regulating private hospitals

Regulating private hospitals

Professor EK Yeoh

Harding-Preker Framework

•Distribution(equity)

•Efficiency

•Quality of Care

Source: Adapted from Harding & Preker, Private Participation in Health Services, 2003.

PHSA•Gather available

information

•Identify additional needs

•In-depth studies


information


•In-depth studiesActivities• Hospitals• PHC• Diagnostic labs• Producers / Distributors

Ownership• For-profit corporate • For-profit small

business• Non-profit charitable

Formal/ Informal

Activities• Hospitals• PHC• Diagnostic labs• Producers / Distributors



Formal/ Informal

Grow

Harness

Convert

StrategyStrategyAssessmentAssessmentIssues and GoalsIssues and Goals

InstrumentsInstruments

FocusFocus

Private SectorPrivate Sector

PublicSectorPublicSector

Policy Tools• Regulation• Contracting• Training/Info• Social marketing• Social franchising• Info. to patients• Demand-side • (incl. Vouchers)• PPP transactions• Enable environment

improvement


improvement

Harding-Preker Framework

•Distribution(equity)

•Efficiency

•Quality of Care

Source: Adapted from Harding & Preker, Private Participation in Health Services, 2003.


information


•In-depth studies


information


•In-depth studiesActivities• Hospitals• PHC• Diagnostic labs• Producers / Distributors



Formal/ Informal

Activities• Hospitals• PHC• Diagnostic labs• Producers / Distributors



Formal/ Informal

Convert

StrategyStrategy


improvement


improvement

AssessmentAssessmentIssues and GoalsIssues and Goals

InstrumentsInstruments

FocusFocus

Private SectorPrivate Sector

PublicSectorPublicSector

Grow

Harness

Regulation

Outline for Presentation• Define regulations• Regulatory strategies and instruments• Regulating quality

– Compliance-based– Incentive-based– Self-regulation

• Regulatory regime and effectiveness• Key Messages• Further Reading and References

Regulation

• Regulation as setting forth mandatory rules that are enforced by a state agency

• Regulation incorporates all efforts by state agencies to steer the economy… include state ownership and contracting, taxation and disclosure requirements

• Regulation to include all mechanisms of both intentional and unintentional social control

Saltman and Busse (2002)

Baldwin et al (1998)

Three basic categories

Regulation

• Regulation is the range of factors exterior to the practice or administration of medical care that influences behaviour in delivering health care

Brennan and Berwick (1996)

Dimensions [Purposes] of health sector regulation

Policy Objectives • Normative and value driven• Broad public interest• Specific policy goals [ends and objectives]

Managerial mechanisms

• Specific regulatory mechanisms to attain policy objectives

• Technical in nature, emphasis on efficient and effective management of human and financial resources


Social and economic policy objectives

• Equity and justice• Social cohesion• Economic efficiency• Health and safety• Informed and educated citizens• Individual choice

Harding and Preker (2003)


Health sector management mechanisms

• Regulating quality and effectiveness• Regulating patient access• Regulating provider behaviour• Regulating payers• Regulating pharmaceuticals• Regulating physicians



Regulatory strategy• Command and control• Self regulation• Incentive-based regimes• Market harnessing controls• Disclosure• Direct action• Rights and liabilities laws• Public compensation and social insurance


Actors

• Government• Professional/ provider organizations• Patients’/ Consumers’ organizations

Regulatory actors


Baldwin and Cave (1999)

• self-regulators tend to be strong on specialist knowledge but weak on accountability to the public;

• local authorities strong on local democratic accountability,weak on coordination;

• parliament strong on democratic authority, weak on sustained scrutiny;

• courts and tribunals strong on fairness, weak on planning;• central departments strong on coordination with the

government, weak on neutrality; • agencies strong on expertise and combining functions, weak

on neutrality; • directors general strong on specialization and identification of

responsibility, weak on spreading discretionary powers.

Targets

• Quality• Capacity• Price• Market structure and levels of services• Entitlements


Regulatory instruments• Control-based regulation

– Licensing– Registration

• Incentive-based regulation– Contracts– Accreditation

• Market-structure regulation– Encourage desired behaviour


Control-based regulatory instrument


Area Method of regulation

Application Target

Healthcare facilities

Facility licensing Operation of new facility Minimum facility structure

Certificate of need programs

New facility constructionor facility expansion

Community need for service Resource allocation

Health maps (carte sanitaire)

Health planning anddistribution of healthfacilities

Efficient distribution ofhealth facilities

Health system agencies

New facility constructionor facility expansion

Rationalization of capitalinvestment

Antitrust regulation Relationship betweenproviders

Price and quality of services

Facility accreditation Facility structure andperformance

Quality of services

Control-based regulatory instrument


Area Method of regulation Application Target

Healthcare personnel

Licensing Minimum qualifications Quality of services

Primary and specialty certification

Specialized competence Quality of services

Recertification Maintained competence Quality of services

Practice guidelinesand outcomes research

Clinical practice Quality of services

Professional standardsreview organizations

Utilization review Quality of servicesCost of care

Peer revieworganizations

Utilization review Quality of servicesCost of care

Fines, penalties andsanctions

Provider compliance withregulation

Varied

Incentive-based regulatory instrument


Financial Incentives

Capital markets• Provide government loans at low interest.• Provide government guarantees for borrowing on private markets.• Improve access to low-cost credit and simplified loan application processes.• Provide access to foreign currency.

