1

International Health Care Management

Part 3b

Steffen FleßaInstitute of Health Care Management

University of Greifswald

2

Supply of Health Services: Structure

1 International Public Health2 Demand for Health Services

3 Supply of Health Services3.1 Factors of Production

3.1.1 Buildings and Plants3.1.2 Staff3.1.3 Problems of Donations

3.2 Spatial Structure of Supply3.3 Levels of Care3.4 Provider Portfolio

4 Health Reforms

3

3.2 Spatial Structure of Supply

Spatial Disparity: uneven distribution of resources in developing countries

Example: Kenya

4

Health Expenditure per capita(1,000 p.a., at 2010 prices)

Source: Simon 2014

Health Expenditure per capita (1,000 p.a., at 2010 prices)

GDP per capita (1,000 p.a., at 2010 prices)

5

Health Facilities (1959=308; 2002=2052)

6

7

8

9

10

11

12

13

14

15

16

Development of Catchment Areas

17

Formation of Hexagons

18

Hierarchical Structures

19

AccessibilityA: Distance 2003B: Distance 2008C: ImprovementD: Share of population > 5 km

20

Why are they not coming from there?

Ziwa Nyassa

Itete

21

Why are they not coming from there?

Ziwa Nyassa

22

Ziwa Nyassa

Why are they not coming from there?

23

Where should we start investing and where stop?

Lake

10 km

D12

D1

D13

D2

D3 D4

D5 D6

D7

D8

D10 D11

D15

D14

D9

D17

D18

D19 D16

24

Example: Health Facilities in Three Kenyan Districts

25

26

27

28

Quality in Structure

48

32

3

23

15

7

35

9

0

10

20

30

40

50

60

Nairobi Central Coast Eastern North Eastern

Nyanza Rift Valley Western

Prop

orti

on [

%]

% of Health Facilities Complying with National Minimum Standard (e.g. regular supply of water

and electricity)

29

3.3 Levels of Care

Dorfgesundheitshelfer, Traditionelle Hebammen

Dispensarien

Gesundheitszentren

Distriktkrankenhäuser

Regionalkrankenhäuser

Tertiär-

Krankenhäuser

Health Pyramid

Village Health Workers, Traditional Midwives

Dispensaries

Health Care Centers

District Hospitals

Regional Hospitals

Tertiary Hospitals

30

Quality in Structure and Level of CareKenya Service Provision Assessment Survey (2004)

0

5

10

15

20

25

30

35

40

Hopitals Health Centers Dispensaries

Prop

orti

on [%

]

% of Health Facilities Complying with National Minimum Standard

(e.g. regular supply of water and electricity)

31

Quality in Structure (Cost per visit in the ambulance of a private hospital, Kenya 2005)

525 578

784 835 864982 1,016 1,024

1,170

1,376 1,384

1,6071,750

1,941

2,171 2,173

2,587 2,600

3,230

3,427

4,011

4,218

1,432

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Hospital Code

Cost

per

Am

bula

nce

Vis

it [

Ksh

]

Hospital Code

32

Quality in Structure (Cost per visit in the ambulance of a private hospital, Kenya 2005)

525 578

784 835 864982 1,016 1,024

1,170

1,376 1,384

1,6071,750

1,941

2,171 2,173

2,587 2,600

3,230

3,427

4,011

4,218

1,432

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Hospital CodeHospital Code

There are private hospitals of low quality for the

poorer!

There are also private hospitals of high quality for

the rich!

Cost

per

Am

bula

nce

Vis

it [

Ksh

]

33

Cost per Admission 2007(Kenya Costing Model)

Publ. Distr.Hospital

Publ. Prov.Hospital

NGO. Distr.Hospital

Priv. Distr.Hospital

34

Competitive Situation in Relation to Traditional Medicine

Spiritual Background of Medicine – i.e. disabilities and taboos– Child mortality and fontanel– Evil eye, protecting small children– Cycle and reincarnation, „living dead“

Forms of Traditional Healers– Traditional midwives– Herbalists– Traditional surgeons– Spiritual healers

35

3.4 Provider Portfolio

• Trustee:– Public

• federal• provincial• districts

– Nonprofit– Commercial

• Who should supply what on what level?• How should collaboration look like?

