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New Zealand's health providers in an emerging market.

Services have almost completely replaced hospitals as the organisational units in the reformed New Zealand health care system. Within the secondary service provider sector service management, the decentralisation of general management to budget-holding clinical groupings has been an important factor in achieving a population focus, cost containment, accountability and integration. It is being further developed within the 23 newly formed Crown health enterprises (CHEs), the main providers of secondary, hospital and related services. The CHEs are evolving roles beyond a narrow definition of 'providers', taking initiatives to collaborate with other providers, or rejecting those elements of competition that might interfere with effective local co-ordination of services. Service management is also being extended to the demand-driven, fee-for-service primary care sector, where inflation-adjusted expenditure over the last decade has grown at more than 6%, compared with zero growth in the capitation-financed secondary sector. This is being achieved in both general practice and community budget-holder groupings through what might be called managed primary health care. The current health reform process has also created four regional health authorities (RHAs), responsible, within capped and capitated budgets, for the fully integrated purchasing of services from both primary and secondary providers. The success of these innovative arrangements, which could be of international significance, will depend upon the quality of the developing relationships between providers and their purchasing RHAs.

Budgets↗

Off-balance-sheet financing can generate capital for strategic development.

To manage their real estate portfolios effectively and obtain funding for strategic development, IDSs should consider adopting off-balance-sheet financing strategies, such as sale-and-leaseback transactions, synthetic leases, and joint-venture arrangements. Under these approaches, real estate assets are moved off of the organization's balance sheet via a partial or complete transfer of ownership to a third-party entity. The organization typically retains a satisfactory degree of control over the assets as lessee in sale-and-leaseback and synthetic-lease arrangements, or limited or minority partner in a joint venture, while freeing up cash to use for other strategic purposes.

Accounting↗

Health care reform? An American obsession with prescriptive incrementalism.

A rounded evaluation of the national health insurance proposals that now seem to be taken seriously by political elites requires conceptual organization. This article adopts a typology that describes each major proposal as a social, mixed or a private insurance scheme depending on the source(s) of funding, method of compensating hospitals and physicians, the unit of payment, and mechanism for financing capital. Not surprisingly, the analysis suggests that the social insurance model, closely resembling the Canadian system, is more likely to control inflation and redress distributional inequities than are other approaches. Why, then, has this approach not been adopted? The answer may be found in the widespread acceptance of disjointed incrementalism as a valid description of the policy process which yields an ideological orientation that can be termed "prescriptive incrementalism." This orientation is closely related to a belief in an "American exceptionalism," a belief that is not warranted by a cross-sectional examination of the political culture infusing issues about the proper role of government in health care financing and delivery. Unfortunately for advocates, the truly exceptional factor restricting the United States' ability to effect national health reform is a quite delberately obstruction-oriented political structure.

Attitude to Health↗

Capitation payment for pharmacy services. I. Impact on drug use and pharmacist dispensing behavior.

Results of a two-county pilot study in Iowa revealed that capitation may have significant advantages over fee-for-service (FFS) reimbursement in the Medicaid drug program. Consequently, the capitation program was expanded to 32 counties on April 1, 1981 and continued through December 31, 1981. Another 32 counties were used as part of a before:after/experimental:control design. Pharmacists were paid 80% of projected drug expenditures in advance based on the types of Medicaid eligibles who chose them as their providers. The remaining 20% was withheld in an escrow account to be used for supplemental, emergency, and bonus payments. Pharmacists who participated in this experiment were guaranteed that their gross profits on Medicaid prescriptions would remain at least equal to what they would have been if they had remained under the current FFS payment system. Major differences in drug use levels and pharmacist dispensing behavior under capitation financing were observed in the pilot study. However, no such changes associated with payment type were noted in the expanded program. Relative to these findings, a discussion of pharmacist attitudes is presented.

Attitude of Health Personnel↗

Case management in a capitated system: the community nursing organization.

This article describes the Community Nursing Organization, a federal health care model designed to provide specific ambulatory and outpatient services to medicare beneficiaries via a nurse managed delivery system under capitated financing. A primary nurse provider, working with the elderly client, family, physician, health care service providers, and community organizations, assesses the need for care and arranges for appropriate services. This nurse must also authorize payment of those services covered by the Community Nursing Organization (CNO). A 3-year demonstration project is currently under way. Findings at 1 year indicate that the system may have a positive effect on client health status.

Aged↗

Risk adjusting community rated health plan premiums: a survey of risk assessment literature and policy applications.

