human resource implications– Waiting times– Quality– Access

• Geographic access• Equity of access

– Patient satisfaction– Hospital financial performance


• How does one get to activity-based funding?

– Mutually agreed upon hospital ‘products’

– Deriving a ‘value’ for hospital products


Defining the Product

Setting the Value/Price

CMG / DRG Payment


• Generally, the payer defines the product groups it is willing to pay for• Medicare (DRG)• Department of

Health, UK (HRG)• Department of

Health and Ageing, Australia (AR-DRG)

Defining the Product

CMG / DRG


• Cost data is used to set the value (price)• Ontario Case

Costing Initiative, Alberta costing

• Charge data (DRG)• Micro-costing

studies, Australia (AR-DRG)

• Hospital financial data (UK, HRG)

• What’s components are in?

Setting the Value/Price

Payment


Methods of Case Costing:• Top Down

– Expenditure divided by activity

• Bottom Up– Individually costing all activities and resources associated with

activityTop Down Bottom Up

Level of detail Less Detail HigherAccuracy for each

Proc/Dx Less Precise HigherCompleteness Comprehensive May Exclude Elements

Cost Less Expensive More ExpensiveTime Easy to implement Longer


• Costing Methods:


• How is the price set?

• Aggregating patient cost data according to clinical characteristics

Clinical Data

Patient Cost

Average Cost

per hospital product group


• What happens when the price is not right?


• Can activity-based funding be credibly executed in Canada?

• Some of the key issues– Data availability

• Clinical• Financial• Patient level costing

– Coding quality• Framework for non-adherence to standards

– Increased demands for timeliness


• Key ‘lessons learned’ from partners?

– Framework which needs continuous attention– One tool in the toolkit– Remove some components

• Capital, teaching, rural, EDs– Setting the payment amount is really hard to balance

incentives• ‘best practice price’, ‘fair and achievable’ or average• MH, geriatric, palliative, rehabilitation

– Funding for growth– Watch for changes in settings of care, Episode splitting


• What are additional key issues from the literature?

– Prepare for change within hospitals• Activity• Hospital financial performance• Management changes

– Prepare for change in other sectors– Increase the volume of the most profitable patients

rather than those most in need


• What are some of key implementation issues?– Determining service contracts between funder and

hospitals• Setting desirable levels of activity

– Spending ‘caps’ to limit growth of activity– Long-term commitment needed for hospitals to respond

to incentives– Phased implementation

• How quickly and to what level– Adjust payment amounts away from ‘average’– Quality?


• What are some additional important risk factors?

– What are the critical success factors• Vision and Leadership

– Political issues related to changing hospital capacity– Understanding the effects of natural geographic

monopolies– Threshhold for applicability in less-populated

provinces and territories– Understanding demand and supply on post-hospital

services


• What don’t we know?• Improve evidence-based care• Improve effectiveness• Improve safe, coordinated care between sectors

• What are the key issues of P4P?– Few hospital measures of quality

• Lack of process measures in Canada – ‘silos’ of data– Formal evaluations of P4P’s effectiveness and efficacy

are few– Integration of P4P with activity based funding in

Medicare


• What are you describing as your barriers to changing funding policies?

– High quality and accessible data– Expertise to guide implementation– Stakeholder resistance or support


• Where are you able to obtain information?– Provincial governments– CIHI– Universities, literature review

• How are you building capacity?– Attend workshops and conferences– Participate in provincial initiatives and working groups– Internally-generated

• Sharing successes– Understanding of methods– Benefits


• What expertise do you feel is lacking?– Intestinal fortitude– Education of funding policies affect on:

• Overall spending• Quality• Case mix

– Cross-training between finance and clinical areas

• “National Network of Experts”– Yes/No, more knowledge translation


• What else is present in the environment?

– Medical Home, Accounting Care Organizations– Bundling care into ‘Episodes’

• Breaking the silos• Opportunities for outcome quality measures• Engaging physicians – transforms incentives

– ‘gain-sharing’ accompanies risk sharing

– Widespread discussion of incorporating quality measures into hospital/episode funding


[email protected]

health system funding forum the road ahead edmonton, alberta november 25 th -26 th 2010 jason...

Documents

activitybased funding

rehabilitation funding

funding policies

hospital funding reform

health system reform

health services

current system

uk hrg department of