Taxes and tariffs• Introduce tax waivers, exemptions, and deductibles.• Provide favorable tariffs and duty-free imports of medical equipment and supplies.

Other subsidies• Give direct government subsidies targeted to public health objectives.• Provide government grants targeted to public health objectives.

Provider payment• Ensure appropriate provider payment mechanisms.• Assure reasonable profit margins (if prices are controlled by the government).• Pay government obligations to providers in a timely manner.• Protect overdrafts in response to government payment delays.• Give bonuses to serve in underserved areas.

Incentive-based regulatory instrument


Nonfinancial Incentives

Regulatory environment• Improve ease of entry to the market.• Improve regulatory processes and reduce bureaucratic controls.• Disseminate information on regulations and laws.• Confer legal authority to transform public providers into public corporations.

Market and business environment• Purchase selectively.• Provide referral systems with the public sector.• Grant access to use government facilities and equipment.• Provide consumer and market information.• Support development of an adequately skilled work force.

Human resource development• Offer training and professional development opportunities in needed specialties.• Improve career path for specialties that are in short supply.

Public-private sector relations• Assure clarity and predictability of provider-performance expectations.• Promote public and private sector provider dialogue.• Formal partnership where appropriate (such as engage private providers in public health programs).

Regulatory instruments by regulatory strategy and target of regulation


Target of regulation/ regulatory strategy

Controls Incentives

Indirect regulatory instruments (aimed at the input-provider interface)

Capital funding • Regulation of capital markets• Mechanisms for allocating public funds (such as

contracting, prospective/ retrospective reimbursement)

• Government low-interest loans• Government guarantees for borrowing

on private markets

Manpower • Control of medical school admissions• Pay scales for public managerial personnel

• Accreditation of educational institutions

Facilities, equipment, and supplies

• Import restrictions• Global budgets• Testing requirements and quality controls on production

of equipment and supplies

• Health system agencies• Duty-free imports of medical equipment

and supplies

Technology/ knowledge • National health technology agencies/advisory panels • Research funding

Direct regulatory instruments (aimed at the provider-consumer interface)

Price of services • Rate setting and price controls • Government subsidies

Health system capacity (quantity and distribution of services)

• Certificate of need programs• Health maps

• Bonuses to serve in undeserved areas

Quality of services • Registration/licensing requirements• Practice guidelines• Medical technology/equipment safety acts

• Voluntary facility accreditation• Personnel credentialing

Combinations of the above targets

• Fines , penalties, and sanctions• Antitrust law (to control prices and quality of services).• Professional standards review organizations and peer review organizations (to control cost and quality of services)

• Tax laws (to influence volume and price of private provision

• Provider-payment schemes (can influence volume and quality of services)Harding and Preker

(2003)

Self-regulation• A state-generated mandate that allows certain

professionals or enterprises to set standards for the behaviour of its membership– Private self-regulation without state enforcement

e.g. some professional organisations or voluntary organisations

– Publicly mandated self-regulation e.g. professional self-regulation by physicians, dentists and pharmacists, etc.

– Joint self-regulation with non-governmental actors



Self-regulationAdvantages Disadvantages

High commitment to ownership of rules Self-serving

Well-informed rule making Impetus toward monopolistic behaviour

Low costs to government Command and control problems cannot always be avoided

Close fit of regulatory standards with those seen as reasonable by actors

Exclusion of public from rule-making procedures

Potential for rapid adjustment Enforcement bias toward industry

Enforcement and complaints procedures potentially more effective

Public distrust of enforcers

Potential for combining with external oversight

Problematic legal oversight

Public preference for governmental responsibility



Regulatory body in Hong Kong

• The Medical Council of Hong Kong• Hong Kong Academy of Medicine• Hong Kong Hospital Authority

The Medical Council of Hong Kong

Empowered by the Medical Registration Ordinance, Cap. 161, Laws of Hong Kong, the Medical Council maintains a register of eligible medical practitioners, administers the Licensing Examination, issues guidelines and a Professional Code and Conduct, exercises regulatory and disciplinary powers for the profession, and answers general enquiries from doctors and the public.

http://www.mchk.org.hk

The Medical Council of Hong Kong• Standards of practice

– Licensing– Entry to the professions– Re-certification not required– Continuing medical education not required– Clinical audit and quality assurance not required

• Accreditation of specialties• Code of practices and ethics

The Medical Council of Hong Kong

• 24 medical members, 4 lay members• Preliminary Investigation Committee• Licentiate Committee• Education and Accreditation Committee• Ethics Committee• Health Committee

