Global budgeting of hospitals in Hong Kong.

Policy-makers in industrialized countries face the dilemma of having to contain soaring hospital costs while resisting any reduction in the quality and quantity of hospital services. Among the many hospital financing systems, centralized control via global budgeting is advocated by some to be the most effective in containing hospital costs. Containing hospital costs, however, is but one aspect of the trade-off between cost containment and quality of care. The hospital financing system of Hong Kong provides some insights into the extent to which cost control can be achieved through global budgeting; and its impact on the accessibility of hospital care. The case of Hong Kong highlights three necessary conditions for effective cost control: (1) the payer must have a clear policy stance on overall public spending; (2) the payer must have a clear policy stance on the importance of hospital care relative to other goods and services; and (3) the payer must also have the will and ability to limit hospital spending within finalized global budgets. However, successful cost containment in Hong Kong affects the accessibility of hospital care. In a time of population growth and economic prosperity, new community needs seem to have preceded government plans and actions to build hospital facilities.     

Minding our Ps and Qs? Financial incentives for efficient hospital behaviour

In this paper, the empirical evidence addressing the particular issue of how hospitals may be reimbursed is reviewed. Most forthcoming is the indeterminate effect of prospective payment systems using diagnosis-related groups as a means of controlling costs. Such systems, by controlling only the price of hospital care, remain vulnerable to compensatory increase in patient throughput, cost-shifting and patient-shifting despite hospital cost per case being reduced. Health maintenance organisations have been shown to reduce hospital costs, but their effects on patients selection and patient outcome are unclear. Selective contracting in California (similar to the U.K. Government's proposed internal market) has also been shown to reduce costs by affecting both the price and quantity of hospital care. But these effects have occurred only in areas with high concentrations of hospitals. Global and clinical budgeting (which control price times quantity) seem to offer the most potential for cost reduction whilst maintaining patient outcome. By monitoring both cost and outcome within clinical budgets it should be possible to reduce wasteful variations in health care and so establish more efficient hospital practice.     

Developing and implementing a personnel budget report

Few issues are as vital to the health care industry as those surrounding the notion of cost containment and cost control. If hospital executives are to gain a handle by which to institute programs of cost containment, however, they must have access to pertinent and timely information on hospital operations. Because labor costs represent such a large percentage of total hospital costs, a personnel budgeting report can be a useful first step in gaining valuable management information.     

Kostendämpfungspolitik in den Niederlanden und in Deutschland: Eine Untersuchung von Maßnahmen in drei Leistungsbereichen

Cost containment is an important endpoint of successful health policy. The strategic objectives of cost control, especially the one to reduce statutory charges on labour are not uncontroversial. In terms of operational targets, the Netherlands primarily aim to contain health care expenditure according to the growth level of the gross domestic product, while Germany aims to contain expenditure according to the growth level of premium income of the statutory sickness funds. From the universe of cost containment measures, this paper investigates for both countries concurrent control measures in three health care sectors: budgeting of hospitals and specialized physicians, and fixed-price reimbursement for drugs. Concerning the global policy objectives, only comprehensive fixed budgets with a well defined balancing mechanism turned out to be effective in the short run. In the long run, fixed budgets may incur problems in the flexibility of the system to adapt to changes. In spite of the restricted effectiveness of the individual containment measures, health care expenditures have been, in international comparison and at the level of the national economy, controled quite successfully in both countries over the last twelve years which were investigated here. This relative, long term success of cost containment policy corresponds with the continuous will of the governements in both countries to work, in collaboration with all participants in the health field, towards explicit national expenditure goals. This process features analogies with the principles of quality management.     

Institutional responses to Medicare's prospective payment system

The introduction of Medicare's prospective payment system (PPS) meant an important change in the environment of US hospitals. The new payment system was expected to improve clinical and non-clinical efficiency in hospitals. A case study in a non-profit Pennsylvania hospital was performed to analyse the impact of PPS on hospital services. The hospital responded to PPS by a twofold strategy. First, attempts were made to achieve effective cost containment by improving the efficiency of intermediate and final outputs. Here special attention is paid to the activities of the DRG coordinator and the Utilization Review Committee and to the activities of nurses in their role as case manager. The second strategy was directed at revenue enhancement, initially mainly by shifting more costs to non-Medicare patients and later by trying to strengthen the position of the hospital in the local health care market. This second strategy was considered more important than the strategy of cost containment. With respect to organizational structure and policy-making, the following changes can be observed: a growing importance of strategic management; more integrated hospital-physician relationships; and the development of an adequate medical information system and a medical records department.     