36

Provider Portfolio

Organizations

For-Profit Org. Non-Profit Org.

Governmental NPOs

Economic NPO

Socio-cultural

NPO

Political NPO

Charitable NPO

Private Organizations

Church Social Work

………….

………….

CSO i.n.s.

Civil Society Organisations i.b.s.

37

NPOs

• NPO: limitations to allocations of profits• CSO in a broader sense: collective term for

charitable, political as well as socio-cultural NPOs.

• CSO in a narrower sense: civil society’s participation in political decision making (Advocacy). Political NPO

38

Collaboration of Providers

Serengeti

Haydom

Iambi

Singida

Dongobesh

Mbulu Lutheran Hospital

Government Hospital

Lutheran Dispensary

Government Dispensary

39

Supervision?

Serengeti

Haydom

Iambi

Singida

Dongobesh

Mbulu Lutheran Hospital

Government Hospital

Lutheran Dispensary

Government Dispensary

40

Public-Private Partnership (PPP)

• Assumption: there are public goods the state has to provide– Not pareto optimal– Insufficient provision of certain (poverty) groups

• But: This does not imply the state operating as financer

• The state can collaborate with the private economy regarding the provision of public goods

41

PPP: Deviating Criteria• Exclusive partnership of state with commercial

businesses vs. additionally partnering with NPOs• Partnership via market regulation (through prices) vs.

partnerships based on long-term contracts and agreements

• Partnering with non-governmental organizations performing public tasks vs. participation of the private economy in public production (i.e. financing public hospitals via private leasing companies)

42

PPP - Versions Government of Kenya

Other sectors Health sector

Private

Other sectors

4 3

1a

2

Health sector

NPO secto

r

FPO sector

1b

Gov

ernm

ent o

f G

erm

any

5

43

4 Health Care Systems and Health Care Reforms

4.1 Costs4.2 Options of Funding4.3 Health Care Systems by International Comparison4.4 Health Care Reforms

4.4.1 Objectives4.4.2 Reform Alternatives

44

4.1 Costs

• Cost-of-Illness– Content: all economically feasible negative results of

disease and death– Concept: Rice (1966); today standard– Examples: Cost-of-Illness studies

• Xie (1996): Alcohol and drugs in Ontario• Henke (1997): Disease in Germany• Welte, König, Leidl (2000): Consumption of cigarettes in Germany

45

Cost-of-Illness

Intangible Costs Tangible Costs

Health Services Costs Household Costs

Non-Core Costs Core Costs

Prevention

Curative Care

Administration

Training

Research

Direct HH Costs Indirect HH Costs

Loss of harvest

Loss of labour

Transport for patient and relatives

Accomodation for relatives

Buildings, i.e. for disabled

Diet, i.e. special food

User Fees, drug bills etc.

Loss of salary

Loss of education

District Production Function: Y=Y(K,L)

Direct Costs

46

Cost-of-Illness

Intangible Costs Tangible Costs

Health Services Costs Household Costs

Non-Core Costs Core Costs

Prevention

Curative Care

Administration

Training

Research

Direct HH Costs Indirect HH Costs

Loss of harvest

Loss of labour

Transport for patient and relatives

Accomodation for relatives

Buildings, i.e. for disabled

Diet, i.e. special food

User Fees, drug bills etc.

Loss of salary

Loss of education

District Production Function: Y=Y(K,L)

Direct Costs

Cost-of-Illness

Intangible Costs Tangible Costs

Personal suffering. i.e. caused by grief,

pain, longing, …Measurable only

indirectly in assessing quality

of life

Directly or indirectly

resulting in consumption of

resourcesUsually

quantitatively measurable

47

Cost-of-Illness

Intangible Costs Tangible Costs

Health Services Costs Household Costs

Non-Core Costs Core Costs

Prevention

Curative Care

Administration

Training

Research

Direct HH Costs Indirect HH Costs

Loss of harvest

Loss of labour

Transport for patient and relatives

Accomodation for relatives

Buildings, i.e. for disabled

Diet, i.e. special food

User Fees, drug bills etc.