Hong Kong Academy of Medicine (HKAM)

In recognition of the need for essential postgraduate medical education and training in Hong Kong, the Hong Kong Academy of Medicine was formally established under the Hong Kong Academy of Medicine Ordinance (Cap 419) with the statutory power to organise, monitor, assess and accredit all medical specialist training and to oversee the provision of continuing medical education.

http://www.hkam.org.hk

Role of HKAM

• To maintain the standard of specialist training and specialist continuing medical education (CME) and continuous professional development (CPD) in the territory

• To assists the Medical Council of Hong Kong, the Registration body, in the maintenance of the Specialist Register (SR) since its inception in 1997 (Medical Registration Ordinance)

Specialist training

• Standard 6-year format for basic and higher specialist training leading to Fellowship

• Examinations and assessment• Require continuing medical education and

continuous professional development to maintain specialist status

Hong Kong Hospital Authority

• Public hospitals were corporatized in 1991 under the holding of a single statutory nonprofit public corporation, the Hospital Authority, independent of the government bureaucracy and established with the mandate to manage all public hospitals.

http://www.ha.org.hk

30

Hong Kong Hospital AuthorityUnder the Hospital Authority Ordinance, the Hospital Authority is responsible for:

– Advising the Government on the needs of the public for hospital services and of the resources required to meet those needs;

– Managing and developing the public hospital system; – Recommending to the Secretary for Food and Health

appropriate policies on fees for the use of hospital services by the public;

– Establishing public hospitals; – Managing and controlling public hospitals; and – Promoting, assisting and taking part in education and training

of persons involved in hospital or related services.

Management structure

Functions:• Clinical effectiveness and

technology management• Patient safety and risk

management • Patient relations and

engagement • Quality and Standards• Infection, emergency and

contingency • Chief Infection Control

Office • Infectious Disease Control

Training Centre

Quality assurance/ clinical audit

• Monitoring, audit and inspection• Implement pilot hospital accreditation

program, which includes defining the quality of hospital services in line with international standards and review by an international accrediting agent

• Key performance indicators• Satisfaction survey

Regulating quality

• Structure– Facility licensing– Healthcare personnel licensing

• Process– Facility accreditation– Clinical practice guideline

• Outcome– Performance reporting– Clinical audit

Complementary/ synthetic role of regulatory instrument

• Licensing/ professional standards– Compliance/ control based– Self-regulatory

• Specialist practice– Self-regulatory– Non-financial incentive-based

A framework for comprehensive regulatory assessment

Overall countryprofile

Political economy

Demographic andhealth indicators

• Political ideology• Culture, values, and norms• Interrelationship or power balance between stakeholders• Per capita income level

• Demographic data• Literacy rates• Health status

Existing or potentialcapacity for regulation

Overall healthsector structure

Current regulatorysystem

Governmentcapacity

• Provider mix and extent and forms of private provision• Breadth of insurance coverage: public, private• Health care utilization indicators

• Status of current health care regulation• Effectiveness of current regulation in encouraging private participation and ensuring

desirable performance• Information systems, ease of data collection, and ability to process data efficiently

• Organizational structure• Level of government• Technical capacity to perform regulatory functions (set standards, monitor, evaluate

and enforce)• Availability of trained personnel• Funding (public and private)


Regulatory decision-makingIs the issue correctly defined?

Is government action justified?

Is regulation the best form of government action?

Is there a legal basis for regulation?

What is the appropriate level of government for this action?

Do the benefits of regulation justify the costs?

Is the distribution of effects across society transparent?

Is the regulation clear, consistent, comprehensible and accessible?

Have all interested parties had the opportunity to present their views?

How will compliance be achieved?

OECD (2002)

Regulatory activity

• Legislation• Implementation• Monitoring• Evaluation• Enforcement• Judicial supervision


Regulating legitimacy• Acceptability

– Political– Social– Regulated

• Process– Communication– Transparency

• Independent creditability of regulatory body• Legal foundation

Regulation

Regulatory cycleDecide to regulate

Secure legal authority

Write rules

Monitor compliance

Impose penalties for

violators

Evaluate system

performance

Peter Berman

Key Messages• Regulations is an inherently complex and political

process.• Regulation is a strategic, dynamic and on-going

process.• Control/Compliance based regulations needs to be

complemented with other instruments (e.g. (purchasing, self-regulations) to be effective.

• Legitimacy and wide awareness of quality regulations are critical for effectiveness.

Reading and References• Busse R, Hafez-Afifi N and Harding A (2000). “Chapter 4:

Regulation of Health Services.” Private Participation in Health Services Handbook. Washington, DC: The World Bank

• Saltman R, Busse R and Mossialos Elias (2002). European Observatory on Health Care Systems Series: Regulating entrepreneurial behaviour in European health care systems. Open University Press. World Health Organization

• http://www.ps4h.org/hospital_documents• http://www.ps4h.org/Bali_documents

http://www.ps4h.org/hospital_documents

http://www.ps4h.org/Bali_documents

regulating private hospitals

Documents