Intramural health care budgeting.

In the last years endeavours have been made in several health systems to get a firm grip on the explosive cost development in hospitals which amounts to nearly half of all health care expenditures. The fee-for-service system for doctors coupled with the professional autonomy leads to expansion of quality and quantity of services provided. In many systems hospitals are financed on basis of output items as patient days, examinations and therapies. As hospital costs are in the short run preponderantly constant prices fixed at average costs are higher than marginal costs. This situation favours expansion of services as in that case marginal revenue exceeds marginal cost. Inversely the decrease of services provided generates losses for the hospital. In systems, where financing takes place in the way of budgets like the U.K., Denmark and Italy, the authorities have more influence on the cost development in the system. In systems where the hospitals are financed by social security on basis of output, arrangements are now made to bring budgetary elements in the financing of these institutions. In France the "Budget Global" will be applied to services financed by the Sécurité sociale. In Belgium arrangements have been made to contain the amount of patient days allowed for reimbursement and in the Netherlands in 1983 budget-financing has been introduced for all general and teaching hospitals. In 1984 this system also applies to all other intramural institutions. If a way has been found to focus the financing mechanism of these institutions on budgeted costs, the way is open for budgeting these institutions. A very important problem in this context is the budget formula, which will be used to determine the budgets. In this respect a distinction can be made between internal and external budgeting. Internal budgeting is understood here as a process whereby the hospital itself puts a limit to the use of resources or adapts its resources to budget constraints coming from the outside. External budgeting can be defined as the budgetary constraint given from the outside by third parties to the hospitals. Of course, both internal and external budgeting are narrowly interrelated. The distinction between these two ways of budgeting should be sought in the character of the budget formula. External budgeting should be based on global indications whilst internal budgeting should be more differentiated than the external budget formula.(ABSTRACT TRUNCATED AT 400 WORDS)     

Hospital staffing adjustments under global budgeting

The U.S. Department of Veterans Affairs operates a hospital system that distributes a national global budget to 159 hospital units. Over recent years, cost containment and downward budgetary pressures have affected hospital performance and the quality of care delivered in unknown ways. This article examines hospital staffing levels as potential performance measures. We first develop a regression model to estimate the number and types of clinical staff required to meet current inpatient workloads at VA medical centers. We are able to improve on previous analyses by employing better data on physicians and by evaluating the behavior of hospitals in consecutive years. Our findings provide managers of hospital systems with promising new approaches for comparing hospital production processes and more information on the effects of global budgeting on individual hospital staffing within systems.     

Changing relations between hospitals and primary health care: new challenges for hospital management

Hospitals in the Netherlands are now operating in a rapidly changing environment. Most changes directly result from government's policy to achieve effective cost containment in health care. Some of them basically affect the existence and functioning of hospitals. These changing environmental conditions inspire hospitals to undertake innovative activities to protect or even strengthen their position. This will be illustrated below by a case in which a small acute hospital attempted to establish a close relationship with primary health care in order to protect its position. Our focus will be upon this innovative initiative and upon some management problems that must then be resolved.     

DRGs: the road to hospital efficiency

In this paper, the effects of using diagnosis-related groups (DRGs) as the basis of a hospital funding mechanism and within a global budgeting mechanism are reviewed. Most forthcoming is the indeterminate effect of DRGs as a funding mechanism. By controlling only the price of hospital care, such systems remain vulnerable to compensatory increases in patient throughout, cost shifting and patient-shifting. Whether the use of DRGs has substantially reduced hospital cost per case is also not clear cut. Effects on patient outcome have not been adequately assessed. At this stage, use of DRGs within a system of global budgeting will simply focus attention on the current average costs of treating cases without consideration of whether such average costs represent efficient clinical practice. Efficient clinical practice is better established through use of less sophisticated techniques, such as clinical budgeting and cost-effectiveness analysis. The failure of more global budgeting in the past has been that patient outcome has not been monitored. Data on outcome are crucial to determining efficiency. Once efficient clinical practice is established through budgeting, DRGs could be calculated according to efficiency criteria rather than current average cost.     

Cost containment for the public health

The U.S. health care system has major problems with respect to patient access and cost control. Trimming excess hospital expenses and expanding public health activities are cost effective. By budgeting well, with global budgets set for the high cost sectors, the United States might emerge with lower tax hikes, a healthier population, better facilities, and enhanced access to service. Nations with global budgets have better health statistics, and lower costs, compared to the United States. With global budgets, these countries employ 75 to 85 percent fewer employees in administration and regulation, but patient satisfaction is almost double the rate in the United States. Implement a global budget for health care, or substantially raise taxes, is the basic choice faced in this country. Key words: global budget control cost containment.     