Loss of salary

Loss of education

District Production Function: Y=Y(K,L)

Direct Costs

Tangible Costs

Household Costs Health Services Costs

Costs of performing institutions, usually well documented

Costs of household consuming

health services,

usually bad documentatio

n

48

Cost-of-Illness

Intangible Costs Tangible Costs

Health Services Costs Household Costs

Non-Core Costs Core Costs

Prevention

Curative Care

Administration

Training

Research

Direct HH Costs Indirect HH Costs

Loss of harvest

Loss of labour

Transport for patient and relatives

Accomodation for relatives

Buildings, i.e. for disabled

Diet, i.e. special food

User Fees, drug bills etc.

Loss of salary

Loss of education

District Production Function: Y=Y(K,L)

Direct Costs

Non-Core Costs Core Costs

Health Services Costs

Administration, Teaching,

Research

All Costs of Prevention and

Treatment (programs,

dispensaries, hospitals etc.)

49

Cost-of-Illness

Intangible Costs Tangible Costs

Health Services Costs Household Costs

Non-Core Costs Core Costs

Prevention

Curative Care

Administration

Training

Research

Direct HH Costs Indirect HH Costs

Loss of harvest

Loss of labour

Transport for patient and relatives

Accomodation for relatives

Buildings, i.e. for disabled

Diet, i.e. special food

User Fees, drug bills etc.

Loss of salary

Loss of education

District Production Function: Y=Y(K,L)

Direct Costs

Household Costs

Direct HH Costs Indirect HH Costs

Transport, Fees, Diet,

Construction

Loss in Labor, Crops, Income,

Education, Domestic Product

50

Determining Household Costs

Direct Costs

Indirect Costs- Human Capital Approach

- Friction Costs Method

- Willingness-to-pay ≠ ability to pay

51

Cost-of-Illness

Intangible Costs Tangible Costs

Health Services Costs Household Costs

Non-Core Costs Core Costs

Prevention

Curative Care

Administration

Training

Research

Direct HH Costs Indirect HH Costs

Loss of harvest

Loss of labour

Transport for patient and relatives

Accomodation for relatives

Buildings, i.e. for disabled

Diet, i.e. special food

User Fees, drug bills etc.

Loss of salary

Loss of education

District Production Function: Y=Y(K,L)

Direct Costs

52

4.2 Options of Funding

SOCIAL HEALTH

INSURANCE

PRIVATE HEALTH

INSURANCE

GOVERNMENT

Dir

ect I

nput

HEALTH CARE FACILITIES

HE

AL

TH

SE

RV

ICE

S

POPULATION DONORS

53

Concepts of Remuneration

• Input-basierte Finanzierung

• Output-basierte Finanzierung

• Output-based Aid

HEALTH FUNDING

Input-based funding

Output-based funding

Combined funding

Needs

Population

Beds

Admissions

Patient Days

Lump Sums

Buildings

Plants

Materials

Staff

Other

Lump Sum Funding

Nursing Rates / DRGs

Services

based on based on

54

Input-Based Funding

Client

Funding Entity (Health Insurer, Government)

Provider Service

Fixed Budget

55

Input-Based Funding: Ways

MINISTRY of HEALTH (MoH)

SERVICE PROVIDER

FINANCIAL SERVICE PROVIDER

ASSOCIATIONS

REGION

DISTRICT

HEALTH INSURANCE

56

Output-Based Funding

Client

Funding Entity (Health Insurance, Government)

Provider Service

Proof of Authorization

Proof of Authorization

Bill Reimbursement

57Source: Obermann 2014

58

59

Output-Based Aid

Client

Distributor

Voucher Management Agency

Voucher Service Provider

Voucher

pays Voucher

service

Voucher

Claim Reimburse-ment

60

Example: Kenya

• As of June 2006 for– Family planning– Delivery– Gender Violence Recovery (GVR)

• Cost (here: delivery)– Voucher: 200 Ksh– Reimbursement

• Normal delivery: (incl. 4 ante-natal): 5000 Ksh• C-Section: 20.000 Ksh

61

0

5.000.000

10.000.000

15.000.000

20.000.000

25.000.000

30.000.000

35.000.000

40.000.000

0

100.000

200.000

300.000

400.000

500.000

600.000

0 10 20 30 40

Su

bsi

dy

p.a

. [U

S$]

Am

ou

nt o

f V

ou

cher

s p

.a.