This paper surveys recent health care reform debates and empirical evidence regarding the potential role for risk adjusters in addressing the problem of competitive risk segmentation under capitated financing. We discuss features of health plan markets affecting risk selection, methodological considerations in measuring it, and alternative approaches to financial correction for risk differentials. The appropriate approach to assessing risk differences between health plans depends upon the nature of market risk selection allowed under a given reform scenario. Because per capita costs depend on a health plan's population risk, efficiency, and quality of service, risk adjustment will most strongly promote efficiency in environments with commensurately strong incentives for quality care.

Actuarial Analysis↗

Managed care in Latin America: the new common sense in health policy reform.

This article presents the results of the comparative research project, "Managed Care in Latin America: Its Role in Health System Reform." Conducted by teams in Argentina, Brazil, Chile, Ecuador, and the United States, the study focused on the exportation of managed care, especially from the United States, and its adoption in Latin American countries. Our research methods included qualitative and quantitative techniques. The adoption of managed care reflects the process of transnationalization in the health sector. Our findings demonstrate the entrance of the main multinational corporations of finance capital into the private sector of insurance and health services, and these corporations' intention to assume administrative responsibilities for state institutions and to secure access to medical social security funds. International lending agencies, especially the World Bank, support the corporatization and privatization of health care services, as a condition of further loans to Latin American countries. We conclude that this process of change, which involves the gradual adoption of managed care as an officially favored policy, reflects ideologically based discourses that accept the inexorable nature of managed care reforms.

Diffusion of Innovation↗

Managed health care.

The fundamental components of managed-care plans are described; the development of managed-care programs is discussed; and the impact of managed care on pharmacy services and the price, quality, and accessibility of health care are reviewed. Health care can be considered to be managed when at least one of the following fundamental components is present: prospective pricing, "UCR" (usual, customary, and reasonable) pricing of services, peer review, mandatory use review, benefit redesign, capitation payments, channeling, quality criteria, and health promotion. The managed-care industry consists of health maintenance organizations (HMOs), preferred provider organizations (PPOs), and managed fee-for-service plans. Managed-care reimbursement principles involve transferring some or all of the impetus for controlling use of services to the health-care provider. Means by which this is done include prospective pricing, services bundling, price discounts and negotiated fees, and capitation financing and reimbursement. Financial risk-sharing arrangements with providers--including hospitals, physicians, pharmacies, and home-care companies--are necessary for any managed-care plan to attain true control over its service costs. Use-review and use-management services are also fundamental to containing health-care spending. These include retrospective, concurrent, and prospective reviews of the necessity and appropriateness of medical services. Use management, like services bundling and prospective pricing, has been more effective in reducing costs of hospital inpatient services than costs associated with ambulatory care. Per case payments and services bundling have made individual charges for items irrelevant to hospital revenue. This has forced hospital pharmacy managers to become more sensitive to cost management. Drug formularies, improved productivity, and use of prescribing protocols are means by which hospital pharmacies have controlled costs. However, since shorter hospital stays are not associated with a linear decline in the need for drug therapy, reducing pharmacy operating expenses in proportion to the decline in hospital occupancy is probably not possible. Community pharmacies have responded to managed care by forming pharmacy services administrative organizations. Application of managed-care principles has reduced the use of inpatient hospital services by Medicare beneficiaries, helped HMOs and PPOs to lower prices for some services, reduced use of hospital services by HMO members, and redirected some inpatient hospital care to alternate-care providers.(ABSTRACT TRUNCATED AT 400 WORDS)

Capitation Fee↗

Medicare risk contracting. Lessons from an unsuccessful demonstration.

The Tax Equity and Fiscal Responsibility Act of 1982 provided a full-risk Medicare capitation financing option for health maintenance organizations and competitive medical plans. Two rounds of demonstrations were conducted, followed by the publication of final regulations in January 1985. The first-round demonstration at Marshfield, Wis, was operational for 28 months. Thirty-seven percent of all resident beneficiaries enrolled. Aggregate losses exceeded $3 million (11.6% of revenue). Management implemented increasingly more stringent utilization review. Overall hospital utilization declined 261.7 days per 1000 from fiscal year 1981 to 1982; nonetheless, federal reimbursement was insufficient to meet program costs and the demonstration was terminated. The central reimbursement method used in Medicare risk contracting (adjusted average per capita cost) does not adequately control for enrollment selection, unmet medical need, or recent regional cost variations. Reimbursement set at 95% of estimated fee-for-service costs does not recognize, and in the long run will not support, an efficiently operating delivery system.

