The changing nature of contracts in German health care

The flexibility inherent in the German health care system is fairly limited. The contracting environment itself is characterized by bilateral cartels negotiating the terms covering their respective members. Looking at some recently implemented reforms, namely structural contracts and experimental settings, the paper assesses the potential for sickness funds to take on a more active role. The paper also evaluates the implications for the contracting relationships between the statutory sickness funds and provider associations. Furthermore, the potential effect of selective contracting on the health care system is studied. A look at the reforms recently enacted in other countries illustrates the difficulties contractual reform has to cope with in an environment characterized by strong informational asymmetries. It is postulated that both private and public choices are needed for a successful reform effort.     

Reconsidering the role of private health funds in Australia: a dynamic model

In recent years the private sector has played a more important role in the funding and provision of Australian hospital care as a consequence of federal government policies aimed at increasing participation in private health insurance (health funds). These policies include tax incentives, a 30% rebate on premiums and lifetime community rating (premiums set by age). While these policies have improved the short-term profitability of the private sector, its long-term success is not certain. This is because negotiations between health funds and private hospitals are often myopic, the nature of the insurance product may be inefficient, and there is a general lack of academic research on the private sector. This paper highlights the importance of the relationship between health funds and private hospitals in ensuring the long-term viability of the industry. It uses a simple overlapping generations model to demonstrate that it is not only the price that health funds pay that impacts on the capital value of hospitals, but also it is important how they structure their policies and attract individuals. The model demonstrates the potential benefits of implementing health insurance based on intertemporal transfers of funds rather than the current cross-subsidization. Such a policy would see health funds become an important store of capital. Also highlighted are the difficulties of discussing fundamental changes to the health care system. While recent health care reforms have been described as driven by ideology rather than evidence, in the Australian context there is little evidence on which to base policy. Researchers need to be more proactive in their consideration and evaluation of alternative health care policies. Through quality research on the private sector, academics can better guide policy makers at the national and institutional level.     

Recruitment of Physicians To Rural America: A View Through the Lens of Transaction Cost Theory

CONTEXT: Many rural hospitals in the United States continue to have difficulties recruiting physicians. While several studies have examined some of the factors affecting the nature of this problem, we know far less about the role of economic incentives between rural providers and physicians. PURPOSE: This conceptual article describes an economic theory of organization called Transaction Cost Theory (TCT) and applies it to rural hospital-physician relationships to highlight how transaction costs affect the type of contractual arrangement used by rural hospitals when recruiting physicians. METHODS: The literature is reviewed to introduce TCT, describe current trends in hospital contracting with physicians, and develop a TCT contracting model for analysis of rural hospital-physician recruitment. FINDINGS: The TCT model predicts that hospitals tend to favor contractual arrangements in which physicians are full-time employees if investments in physical or other assets made by hospitals cannot be easily redeployed for other services in the health care system. Transaction costs related to motivation and coordination of physician services are the key factors in understanding the unique contractual difficulties faced by rural providers. CONCLUSIONS: The TCT model can be used by rural hospital administrators to assess economic incentives for physician recruitment.     

Hard gains through soft contracts: productive engagement of private providers in tuberculosis control

Over the past decade, there has been a rapid increase in the number of initiatives involving "for-profit" private health care providers in national tuberculosis (TB) control efforts. We reviewed 15 such initiatives with respect to contractual arrangements, quality of care and success achieved in TB control. In seven initiatives, the National TB Programme (NTP) interacted directly with for-profit providers; while in the remaining eight, the NTP collaborated with for-profit providers through intermediary not-for-profit nongovernmental organizations. All but one of the initiatives used relational "drugs-for-performance contracts" to engage for-profit providers, i.e. drugs were provided free of charge by the NTP emphasizing that providers dispense them free of charge to patients and follow national guidelines for diagnosis and treatment. We found that 90% (range 61-96%) of new smear-positive pulmonary TB cases were successfully treated across all initiatives and TB case detection rates increased between 10% and 36%. We conclude that for-profit providers can be effectively involved in TB control through informal, but well defined drugs-for-performance contracts. The contracting party should be able to reach a common understanding concerning goals and role division with for-profit providers and monitor them for content and quality. Relational drugs-for-performance contracts minimize the need for handling the legal and financial aspects of classical contracting. We opine that further analysis is required to assess if such "soft" contracts are sufficient to scale up private for-profit provider involvement in TB control and other priority health interventions.     

