Joseph Kutzin, Coordinator Health Financing Policy, WHO Global Health Histories seminar 13 June 2012, Geneva Capturing the potential of “pay-for-performance” within national health financing arrangements
Joseph Kutzin, CoordinatorHealth Financing Policy, WHO
Global Health Histories seminar
13 June 2012, Geneva
Capturing the potential of “pay-for-performance” within national health
financing arrangements
Incentives matter, but can do harm as well as good: handle with care
Incentives matter, but can do harm as well as good: handle with care
15.4% 15.9% 16.4% 17.0% 17.2% 17.8% 18.3% 18.9% 19.8% 20.0% 20.0% 20.1%
17.0% 17.3% 16.2% 16.8% 18.4% 20.2% 20.3% 21.6% 20.6% 20.1% 19.3% 19.7%
28.8%
36.3%
30.5%
24.3%
35.9%
42.3%37.7%
41.4%45.6%
40.1%
48.4% 48.1%
9.8%
14.3%
6.0%9.3%
14.0%12.2% 12.7%
18.5%16.4% 16.4%
20.4%
15.1%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2004Qtr1
2004Qtr2
2004Qtr3
2004Qtr4
2005Qtr1
2005Qtr2
2005Qtr3
2005Qtr4
2006Qtr1
2006Qtr2
2006Qtr3
2006Qtr4
UC SSS CSMBS ROP
Source: Electronic claim database of inpatients from National Health Security Office, 2004-2006 (N=13,232,393 hospital admissions)
Source of slide: Dr. Phusit Prakongsai, IHPP, Thailand
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Financial incentives Global Health Histories13 June 20123 |
COUNTRIES AROUND THE WORLD ARE TRYING TO “PAY FOR RESULTS”
COUNTRIES AROUND THE WORLD ARE TRYING TO “PAY FOR RESULTS”
Measures in OECD P4P programs Australia “Practice Incentives Program (PIP)”
13 incentive areas in 3 domains--quality of care, capacity, rural support
Brazil “Programa de Incentivo para a Melhoria do Desempenho na Saude da Familia (PIMESF)”
6 indicators of health service coverage addressing specific health gaps in the municipality
France “Contracts to Improve Individual Practice (CAPI)”
16 indicators in 3 domains—prevention, chronic disease management, cost-effective prescribing
New Zealand “PHO Performance Programme”
10 indicators in 4 domains-- service coverage, quality, efficiency, capacity to improve performance
U.K. “Quality and Outcomes Framework (QOF)”
129 indicators in 4 domains—clinical care, organizational, patient experience, additional services
U.S. “Premier Hospital Quality Improvement Demonstration (HQID)”
34 indicators for 5 acute clinical conditions: acute myocardial infarction, coronary artery bypass graft, heart failure, community-acquired pneumonia, and hip/knee replacement.
Chi, Borowitz, et al. “Sustainability in health systems: Is P4P the answer?” OECD Presentation, May 11, 2011
And in low-middle income countriesAnd in low-middle income countries Spreading rapidly under labels of “RBF” and “PBF”
Supported from the “Health Results Innovation Trust Fund” managed by World Bank and funded by Norway and the UK, with particular focus on MDGs 4 and 5. Many others now engaged
– Focus on supply-side incentives and demand-side barriers– Link to targeted “free care” initiatives
Has diffused rapidly– Initially in Benin, DR Congo, Eritrea, Ghana, Rwanda, Zambia– Later in Afghanistan, Argentina, Burundi, Cambodia, Kyrgyzstan,
Nigeria, Sierral Leone, and many more– See (http://www.rbfhealth.org/rbfhealth/) – CoP PBF: https://groups.google.com/forum/?fromgroups#!myforums
Financial incentives Global Health Histories13 June 20126 |
SOME WHO REFLECTIONS ON THESE DEVELOPMENTSSOME WHO REFLECTIONS ON THESE DEVELOPMENTS
Financial incentives Global Health Histories13 June 20127 |
Many ideas are being peddled in countries around the world. How to ensure that choices will actually solve problems rather than simply
being "faith-based policy"?
Many ideas are being peddled in countries around the world. How to ensure that choices will actually solve problems rather than simply
being "faith-based policy"?
