International Health Care Systems

You are currently browsing the archive for the International Health Care Systems category.

Measuring Variation in Labor Costs for the NHS

July 6, 2010 in International Health Care Systems, Labor Economics, Medicaid/Medicare | No comments

The cost of running a hospital in New York City is much higher than running a hospital in Bozeman, Montana.  To take into account these cost differences, the Centers for Medicare and Medicaid Services (CMS) has created a wage index to adjust the inpatient prospective payment system (IPPS) for differences in labor costs.

However, the U.S. isn’t the only country where public health agencies adjust payments based on labor costs.  For the past 30 years, England’s Staff Market Forces Factor (MFF) adjusts National Health Service (NHS) payments for medical care.  The MFF’s origin began in a1976 report from the Resource Allocation Working Party (RAWP).  Although the goal of the MFF is to control for geographic variation in input costs, labor costs make up 65% of these input costs.  Although drug and equipment costs also make up 26% of input costs, the prices of these goods are fairly constant across all English regions.  A paper by Elliot et al. (2010) investigates the construction of the labor portion of MFF in more detail.

The MFF is calculated based on standardized spatial wage differentials (SSWDs).  These SSWDs in essence calculates the difference in labor input costs for each region compared to the national average.  The paper divides the country into regions through three different mechanisms:  a region in one of three ways: 303 primary-care trusts (PCTs), 354 local authority districts (LADs) and 207 travel-to-work areas (TTWAs). LADs and PCTs are administrative areas while TTWAs are intended to constitute largely self-contained labor markets based on commuting patterns.  Using these three definitions, the authors calculate the SSWD from the Annual Survey of Hours and Earnings (ASHE) as:

  • ln(wij)=xijβprivate + vjprivate + εij
  • ln(wij)=xijβNHS + vjNHS + εij

The first equation is used to measure wage differentials for a variety of workers whereas the last only examines NHS nurses.  The variable xij contains information on age, age-squared, gender, year dummies, industry dummies and occupational dummies.  The fixed effect variable vj measures the difference in log wages from in region j from the national mean.  In the case of the NHS regression, year and occupational dummies are removed because nurses constitute working in a single industry.

To calculate the MFF for area j, the authors impose a log-to-level wage transformation for the variable vj and normalize this differential based on the national mean.

  • MFFj=100*exp[vjprivate]/exp[J-1 (Σj vjprivate)]

The authors also conduct estimate regional variation in labor costs for doctors.  Because the ASHE sample of NHS doctors is too small to estimate robust SSWDs, the authors instead obtain data on the annual financial returns of NHS trusts through the Department of Health.

How well are these adjustments working?  To answer this question, the authors examine how the differential between private and NHS pay affect the vacancy rate for NHS positions for doctors and nurses.  When private pay is higher than NHS pay, the authors find that the nurse vacancy rate increases.  This makes sense since when the private sector pays more, nurses will be more likely to take jobs outside the NHS.  On the other hand, when private sector pay for doctors is higher, the NHS vacancy rate for physicians is lower.  This seems counterintuitive that physicians would be attracted to lower paying NHS areas.  One explanation is that areas with relatively less generous NHS pay have higher private sector pay.  Thus, these physicians can take the NHS job, but also spend part of his time working for higher private-sector pay.  Using this information, the authors conclude that “The case for additional funding in high-cost low-amenity areas to employ doctors is not supported by this analysis. The MFF adjustment in the NHS funding formula should be amended to reflect this.”

Tags: , , , , ,

Health Care Reform in Germany

May 4, 2010 in International Health Care Systems | No comments

Health care in Germany achieves universal health care by mandating that individuals enroll in a sickness fund.  The German government requires lower and middle class individuals to enroll in the sickness funds, but richer individuals can opt out and choose to purchase their own private health insurance.  Approximated 9% of Germans have supplemental insurance; these private, supplemental insurance covers items not paid for in the sickness fund benefit package.  Most Germans like this system.

Yet the Economist reports that all is not  well in the German health care system.  Like Medicare in the U.S., the German sickness funds are funded by payroll taxes.  However, with an aging population and stagnant wage growth from the economic slowdown, paying for the increasing cost of medical care is becoming a burden.   Health care spending has not risen as quickly as in the U.S., party due to reforms such as the implementation of “disease management” programs to standardise care for ailments like diabetes, as well as lump-sum payments to hospitals that discourage over-treatment.

Philipp Rösler, the federal health minister, plans to institute a number of reforms to the health care system.  These include: 1) creating an agency to determine drug effectiveness relative to existing ones, and 2) “vouchers.”

Read the rest of this entry »

Tags:

Are WHO rankings entirely worthless?

April 27, 2010 in International Health Care Systems | 4 comments

According to the World Health Organization’s (WHO) 2000 report, the U.S. ranked 37th in the world in terms of the quality of its health care system.  The placed the U.S. health system behind Saudi Arabia, Costa Rica and Morocco.  Do we need to fire all U.S. doctors?  Should everyone stop reading this blog post and immediately go for a run or eat a tofu salad?