Contracts in the real world: case studies from Southern Africa

The desirability of using the private sector to deliver public services is widely debated internationally. Understanding the nature of contracts that initiate and govern such public-private partnerships, and the extent to which they can define the performance of private providers, is key in addressing the questions that underlie this debate. Such understanding has to be gained through better knowledge of all the influences upon contractual relationships. Environmental and institutional factors have been highlighted as one set of influences in need of more attention. This paper presents case studies of three contracts for primary care services in Southern Africa. It reports aspects of the institutional and environmental context in which they operate, and reflects on the nature of publicly financed primary care as a service to be contracted out. An urban-based private sector contract for a sub-set of primary care services was found to operate very differently from rural-based public sector contracts, which attempted to provide broader coverage. The latter contracts were more loosely defined and operated in a more relational manner. Important environmental influences on incomplete contractual relationships explored here are the nature of the market, scope of services, management capacity and involvement of a public purchaser. The paper illustrates some of the practical challenges for low- and middle-income countries in pursuing a policy of contracting with private providers for public primary care services, and particularly highlights the difficulties of deciding how to divide up responsibility between the public and private sectors and yet maintain a comprehensive service delivery system.     

A transaction costs analysis of changing contractual relations in the English NHS

The English National Health Service has replaced locally negotiated block contracting arrangements with a system of national prices to pay for hospital activity. This paper applies a transaction costs approach to quantify and analyse the nature of how contracting costs have changed as a consequence. Data collection was based on semi-structured interviews with key stakeholders from hospitals and Primary Care Trusts, which purchase hospital services. Replacing block contracting with activity based funding has led to lower costs of price negotiation, but these are outweighed by higher costs associated with volume control, of data collection, contract monitoring, and contract enforcement. There was consensus that the new contractual arrangements were preferable, but the benefits will have to be demonstrated formally in future.     

A conceptual framework for evaluating joint venture opportunities between hospitals and physicians.

This paper reviews the changes in the competitive and regulatory environment and examines the impact of those changes on the relationships between hospitals and physicians. Transaction cost economics (TCE) provides a conceptual framework for examining the emergence of closer linkages between hospitals and physicians than the traditional independent hospital and medical staff organisations. TCE predicts that as investments in support of transactions become more specialised, closer linkages are more efficient. To illustrate, two case studies of successful hospital-physician joint ventures are presented. The first case study describes a joint venture between hospitals and physicians to purchase durable medical equipment. The second case describes the breakdown of an informal arrangement and the subsequent formation of a joint venture to organise a clinical programme. The discussion reports the rationale for choosing these structural arrangements and their key features, pointing out how TCE would account for the decision to establish a joint venture. The conclusion discusses the implications of this argument for the strategic decisions of health care managers.     

Contracting-out health care services: a conceptual framework.

Contracting-out has become increasingly prominent in the health-care sector. It has been used in activities ranging from 'internal market' arrangements in which providers compete for funding from government payers to purchases of medical and non-medical inputs by service providers. While contracting-out arrangements for non-medical services have been widely adopted with apparent success, the contracting-out of medical services has met with criticism. Specifically, prominent 'market failures' have been identified which allegedly make contracting-out inefficient and even potentially disruptive to health care delivery. This paper presents and discusses a systematic framework for policymakers to identify and assess potential problems in contracting-out health care services, as well as some generic approaches to mitigating these potential problems. A key to the framework is the notion that conditions contributing to potential market failure problems can often be mitigated by policymakers, and that the strategic choices of policymakers in the 'first stage' of the contracting process should include an analysis of how the contracting-out environment can be changed to mitigate potential market failure problems.     

Contracting but not without caution: experience with outsourcing of health services in countries of the Eastern Mediterranean Region

The public sector in developing countries is increasingly contracting with the non-state sector to improve access, efficiency and quality of health services. We conducted a multicountry study to assess the range of health services contracted out, the process of contracting and its influencing factors in ten countries of the Eastern Mediterranean Region: Afghanistan, Bahrain, Egypt, Islamic Republic of Iran, Jordan, Lebanon, Morocco, Pakistan, the Syrian Arab Republic and Tunisia. Our results showed that Afghanistan, Egypt, Islamic Republic of Iran and Pakistan had experience with outsourcing of primary care services; Jordan, Lebanon and Tunisia extensively contracted out hospital and ambulatory care services; while Bahrain, Morocco and the Syrian Arab Republic outsourced mainly non-clinical services. The interest of the non-state sector in contracting was to secure a regular source of revenue and gain enhanced recognition and credibility. While most countries promoted contracting with the private sector, the legal and bureaucratic support in countries varied with the duration of experience with contracting. The inherent risks evident in the contracting process were reliance on donor funds, limited number of providers in rural areas, parties with vested interests gaining control over the contracting process, as well as poor monitoring and evaluation mechanisms. Contracting provides the opportunity to have greater control over private providers in countries with poor regulatory capacity, and if used judiciously can improve health system performance.     

