Changing the Health Care System Models from Here and Abroad (1994) / Chapter Skim
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Additional Perspectives on Global Budgeting
Additional Perspectives on Global Budgeting
Pages 76-102
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From page 76... ...
I will briefly summarize four results of the study as they apply to the question of global budgets and then I will discuss their implications. First, the two countries that have both universal coverage and global budgets, Canada and Germany, have physicians who are more satisfied with their health care system than American physicians are with theirs.
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From page 77... ...
I draw two conclusions from these data. First, universal coverage and global budgets involve some trade-offs.
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From page 78... ...
In the institutional global budgeting area, however, cost increases were more in the neighborhood of 10 to 12 percent a year. Those institutional cost increases be they for acute care hospitals, nursing homes,
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From page 79... ...
By 1983, a study in the province of Ontario demonstrated that waiting times had increased to 5 weeks for routine elective surgical procedures. Fundamentally, in the Canadian system, one can get instant access for emergency procedures and almost instant access for urgent procedures and for primary care services.
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From page 80... ...
In Canada, during the 1970s, particularly in the institutional care setting, as new medical technologies arose, those technologies were only introduced into the system in selected institutions that were controlled from a global budget point of view. Take lithotripsy in the United States in the 1980s, for example.
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From page 81... ...
Would I argue that global budgeting is good and that it works? It certainly did work in Canada.
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From page 82... ...
What we learned from that experiment is very germane to the theme of health care reform. So, I will share with you four areas of interest: first, the infrastructure on which the global payment experiment was grafted; second, the experiment itself; third, some assessment of the strengths and weaknesses of the experiment; and finally, some thoughts on what would be required for a successful global payment system for the 1990s.
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From page 83... ...
An important caveat is that the success of a global health care budget is dependent upon a provider infrastructure that promotes access, quality, and affordability. The Hospital Experimental Payment Program In 1980, the seven Rochester hospitals and one outlying hospital accepted an individual and regional cap on hospital income derived from all contractors, principally Blue Cross, Medicare, and Medicaid.
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From page 84... ...
Increases in hospital costs were less than the state and national averages, and from 1978 to 1990, the hospital component of the community's health care costs shrank from 55 percent to 38 percent. Despite that, the financial position of the Rochester hospitals improved in contrast to the financial positions of the rest of the hospitals in New York State.
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From page 85... ...
As I look at it, the discussion about global budgeting needs a little truth in advertising. Public expenditures on health services are already set in ways that permit global budgets, as evidenced by the U.S.
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From page 86... ...
The bottom line is not to say that one therefore should not talk about global budgets; rather, for a global budget to succeed, we need to emphasize a delivery system that puts in place the structure, the information, and the shared financial interests. Those delivery system reforms are common to both global budgeting and managed care.
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From page 87... ...
We have been through that debate at least three times in my career, and it destroyed rather than built political consensus. Comprehensive reform, which emphasizes improving health status within defined resources, requires as much emphasis on cost containment and efficient insurance purchasing as it does on delivery reform.
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From page 88... ...
Second, when German physicians comment on the nursing staff of a hospital, unless they are salaried employees of the hospital, they would not really know what goes on inside, because they are not in it. They are not affiliated.
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From page 89... ...
On the other hand, I did not find institutions governed by global budgets in that system at any level going out of business. It was not tolerable.
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From page 90... ...
Second, what role do you envision for commercial insurance companies in the future, if in fact the benefit package is standardized and they are no longer competing on diversified products and they are no longer marketing directly to employers but competing for a share of the market or for the public dollars being managed through the HIPC? REINHARDT: The problem with managed competition in general is that it is not terribly descriptive of what people have in mind.
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From page 91... ...
In a regulatory model that guarantees access and coverage, the regulator acquires a responsibility to ensure that the delivery capability is there. I do not think that varies whether one is talking managed competition, fee-for-service, or allpayer state rates.
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From page 92... ...
But you could pass a law, which I would recommend, that everyone must use the relative value scale implicit in the DRG and the relative value scale that was developed for physicians. They may accept their own conversion factor, but they must announce it.
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From page 93... ...
The only way to do that is to reverse the payment system and make sure that hospitals and their medical staffs become partners in risk-reward relationships that put a premium on the discriminating use of resources. To do this, we must talk about global budgeting at the national level.
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From page 94... ...
Half of the 15 percent, 7.5 percent of Americans, are enrolled in something that is similar to Kaiser. Now assume that President-elect Clinton has managed competition and global budgets 8 hours after his inauguration.
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From page 95... ...
STOUGHTON: I would add only one thing. As global budgets are introduced, whatever entity they are introduced around, those entitieslet us pick on hospitals for a minute are going to respond in the context of the system in which they operate.
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From page 96... ...
Second, I was surprised, given all that the American Hospital Association has said about community-care networks, if I understood you correctly, that you said that the delivery system is not organized in such a way that hospitals could respond to global budgets or to managed competition because there is a diversity of incentives among physicians. Certainly, that is true, but the suggestion, if indeed this is what you were getting at, that because we cannot respond, these changes will not make sense seems to be putting it backwards.
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From page 97... ...
Until some of those things get specified, it is very hard to determine whether global budgets help delivery reform or hurt it. Our biggest worry is that we will not face those questions but hide them.
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From page 98... ...
The problem of eliminating discussion of the global cap was that President Clinton originally thought he could take the money saved by the global cap and use it to cover the 34 million uninsured.
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From page 99... ...
Somehow, we are going to have to put together a series of strategies that make long-term nursing homes only one alternative to the difficulty of dealing with aged parents. GAINER: I would suggest that, as one thinks of the development of community health networks and integrated delivery systems, one should consider the biggest problem we have with long-term care, that is, overmedicalization.
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From page 100... ...
At some level, certainly in a version of the Garamendi plan of managed competition, that is the inherent structure of the system. So, if it is true that global budgeting and managed competition are ways of displacing blame, does anybody seriously believe that someone has a system in which they are able to control costs by taking responsibility for the consequences at the detail level?
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From page 101... ...
The question is whether that someone is private or public. QUESTION: Certainly one of the promises made to providers in Canada for going along with global budgets was clinical autonomy.
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From page 102... ...
102 PERSPECTIVES ON GLOBAL BUDGETING SHINE: I want to acknowledge and thank Richard and Hinda Rosenthal, and Marion Ein Lewin, who helped organize this program. I especially want to thank John Iglehart, the moderator, Dr.
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