Maybe not.

In a letter to the New England Journal of Medicine, Dr. Philip Musgrove, the former editor of the WHO report recounts the unreliable data used to rank country health systems.   In the case of the United States, the only data available were for life expectancy and child survival, which together only account for about half of the the attainment measure.  Thus, the rest of the figures in the U.S. figures had to be imputed.  In fact, the values of for many variables for many countries had to be imputed.  With such an indictment for the editor of this report, putting much value in these rankings seems dubious.  According to Dr. Musgrove:

“The number 37 is meaningless, but it continues to be cited, for four reasons. First, people would like to trust the WHO and presume that the organization must know what it is talking about. Second, very few people are aware of the reason why in this case that trust is misplaced, partly because the explanation was published 3 years after the report containing the ranking. Third, numbers confer a spurious precision, appealing even to people who have no idea where the numbers came from. Finally, those persons responsible for the number continue to peddle it anyway…Analyzing the failings of health systems can be valuable; making up rankings among them is not. It is long past time for this zombie number to disappear from circulation.”

Tags:

U.S. vs. Canada: Health outcomes and heart disease

April 12, 2010 in International Health Care Systems | No comments

This blog has posted frequently on comparisons between the U.S. and Canadian healthcare systems (see here, here, here and here).  Although there are many points of contention, it is clear that the Canadian system is less expensive than the American.  According to the OECD, in 2006 Canada spent $3,678 per person on health care and the U.S. spent $6,714.  From this additional expense, do Americans receive better health outcomes?

A paper by Pozen and Cutler (2010) examines this question for individuals with heart disease.  Using data from the Joint Canada-U.S. Survey of Health between 2002 and 2003, the authors compare health outcomes between Americans and Canadians who are aged aged 45 and older and who have heart disease.  “Past analyses using these data have found that wealthier Americans and Canadians report similar overall health status, while poorer Americans report worse health status than poorer Canadians.”

The results of the study are as follows:

“Being Canadian was positively associated with fair or poor health, but negatively associated with disability and functional impairment. None of these coefficients, however, was statistically significant from zero at the 5 percent level (though the coefficient on disability was significant at the 10 percent level). Results that were significant in some cases were income, education, and risk factors such as hypertension and smoking status.”

One problem with this simple analysis is that Canadians may simply be more or less optimistic about their health state than Americans.  If could be the case that Canadians report poor health even though–based on objective measures—they may have the same quality health.  A difference in difference estimate would be useful where one could compare the health self-reports of clinically healthy Canadians and clinically healthy Americans and see if the health self-report difference is higher or lower for cohorts in each country with heart disease.

Tags: , ,

Did pay-for-performance work in the UK?

February 15, 2010 in International Health Care Systems, P4P, Quality | No comments

A paper by Sutton, Elder Guthrie and Watt (2010) describes the UK’s National Health Service’s (NHS) adoption of the Quality and Outcomes Framework (QOF) in April 2004. In general, P4P programs can have positive or negative spillovers.  An example of a positive spillover would be the adoption of EMR to comply with certain P4P initiatives, but which also improves productivity in other areas.  A negative spillover would occur if physicians focus on getting the P4P bonuses, but decrease effort in unmeasured areas which could be more important to the patient’s health.

The authors describe the QOF more fully as follows:

In the first 2 years of the QOF scheme, practices were rewarded according to the performance they reported on 146 indicators. Through their performance on these indicators, practices earned up to 1050 QOF points. Practices were rewarded for these points according to a complex, non-linear function of the prevalence of disease in, and size of, their registered populations…An average practice was paid £75 per point in the first year and £125 per point in the second year of the scheme.

Seventy-six of the indicators, and 57% of the financial rewards, were offered for the quality of clinical care. These 76 indicators were focused on the care of people with 10 targeted chronic diseases and involved the maintenance of disease registers, the verification of diagnoses, the recording and management of risk factors and the provision of selected treatments. Points were awarded based on reported coverage rates if they were above a lower threshold of 25%. Maximum points were awarded if the coverage rate equalled or exceeded an upper threshold, which varied across indicators.

The authors examine whether the QOF increased effort levels for physician treatment of five groups of patients who had diseases for which physicians could earn QOF bonuses.  The paper also examines changes in quality for “Untargeted” patients, who did not have any diseases for which physicians could earn additional income under QOF.  The analysis is based on a before and after structure.  It evaluates the change in both quality metrics that were reimbursed under QOF and the quality metrics which were not subject to QOF bonuses.  If there are negative spillovers, one would expect the rewarded metrics would increase after QOF, but the unrewarded quality would decrease as physicians shift their priorities.

The paper finds that the effect on incentivized factors was substantially larger on the targeted patient groups (+19.9 percentage points) than on the untargeted groups (+5.3 percentage points).  The authors claim that there was no obvious evidence of effort diversion but there was evidence of substantial positive spillovers (+10.9 percentage points) onto non-incentivized factors for the targeted groups.