To contract or not to contract? Issues for low and middle income countries

Many low and middle income countries have inherited publicly funded and provided health services, often operating at relatively low levels of technical efficiency. Changing ideas about the management of the public sector, in particular stemming from new public management theory, are spreading to these countries, whether directly or via the recommendations of multilateral and bilateral aid agencies. Pronouncements of agencies such as the World Bank imply that competitive contracting with the private sector is likely to improve the efficiency of services provision. However, very little evidence is available on whether this is likely to be the case, and in what circumstances delivery of services through contracts with the private sector is likely to be preferable to direct provision by the public sector. This paper draws on evidence from five country case-studies of contractual arrangements, in Bombay, Papua New Guinea, South Africa, Thailand and Zimbabwe, done through collaborative research between the LSHTM Health Economics and Financing Programme and local researchers in each country. A common evaluative framework was applied in each country to selected, existing contractual arrangements. Services provided under contract and evaluated included catering, cleaning, security, diagnostic services and whole hospitals. Information is presented on the design of contracts, the process of agreeing contracts including the extent of competition, and the monitoring of contract performance. A variety of evidence, including information on the relative cost and quality of contracted out versus directly provided services in the case of South Africa, Thailand, and Bombay, is used to explore whether or not contracting out to the private sector represented a preferable means of service provision. This analysis, together with information on the capacity of the agency letting the contract, and on the wider environment including the level of development of the private sector, is used to identify which aspects of the contracting process and the context in which it takes place are important in influencing whether or not contracting with the private sector is a desirable means of service provision.     

Management without frontiers: health system convergence leads to health care management convergence

Health care managers and policymakers throughout the industrialized world are faced with a variety of new challenges at the same time that traditional constraints on action are becoming ever more restrictive. These pressures have stimulated a variety of health care reforms involving four different strategies for change: cost-containment efforts, quality and administrative efficiency improvements, cost-shifting efforts, and the adoption of market-related concepts from the private sector. These changes are leading to convergence among health systems, as seen by the reforms underway in the Netherlands, Germany, and the English component of the United Kingdom's National Health Service. This in turn will create convergence in the problems and issues faced by health care managers. Issues such as hospital contracting, managed mental health care, primary care gatekeeping, and four others are explored to illustrate how American managers can learn from the experiences of colleagues in other industrialized nations. A final section identifies common themes for health care executives in this period of global convergence.     

Rural hospitals: organizational alignments for managed care contracting

In order to facilitate the process of determining how best to respond to the recent growth of rural managed care, this study discusses various organizational alignments for managed care contracting. The organizational alignments are divided into three categories: remain independent, enter into a contractual arrangement, or develop an informal agreement. For each category, the article explains the option, examines advantages and disadvantages, and presents empirical evidence about the observed effects. The purpose is to present a comprehensive menu of possibilities so that rural hospitals, given their own needs and objectives, may evaluate the options. Although situations differ for individual hospitals, certain general conclusions emerge. First, contracting with managed care organizations as an independent entity is likely to be most attractive to rural hospitals that have a strong patient base. Second, rural hospitals will be more likely to enter into contractual arrangements for managed care contracting when financial pressures dominate the potential loss of autonomy and control. Finally, developing an informal agreement with other healthcare providers for purposes of managed care contracting is likely to be desirable as an intermediate step, or way of experimenting with collective action before entering into a contractual arrangement.     

Contracting private hospitals: Experiences from Southeast and East Asia

In resource-scarce settings governments have increasingly looked at ways of engaging the private sector in achieving national health system goals. This study is a comparative analysis of institutional contracting for hospital services in three southeast and east Asian countries, namely Thailand, the Philippines and South Korea. In addition, the case of Singapore, where public hospitals are corporatized, is reviewed. Primary data were collected through in-depth-interviews and analysed under a triangulation approach. Institutional contracting is only used in three out of four countries. In these three countries, institutional contracting inter alia aims at increasing access to hospital services, although the scale of private hospital participation depends on contextual factors. Neither strategic provider selection mechanisms nor a preferred provider system is part of the institutional contracting models reviewed. In Thailand and the Philippines, performance-based rewards or sanctions have played a limited role so far and there is relatively little dialogue between contract parties, indicating that the contracting tool has not been used to the fullest extent possible and suggesting that capacity development especially regarding contract and relationship management is needed. Although there is virtually no information available about the cost of contracting, the findings of this study suggest that the potential of institutional contracting arrangements should be explored further to improve health system outcomes and thereby support countries in their quest for universal health coverage.     