Poverty [% of population]

Amount of Vouchers p.a. Subsidy p.a. [US$]

Subsidies

(Births)

62

4.3 Health Care Systems by International Comparison

• Overview – Criteria for Classification

• Organization of funding (predominantly)– Social insurance– Private insurance – Insurance-free health care system (developing countries)

• Organization of service providing – Private service providers– Public organizations provide services– Non-governmental, non-profit organizations provide services

• Market Interventions– Free negotiations on prices– Market interventions of the state

63

Outpatient: privateInpatient: predominantly public

Social InsuranceAustria

Predominantly privateSocial Insurance with Basic Insurance

Netherlands

Outpatient: privateInpatient: partly public

Social InsuranceGermany

Outpatient: privateInpatient: partly publicManaged Care Organizations

Private Insurance Accompanied by Subsidies

Switzerland

Private Service Providers,Managed Care Organizations

Private InsuranceUSA

Predominating Provision of Services

Predominating Organization of

Funding

Country

Examples

64

Predominantly publicNational Health Service

Sweden

Predominantly publicNational Health Service

United Kingdom

Predominantly publicNational Health Service with Funding via Premiums

Italy

Outpatient: privateInpatient: public

National Health Service

Canada

Predominantly publicNational Health Service with Funding via Premiums

Greece

Outpatient: privateInpatient: predominantly public

Social InsuranceFrance

Predominating Provision of Services

Predominating Organization of

Funding

Country

65

National Health Service in the United Kingdom

• Overview – Founded: 1948 – Dimension: almost 1.000.000 employees– Funding: predominantly tax funded

• History (until the end of WW II)– Social insurance for workers– Registered general practitioners – Capitation fee for general practitioners– Hospitals: not covered – Beveridge-Report (1944): public health care planning,

health is considered a basic right

66

National Health Service (cont.)

• Organization – National Health Services Executive (top management

directly supervised by ministry of health)– Health Authorities responsible for 500.000 inhabitants

each– Primary Physician System: general practitioner acts as

gatekeeper (local level)• Remuneration

– Lump Sum per capita, part of remuneration is performance-related, resident registers with one physician

– Target payments, special payment for successes, i.e. vaccination quota or participation in trainings

– Few fee-for-service remunerations especially for patients with chronic diseases

67

• Funding – Basics: 90 % via tax return, low co-payment

(i.e. drugs) – Allocation of budget to Health Authorities via a

specific complex system based on demographic and epidemiologic data

– Allocation leads to down scaling, investment backlog, low income for physicians

– Internal Markets: Local Health Authorities can sign contracts with service providers (i.e. hospitals) that are not part of NHS. This leads to some extend of competition.

National Health Service (cont.)

68

The US Health Care System

• Funding – Predominantly private health insurance premiums – Predominantly employment based

• Public Sector – Medicare, tax funded, > 65 years of age – Medicaid, support for the (very) poor– Veterans Health Administration (primarily veterans

suffering from long-term effects)• Underlying Issue: up to 50 million without

(sufficient) health coverage

69

Number of US-Americans Covered Under Various Forms of Health Insurance [absolute]

http://de.wikipedia.org/wiki/Gesundheitssystem_der_Vereinigten_Staaten#Gesundheitsreform_2010

Maxi-mumPre-

miums!