Financial incentives Global Health Histories13 June 20128 |
Overall, these “incentive” initiatives are a positive development with good potentialOverall, these “incentive” initiatives are a positive development with good potential Recognizes system obstacles that must be addressed to
get priority services to those who need them
Can also help change the culture where (especially public sector) service provision is rigid and unresponsive
If done right, has great potential to build capacity for national health (and health financing) policy, and purchasing in particular
If done wrong, can be a purely donor-driven initiative that raises expectations, under-delivers, and leaves little behind after the project ends
Financial incentives Global Health Histories13 June 20129 |
A part of health financing policyA part of health financing policy
Getting “more health for the money” a WHR main message– More efficiency, more equity, from existing resources
Health financing policy consists of 4 functions/policies– Collection (sources of funds and collection modalities)– Pooling (accumulation of prepaid funds on behalf of population)– Purchasing (allocation of resources to providers/interventions)– Benefits/rationing (entitlements and obligations of the population)
Financial incentives are in the domain of purchasing
Financial incentives Global Health Histories13 June 201210 |
Just paying the provider’s bill can result inpoor quality and inefficiency
Just paying the provider’s bill can result inpoor quality and inefficiency
Tonsillectomy rate in different counties of Hungary (age group of 0-14)
0.91.4
1.72.1 2.3 2.4 2.4 2.5
2.8 2.8 2.9 2.9 2.9 3.03.4 3.4
3.8 3.9 3.9 4.1
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Source: MOH/ESKI, Hungary
Source of slide: Tamás Evetovits, WHO/EURO
Financial incentives Global Health Histories13 June 201211 |
Financial incentives are the focus of the purchasing function
Financial incentives are the focus of the purchasing function
Generic definition: allocation of resources to providers– All systems do it, consciously or not– The way this is done generates incentives, which in turn
influence provider behavior
In financing policy, we aim for “active” or “strategic” purchasing:
– Linking the allocation of resources to information on provider performance or population health needs
– Seek to promote efficiency, use of desired services, and quality
Financial incentives Global Health Histories13 June 201212 |
RBF/PBF/P4P are examples of strategic purchasing
RBF/PBF/P4P are examples of strategic purchasing
They link payment to information– Often, fee-for-service targeted to specific aims like immunizing a
child or delivering a baby in a health facility– Can be very sophisticated or quite simple (e.g. certifying that the
providers meet minimum standards, or a shift from historical budgeting to simple capitation)
– Can be used for both public and private sector providers (but may require changes in some administrative rules in the public sector)
Financial incentives Global Health Histories13 June 201213 |
Strategic purchasing and the Universal Coverage agenda
Strategic purchasing and the Universal Coverage agenda
Efficiency (more health for the money) as one of the key pathways to Universal Coverage identified in WHR2010
Using purchasing more effectively is a demonstrated mechanism to enhance provider efficiency
RBF/PBF/etc. is one pathway to developing more strategic purchasing (and strategic purchasing builds capacity!!)
– People have to analyze and use information on what is actually happening with health services, and use it for decision-making
– Changes the culture of the system, shakes up bureaucratic inertia
The alternative (passive budgeting or unmanaged fee-for-service) does not promote efficiency
Financial incentives Global Health Histories13 June 201214 |
Managing expectations: most results-basedfinancing does not really finance results
Managing expectations: most results-basedfinancing does not really finance results It is rare that anyone is paying for “results” or for
“performance”– We economists are great at measuring quantity, and have
developed methods to pay for it.– Not so great at quality
So frequently, "RBF" means paying for reporting, or paying for processes that are believed to be associated with good quality
Financial incentives Global Health Histories13 June 201215 |
Financial incentives are more effective for some things (routine, mechanical) than
others (cognitive)
Financial incentives are more effective for some things (routine, mechanical) than
others (cognitive)
www.youtube.com/watch?v=u6XAPnuFjJc
But the “mechanical” processes may still be important (e.g. Australia diabetes P4P)But the “mechanical” processes may still be important (e.g. Australia diabetes P4P)
Existence of a diabetes register and patient recall/reminder system• One‐off signing award that depends on the size of the practice
At least 20% of diabetes diagnosed patients complete a cycle of care • For practices with at least 2% of their patients diagnosed with diabetes mellitus
• GP gets a AUS$20 reward per patient
Absolute number of diabetes treatment cycles completed
• Every completed treatment cycle is awarded AUS$40
More generally, that's okayMore generally, that's okay If the problem is lack of activity, especially for interventions for
which there is not a lot of quality variation (e.g. immunizations, directly observing a TB patient taking their medicines), paying for it can still give you better performance
If low utilization/productivity is the problem, paying for outputs can help
– Some good experiences linking RBF to “free care” (e.g. Burundi)
And payment incentives can drive efficiency gain, which is also important
An instrument to bring systems and “programs” together– Effective use of these mechanisms requires technical/clinical input– Don’t let economists like me decide what the “good processes” are!!
Need to monitor reporting sufficiently– Verification of data essential, but can be costly and difficult
Financial incentives Global Health Histories13 June 201218 |
But care and humility are warrantedBut care and humility are warranted
Targeted payment incentives work best for mechanical, repetitive tasks
Effects of payment incentives are less clear for more complex tasks requiring greater cognitive assessment by the provider
Requires a tailored approach
And recognize as well that the ability of financial incentives to "drive quality improvement" may be quite limited (our dose of humility); so need a comprehensive approach to quality improvement
Financial incentives Global Health Histories13 June 201219 |
Don't overdo itDon't overdo it
We don't want a totally (or even predominantly) fee-for-service system (i.e. lessons from China)
Marginal vs average: may well be that a small payment incentive is all that's needed to get response we want
Careful not to overwhelm management capacity– How many special incentive programs can the purchaser
manage (one of the concerns of the English QOF)?– That is a risk of “project-izing” the RBF rather than treating it as
part of a wider system intervention
Reward in OECD P4P programsAustralia PIP Average payment to a practice in
2009-2010 A$57,800 (4 -7% of total practice income)
Brazil PIMESF 20% of individual salary
France CAPI The payment to a physician is EUR 3,100 per year (2% of average total earnings)
NZ PHO Performance Programme
Less than 1% of government PHC expenditure
U.K. QOF The average payment to a GP practice was £74,300 in 2004-05 (30% of average total earnings) and £126,000 in 2005-06.