民营医疗机构发展策略研究：以上海市为例（1）

通过定性和定量分析,收集了上海市93所民营医院资料,从资源配置、效率等角度明确了上海民院医院发展现况,总结了国内外民营医院发展经验,分析了上海民营医院发展的问题。研究发现上海民营医院规模较小,服务质量较低,费用较高。而这可能与较低的市场准入、不完善的监管措施、税收及医保定点政策等有关,并据此提出了相关政策建议。     

Public insurance substituting for private insurance: new evidence regarding public hospitals, uncompensated care funds, and Medicaid

This paper examines the impact of public health insurance programs, whether structured as subsidies to health care providers (public hospitals and uncompensated care reimbursement funds) or as direct insurance (Medicaid), on the purchase of private health insurance. The presence of a public hospital is associated with a lower likelihood of private insurance for those with incomes between 100-200% and 200-400% of the poverty level. Uncompensated care reimbursement funds were associated with less purchase of private health insurance and a higher likelihood of being uninsured across all income groups. More generous Medicaid programs showed both safety-net and crowd out effects.     

Community benefits in a changing health care market

Market changes in the health industry--mergers, acquisitions, and other transactions--are eliminating many of the traditional sources of care for people who have no insurance or poor coverage. There are fewer public or private nonprofit hospitals with a charitable mission. Moreover, through Medicaid contracting, a portion of the funds that once supported broad public health goals now go to private HMOs that serve only their own members. Advocates are responding with the demand that health providers--nonprofit and for-profit, hospitals and health plans--collaborate with the residents of communities where they do business to improve people's health.     

Measuring and valuing productivity loss due to poor health: A critical review

The use of contracts is vital to market transactions. The introduction of market reforms in health care in the U.K. and other developed countries twenty years ago meant greater use of contracts. In the U.K., health care contracting was widely researched in the 1990s. Yet, despite the changing policy context, the subject has attracted less interest in recent years. This paper seeks to fill a gap by reporting findings from a study of contracting in the English National Health Service (NHS) after the introduction of the national standard contract in 2007. By using economic and socio-legal theories and two case studies we examine the way in which the new contract was implemented in practice and the extent to which implementation conformed to policy intentions and to our theoretical predictions. Data were collected using non-participant observation of 36 contracting meetings, 24 semi-structured interviews, and analysis of documents. We found that despite efforts to introduce a more detailed ('complete') contract, in practice, purchasers and providers often reverted to a more relational style of contracting. Frequently reliance on the NHS hierarchy proved to be indispensable; in particular, formal dispute resolution was avoided and financial risk was re-allocated in compromises that sometimes ignored contractual provisions. Serious data deficiencies and shortages of skilled personnel still caused major difficulties. We conclude that contracting for health care continues to raise serious problems, which may be exacerbated by the impending transfer of responsibility to groups of general practitioners (GPs) who generally lack experience and expertise in large-scale, secondary care contracting.     

Introducing coordinated care (2): evaluation of design features and implementation processes implications for a preferred health system reform model

The study investigated why the goals of the Australian Coordinated Care trials for clients with complex care needs were not achieved. Significantly higher health service use and costs were incurred in the absence of clear evidence of improved client health outcomes. The validity of assumptions underpinning trial design and the success of implementation at each step in application of the model were examined. There were failures in both design and implementation. Many clients did not require care coordination. The funds pooling arrangements contributed to limited possibilities for service substitution and training of GP care coordinators was inadequate. Trial design did not focus on either clinical guidelines or consumer empowerment. Furthermore, the expectations of the overall national trial were unrealistic both in trial design and expected outcomes given the rigidities and realities of the Australian health care system. Broader system reform in the form of funds pooling and health services planning at the regional level, based on large populations, may be a more effective means to address problems of care coordination and an inflexible supply system.     

Factors affecting the choice of health care utilisation between private and public services among the elderly population in India

India is experiencing rapid population ageing in recent years. One of the most concomitant issues is the choice of health care services among the elderly, leading to its impact on the magnitude of health expenditure. Applying Andersen's Health Behavioural Model, this study identifies the predictors of the choice of inpatient health care services among the Indian elderly between private and public services. It also examines the nature of interregional disparity in the choice of health care services. Using NSSO data, the results suggest that the elderly belonging to upper caste and having higher levels of education, higher incomes, larger family size, and needing surgery are likely to choose private health care, while those experiencing higher economic dependence, chronic diseases, and higher duration of hospitalisation tend to prefer public inpatient services. The magnitude and significance of these factors, however, vary across regions. The findings of the study provide an understanding of the preferences of the India's geriatric population over hospital services, which may help policymakers better understand their health care needs.     

Health care in the Spanish social security system: public-private relationships

The Spanish socialist regime is faced with the decision of whether to operate its own health facilities or to pay private entrepreneurs for this function. This paper analyzes four policy areas of the Spanish social security system: contracting arrangements, primary care, pharmaceuticals, and methods of financing. The implications of the public-private question in Spain for the United States are discussed.