Incentives for cost-effective behavior: a Dutch experience.

In 1983 the Dutch government introduced a system of hospital budgeting in the Netherlands to contain the increase in health care costs. The budgets were fixed at the real costs in 1983 after an assessment of these costs. A distinction is made between external budgets, which is allocation of resources by external institutions, and internal budgets, which is the allocation within the organization. External budgets should be global; internal budgets should be specific. The influence of the budgeting process on the situation and attitude of physicians is analysed. The budgeting process influences the administration as more and better data are needed to involve heads of departments and physicians in the budgeting process. Specifications of the data in departments, specialisms, and patients seems necessary. The budget process also has its impact on the hospital organization, notably on the position of the physicians and the medical staff, for it tends to integrate them more completely into the organization. There may be a difference between 'the gate specialists' and the specialist heads of service departments. Budget responsibility will be given to all specialists. Finally, the budgeting process affects the quality of patient care. With limited resources, it is necessary to link quality with efficiency in allocating resources. It will probably be necessary to provide more coordination between hospital budgets and specialists' fees. In the future more capitation and salary elements will be brought into the fee system for physicians.     

Cost inefficiency under financial strain: a stochastic frontier analysis of hospitals in Washington State through the Great Recession

The importance of increasing cost efficiency for community hospitals in the United States has been underscored by the Great Recession and the ever-changing health care reimbursement environment. Previous studies have shown mixed evidence with regards to the relationship between linking hospitals’ reimbursement to quality of care and cost efficiency. Moreover, current evidence suggests that not only inherently financially disadvantaged hospitals (e.g., safety-net providers), but also more financially stable providers, experienced declines to their financial viability throughout the recession. However, little is known about how hospital cost efficiency fared throughout the Great Recession. This study contributes to the literature by using stochastic frontier analysis to analyze cost inefficiency of Washington State hospitals between 2005 and 2012, with controls for patient burden of illness, hospital process of care quality, and hospital outcome quality. The quality measures included in this study function as central measures for the determination of recently implemented pay-for-performance programs. The average estimated level of hospital cost inefficiency before the Great Recession (10.4 %) was lower than it was during the Great Recession (13.5 %) and in its aftermath (14.1 %). Further, the estimated coefficients for summary process of care quality indexes for three health conditions (acute myocardial infarction, pneumonia, and heart failure) suggest that higher quality scores are associated with increased cost inefficiency.     

Effects of budgeting on health care services in Dutch hospitals.

BACKGROUND. In 1983 hospital budgeting was introduced in the Netherlands. We studied the effect of the enactment of budgeting on the efficiency and effectiveness of health care. METHODS. In four different age groups, the admission rate, length of stay, type and number of surgical inpatient procedures, and hospital mortality were measured in all short-term hospitals from 1977 through 1988. Data were standardized by age and sex. RESULTS. For the total population, the hospital admission rate and the operation rate decreased after 1982. However, for the subgroup of patients beyond the age of 65 both rates are still on the rise, but the increase in the admission rate for elderly patients has slowed significantly since 1983. The tendency toward a shorter length of stay, together with the diminished admission rates, led to a 22% decrease in standardized hospital days between 1982 and 1988. The severity of the operations increased. Most operations performed on elderly patients were aimed at improving the quality of their lives rather than lengthening their life expectancy. The hospital mortality rate decreased in all age groups. CONCLUSIONS. The findings suggest that modern medicine in the Netherlands has become more efficient and more effective. Better health care for older patients was achieved within the same budget. The tendency toward more efficiency by hospitals has been reinforced since 1983.     

医疗保障制度改革对医院的影响

该文根据云南省曲靖市1997年实施医疗保障制度、改革医疗市场供求关系发生的变化、医院运营情况(包括医疗服务量、医疗效率、业务收入、医疗费用等)、医院经济效益等方面的具体情况,结合翔实的数据,就医改运行对医院的影响进行了比较分析。     

The effects of the global budget system on cost containment and the quality of care: experience in Taiwan.

This study is an attempt to determine whether the implementation of the Global Budget (GB) as a method of health reform has improved cost containment and quality of care in Taiwan. Panel-data analysis is used to investigate cost containment and quality of care in Taipei municipal hospitals before and after the introduction of the GB. The results suggest that there is a trade-off effect. The post-GB data indicate that cost containment comes at the expense of health-care quality. It may, therefore, be the case that policy-makers can more effectively balance cost containment and quality by refining the GB so that reimbursements would be linked to standards of quality. Another way to enhance the reforms would be a more effective monitoring and review system.     