Centers for Medicare and Medicaid Services, U.S.↗

Toward the financial integration of public mental health services.

The public treatment of seriously mental ill patients continues to be frustrated by the lack of administrative and financial integration of state and community mental health services. Several states have initiated attempts to improve the cost-effectiveness of public mental health services through mechanisms that create financial incentives fostering community-based alternatives to psychiatric hospitalization. Examples of such mechanisms include capitation financing systems, performance contracts, regional mental health authorities, utilization review, and bed-targets. This paper reviews evidence supporting the need for and success of these efforts, and also addresses their limitations.

Adult↗

Physician group sizing: a strategic framework.

Consistent with managed health care and associated fundamental shifts in health care economics, physician group sizing has evolved from a formula-driven analytical exercise to one which necessarily addresses a series of strategic issues relative to critical mass, scale economies, and market demands. Strategic issues, therefore, will take priority over operational considerations in determining group size. The methodology proposed considers interactions between qualitative assumptions (group goals/philosophy, market share targets) and quantitative variables (market demographics, physician capacity, physician supply, utilization rates, etc.) within the context of overall group vision relative to the market. Included is a brief case study that applies the recommended approach and illustrates three important considerations in employing the methodology.

Capital Financing↗

Severe obesity: expensive to society, frustrating to treat, but important to confront.

Obesity is a major contributor to chronic and costly diseases and disabilities. More than 30% of American adults are obese, and the percentage has been rising for 20 years. A recent estimate placed the direct economic costs of obesity at more than $39.3 billion, or 5.5% of all medical expenditures in the mid-1980s. These numbers underestimate prevalence and cost because the studies designed to monitor our nation's health problems have ignored the most obese segment of the population-individuals weighing more than 350 pounds. The methods used to treat obesity are controversial, some of them lacking appropriate evaluation. Physicians have been reluctant to treat obese people because of the intensity and duration of an effective treatment program. Finally, many treatments fail in the long term and therefore are not considered cost effective. Multiple treatment options are currently available, and this review presents data to aid physicians in selection of the best therapy to help their patients. As cost advantages of comprehensive care of obese patients become more obvious under capitated financing systems, further investigation should focus on mechanisms of choosing more individualized care plans to defined subsegments of the obese population to make care more cost effective.

Health Care Costs↗

Interregional variations in measures of health from the Health and Lifestyle Survey and their relation with indicators of health care need in England.

STUDY OBJECTIVE: The aim was to assess the extent to which a range of routinely available need indicators which have been suggested for use in NHS spatial resource allocation formulas were associated geographically in England with the different dimensions of population health status collected in the 1985/86 Health and Lifestyle Survey (HLS). DESIGN: Regional health authorities were ranked according to each of the HLS health variables which varied significantly between authorities. The HLS health variables were regressed on a selection from the range of routinely available morbidity and socioeconomic indicators available from the 1981 census. The potential need indicators were also regressed on the health variables. SETTING: The analyses were undertaken at individual level and at regional health authority level in England. SUBJECTS: The study comprised the English component of the HLS random sample representative of the population in private households in Great Britain. MAIN RESULTS: The different HLS health variables did not yield consistent regional health authority rankings. Among the variables, forced expiratory volume in one second (FEV1) and self assessed health appeared to be associated with most of the other health and need variables except longstanding illness. Longstanding illness was not strongly associated with any of the other HLS health variables but appeared to show some association with three deprivation indices constructed from the 1981 Census. CONCLUSIONS: There may be a case for including a measure of chronic ill health in the new NHS system of capitated finance in addition to the all cause standardised mortality ratio which is used currently as a measure of need for health care.

Chronic Disease↗

Argentina: no lesson learned.

This article examines the political, ideological, social, and economic processes by which the Argentinean economy was transformed, the structural consequences, and the policies responsible for dismantling the welfare state. The health care system reform during the 1990s was an important component in accomplishing the last objective. Analyses of the policies adopted after the crisis of 2001 reveal that, despite the discourse against international financial institutions, President Nestor Kirchner, elected in 2002, followed the same approach by accepting and applying the second generation of health reforms recommended by the World Bank and the Inter-American Development Bank with additional pressure from the World Trade Organization and several free trade agreements. This "new reform" furthered business opportunities for multinational corporations while further shrinking the state administration's role in supplying health, education, and other social services to people who need them more than ever. Social movements have emerged that are developing alternative projects and showing that, when the base is solidarity, "another world is possible."

Argentina↗