Employment Based Insurance

Private Insurance

No Insurance

70

Proportion of Population that does not have Health Insurance nor is entitled to Public Health Coverage [%]

http://de.wikipedia.org/wiki/Gesundheitssystem_der_Vereinigten_Staaten#Gesundheitsreform_2010

71

Medicare

• Health Insurance for older people that are not covered otherwise (problem: since insurance is predominantly employment based they stop at pension age)

• Funding: via taxes• Dimension: 39 million Americans (largest program in

the US!) • Insurance for Americans > 65 years, disabled people

and patients suffering from renal failure

72

Medicare

• Part A: compulsory, hospitals services and outpatient care

• Part B: optional additional coverage, part of outpatient physician and hospital services, expenses for additional hospital care (Medigap) as well as medical remedies and

• Co-payment• Limitations to services • Remuneration of service providers

– Strict budgeting – DRG-System

73

Medicaid

• Goal: Health Coverage for People with Low Income

• Funding: via taxes • Assessment Ceiling: variations within the

states • „Basic Package“

74

Private Insurance

• Normally Employment Based • Employer bears (part of) premium payment which is

tax deductible as non-wage labor costs• Problems:

– Employee looses coverage in unemployment – Employee looses coverage when entering retirement– Employee is tied to the insurance the employer has a

contract with

75

Critical View on the System

• United States National Health Care Act (US Congressional Bill, House of Representatives: HR 676)

• Content: Expanded and Improved Medicare “for Everybody”

• Consignor: John Conyers – 24.1.2007– 26.1.2009

• Goal: "To provide for comprehensive health insurance coverage for all United States residents, and for other purposes… "to ensure that every American, regardless of income, employment status, or race, has access to quality, affordable health care services."

76

Health Care Reform 2010 (Obamacare)

• Patient Protection and Affordable Care Act (PPACA)– 23.3.2010

• Content – Obligatory health insurance (partly subsidies/vouchers))– Health Insurance companies have to accept people despite their

medical background– Special conditions for children (i.e. co-insurance for family members

up to age 26)– Tax reliefs for businesses that insure their employees– Limitation of premiums (i.e. older people)– Broader access to Medicare (133% of poverty line, i.e. 14.856 US$ for

a single living person in 2012)– Subsidies for poorer people– Tax deductibility for premiums

77

Criticism

• Criticism– State intervention in functioning system of market

economy– Accusation of socialism (“state takes over the

health care industry“)– Cost increase– Public indebtedness– Increasing unemployment– Intervention in federal system

78

Evaluation

• No change in system• Financial contribution to poorer people so

they can afford private health insurance• Expenses: 1 Trillion US$ over 10 years• Success: has to be devalued

79

4.4 Health Care Reforms 4.4.1 Objectives

System of Values and Objectives in Health Care

Values Objectives

80

Examples for Values

• Freedom • Equality• Justice• Fraternity• Unity• Charity• …

A question of the view on

human beings

81

Examples for Objectives

• Minimizing Mortality • Minimizing Prevalence• Maximizing Quality of Life• Sustainability• Affordability• Efficiency• Participation

82

Objectives and Side Conditions

Objectives- Optimization (Max. / Min.)- possibly not positive (i.e. Maximizing Profits Minimizing Losses)

Side Conditions- Satisfaction- Strict Compliance

Ethical Demands- Humanity as goal- Justice as side condition

Target Groups

- Population groups that are effected by the objectives

83

Task

Develop a system of values and objectives for a health district in a country of your choice.

84

LEVEL of VALUES Values Target Groups

LEVEL of OBJECTIVESObjectives Side Conditions

85

4.4.2 Reform Alternatives

• Making use of existing potential for improvement • Funding Reforms

– Public Health Care Budgets– Foreign Funding– Patient Fees– Health Insurances

• Reforms in Health Care Structure– Secondary and Tertiary Hospitals– District Hospitals– Dispensaries/Health Care Centers– Programs for Prevention

86

Task

• Brain Storming: Develop a list of measures for health care reform in the country of your choice.

• Evaluate various measures according to your system of objectives.

87

Measure Objective Implementation

Cost Willigness

++

positive effect

+ indirect positive effect

o no effect

- indirect negative effect

-- negative effect

? no prediction possible