Channel leadership in health care marketing: a natural role for hospitals

Health care has entered an era of rapid change. Most observers agree that important long-term changes will fundamentally reshape health care as we know it. To that end, health care providers should consider the benefits of operating vertically integrated marketing system with hospitals as the channel leader. Whether an administered VMS (hospitals have the power to gain compliance) or a corporate VMS (hospitals own successive levels of care providers), integrated channel management holds the promise of cost containment and quality patient care for the future. However, a great deal of integrating work must be done before VMSs will become a practical solution. Research studies are needed on each of the issues just discussed. As marketers, it is time we make a transition from treating health care marketing as a disjointed entity and instead treat it as an industry where all marketing principles are considered including channel management.     

Regional task force aligns health groups against rising costs

The hospitals, health care associations, HSA, and Blue Cross of Northwest Ohio have formed a task force through which they have conducted successful joint cost containment projects. Some of these projects include a voluntary "cap" on price increases, promotion of hospital cost containment committees, sharing of cost containment ideas for inhospital implementation, educating the public about its role in health care cost control, and communicating with political and business leaders about cost control.     

Hospital budgeting in the Netherlands: Effects upon hospital services

This article analyses the impact of the transition from outputreimbursement to prospective budgeting upon hospital services.In the period immediately after the adoption of budgeting importantchanges in hospital services can be observed, such as a dropin admissions and the occupancy rate and falling treatment Intensityratios (number of treatments per admission/outpatient visit).Hospital services prove sensitive to incentives built into thepayment system. The specific impact upon services depends uponthe design of the budgeting system. Changes in hospital healthservices can be seen as the result of cost containment strategiesof hospital management. Some instruments for cost containmentwere: a reduction of staff; a more selective use of beds; andmore stringent procedures for investments in medical technology.The common characteristic of these instruments is that theyall reduce the volume of resources for the treatment of patients.Hospital management lacks effective instruments for more directlyinfluencing the medical treatment process.     

The effect of selective contracting on hospital costs and revenues

OBJECTIVE: To examine the effects of selective contracting on California hospital costs and revenues over the 1983-1997 period. DATA SOURCES/STUDY SETTING: Annual disclosure data and discharge data sets for 421 California general acute care hospitals from 1980 to 1997. ANALYSIS: Using measures of competition developed from patient-level discharge data, and financial and utilization measures from the disclosure data, we estimated a fixed effect multivariate regression model of hospital costs and revenues. FINDINGS: We found that hospitals in more competitive areas had a substantially lower rate of increase in both costs and revenues over this extended period of time. For-profit hospitals lowered their costs and revenues after selective contracting was initiated relative to the cost and revenue levels of not-for-profit hospitals. The Medicare PPS has also led high-cost hospitals to lower their costs. CONCLUSIONS: The more competitive the hospital's market, the greater degree to which it has had to lower the rate of increase in costs. A similar pattern exists with regard to hospital revenues. Both of these trends appear to result from the growth of selective contracting. It remains unclear to what extent these cost reductions were the result of increased efficiency or of reduced quality. Since hospital cost growth is sensitive to the competitiveness of its market, antitrust enforcement is a critical element in any cost containment policy.     

Exploring health professionals' perspectives on factors affecting Iranian hospital efficiency and suggestions for improvement

While numerous studies have been undertaken in many developed countries and in a few developing countries, there has so far been no systematic attempt to identify factors affecting efficiency in the Iranian hospitals. This study was designed to elicit the perspectives of a group of health professionals and managers so as to analyse factors affecting the efficiency of hospitals owned by the Iranian Social Security Organization (SSO), which is the second largest institutional source of hospital care in that country. This study also aimed to identify actions that would improve efficiency. Using purposive sampling (to identify key informants), interviews with seventeen health professionals and hospital managers involved in the SSO health system were conducted. The respondents identified a number of organizational factors affecting efficiency, particularly the hospital budgeting and payment system used to fund physicians, and the lack of the managerial skills needed to manage complex facilities such as hospitals. The interviewees stressed the necessity for reforms of the regulatory framework to improve efficiency. A few participants recommended the concept of a funder‐provider split. The results of this exploratory study have provided meaningful insight into Iranian health professionals views of factors affecting efficiency, and of possible remedial actions. It is expected that the findings will provide guidance for health policy makers and hospital managers in the Iranian SSO to analyse factors affecting efficiency and to identify remedial actions to improve efficiency. Hospitals in other developing countries may be affected by similar factors. Copyright © 2010 John Wiley & Sons, Ltd.