U.S. HQID 2% of Medicare payment for only 5 clinical conditions but often > $100,000 per hospital
Chi, Borowitz, et al. “Sustainability in health systems: Is P4P the answer?” OECD Presentation, May 11, 2011
Link to main payment mechanismLink to main payment mechanism
Need to ensure that main payment mechanism is aligned with objectives
Need to ensure sufficient facility autonomy for providers to respond
Sequencing is important for P4P to make an impact
“… simply attaching targets, indicators and bonuses to underlying
payment systems that do not create the right
incentives seems to be expensive and
ineffective.”
Cheryl Cashin
Financial incentives Global Health Histories13 June 201222 |
Message: use these initiatives to build thesystem, not just to “prove they work”
Message: use these initiatives to build thesystem, not just to “prove they work” RBF should not be run like a "scheme" or "project", but as
a step in the process of moving systems towards more strategic purchasing
– Long-term capacity building for the purchaser (and investing in understanding by the providers) is much more important than trying to "prove" whether or not it works (because we know that passive budgeting or unmonitored fee-for-service does not work)
A bad RBF project…A bad RBF project…
…is run by donors (or institutionalizes the idea that the money for these incentives will be managed separately)
…overdoes the financial incentives in a way that can't be sustained by the government
…is only interested in "proving it works" in the short run, rather than always acting with the intent to move from scheme to system
…overwhelms domestic capacity with too many new things to monitor
…does not address the institutional platform that will, in the future, be required to attract and retain the people with the necessary skills to be good purchasers
Financial incentives Global Health Histories13 June 201224 |
Using performance-based payment for system-building: the case of Burundi
Using performance-based payment for system-building: the case of Burundi
2006: President declares abolition of user fees for pregnant women and under-5's
– Initial large increase in utilization, as desired– But absence of fee revenues led to rapid depletion of inputs,
complaints from health workers about increased workload, and then informal payments
– Problems led to development of a solution…a more comprehensive approach to reform
Financial incentives Global Health Histories13 June 201225 |
Making the promise real in BurundiMaking the promise real in Burundi
Linking (“performance-based”) payment to benefits– Initial pilots not linked to free care initiative, but then came
together– Payment linked to facility-level indicators on services for under-
five's and pregnant women– Linking benefits to payment kept the benefits of fee revenue for
providers (flexible and rapid use) while eliminating access barriers
– This comprehensive approach only went national in mid-2010 too early to know the full impact
– It reflects a move towards real strengthening of the national health financing system: central MOH-linked agency managing and analyzing the data, asking questions, making the payments
Financial incentives Global Health Histories13 June 201226 |
Lessons illustrated by this experienceLessons illustrated by this experience Declaring a package without first having (or concurrently
introducing) a mechanism to pay for it results in an unfunded mandate
– Undermines transparency and confidence in the system– Sequencing matters: need a payment mechanism before you
can successfully realize and sustain entitlements
Making an explicit link between benefits and purchasing reflects “systems thinking”, and moves beyond the simple accounting logic often applied to “packages”
– Also links to public sector financial management issues, if these new mechanisms are to become part of the wider system
Financial incentives Global Health Histories13 June 201227 |
SUMMARY MESSAGESSUMMARY MESSAGES
Financial incentives Global Health Histories13 June 201228 |
Our perspective on all of this: it has great potential, but manage expectations
Our perspective on all of this: it has great potential, but manage expectations
"RBF" can be entry point to strengthening the purchasing function of health financing systems
– As such, it is part of our Universal Coverage agenda– Perhaps most important is that it has the potential to build real
capacity for evidence-informed decision making
It’s not a “magic bullet” – must be part of an overall approach to system reform
– just “free care” or just “results-based payment” unlikely to work– it takes coordination among the pieces to make things work– don’t let fascination with the latest fad take too much attention
away from the “heavy lifting” that real reform requires– And more generally, we don’t believe in magic
Financial incentives Global Health Histories13 June 201229 |
Towards Universal Coverage requires moving from scheme to system
Towards Universal Coverage requires moving from scheme to system
Whatever exists in the country today is the starting point– a foundation on which to build (and from where to move)
Principles to guide progress– Explicit complementarity of different funding sources– Focus on reducing fragmentation and expanding pool size (more
prepayment, not more prepayment schemes)– Recognize that real progress will require an explicit role (and for most
of your countries, increased levels) for general revenues– Create unified information platform across all schemes to lay
foundation for universal financing system– More money and larger pools not enough: need to move towards
strategic purchasing to address inefficiencies and make progress on defined, measurable objectives by linking payment to core benefits