One issue here is that paper only looks at observable quality metrics.  The physician may believe that observable quality that is not currently rewarded will be rewarded in the future.  Thus, these positive spillovers may extend over to quality factors observable by the NHS.  On the other hand, unobserved quality may have decreased, but this would not have shown up in the econometric analysis.

  • Sutton, Elder Guthrie and Watt (2010) “Record rewards: the effects of targeted quality incentives on the recording of risk factors by primary care providers,” Health Economics, v19(1):1-13.

Tags: , , , ,

How is the financial crisis affecting the UK’s National Health Service

December 22, 2009 in International Health Care Systems, Wait Times | No comments

In the 1990s, the UK’s National Health Service may have imitated most American’s idea of what is wrong with a single payer system.  However, when Tony Blair became Prime Minister in 1997 government spending on the NHS increased.  Over the past decade spending on the health service has risen by over 6% a year in real terms.  In addition, the NHS set ambitious performance targets and introduced reforms to foster more local independence.  In 2000, the government also declared a “war on waiting” and wait times in the subsequent decade did drop dramatically.  Other improvement include:

  • Hospitals have been able to purchase expensive new equipment like scanners. By 2007 the NHS had 8.2 MRI units per million people, below the average of 11 for the OECD, but above the figure in Canada.
  • The number of hospital consultants has gone increased 56% between 1998 and 2008.  The rise in nurse employment is 26% over this period.
  • Life expectancy continues to rise, with particularly rapid gains for men. Mortality rates from cardiovascular diseases, the leading cause of death in rich countries, have tumbled.
  • Extra cash, together with targets and performance management, have had a large impact on health care quality.

However, not all the reforms have had positive effects:

  • When Labor came to power, it abolished “the internal market in the health service introduced by the Conservatives in the 1990s, in which around half of GPs had become fund-holders with their own budgets for drugs and elective care, giving them an incentive to curb demand and a tool to bargain with powerful hospitals. With this lever gone, the government at first had to rely on instructions from the centre backed by performance ranking.”
  • “Since Mr Brown became prime minister in 2007…[t]he drive to ginger up the NHS by putting more hospital work out to the private sector has faltered.”
  • Even single payer systems can be disjointed. The Economist argues that electronic records need to be adopted so that GPs can better coordinate the care of their chronically ill patients when they enter into a hospital.
  • Productivity has declined 0.4% over the last decade.

With the government coffers more bare after the financial crisis, what does the UK plan to do with its National Health Service?  The Economist reports that–because of the financial crisis–the recent increases in NHS spending will likely stop, but the NHS will experience few cuts (unlike most other government services).

Tags: , , , ,

Taiwan’s National Health Insurance System

December 7, 2009 in International Health Care Systems | 1 comment

In a recent edition of Health Affairs, health economist Tsung-Mei Cheng interviews Taiwan’s Health Minister Ching-Chuan Yeh, M.D. They discuss Taiwan’s adoption of a national health insurance (NHI) system in 1995.  Below are some highlights from the interview.

  • Health spending as a share of GDP was 4.79% in 1993 (prior to NHI) and 6.1% in 2007 (after NHI).
  • Administrative costs are 1.5% of total NHI spending.
  • Taiwanese patients pay very low premiums and copayments.  Over 98% of Taiwanese pay their premiums on time.
  • The government sets a uniform national fee schedule.  “Doctors and hospitals must achieve very high productivity to survive.”
  • There is complete freedom of choice of providers.  Competition between providers is based on quality, not cost.
  • “Taiwan only has private supplemental indemnity health insurance; it covers specific diseases such as cancer or disasters like injuries from traffic accidents.  It is a cash benefit, and the money is used to help pay for copayments, hire special nurses and buy nutritional foods—not for genuine inpatient medical services which are covered by the NHI.”
  • Expenditures have outpaced revenues by 2% since 1998.  To make up the difference, copayments and coninsurance rates have increased and the government instituted a tobacco tax.  There has been only one premium increase (4.25% to 4.55% of wages in 2002).
  • The government pays 100% of premiums for the poorest 1% of households.  The near-poor (the next 2%) can receive interest free loans to pay for NHI.
  • Physician payment: Currently, there is a fee-for-service system under a system of global budgets.  Bundled payment (i.e., DRG-style payments) is available only for 53 surgical procedures.
  • Patients use an IC Card (Smart Card) to access care.  All providers submit claims electronically.  Currently, however, there is no integrated form of electronic medical records, although most hospitals/providers have their own systems.
  • Screening rates for breast cancer, oral cancer, and colon cancer are low.
  • State-specific 5-year cancer survival rates are similar to those in OECD countries.
  • Taiwan has 4.5 nurses/1000 population compared to 9.6 nurses/1000 in wealthy OECD countries.
  • Like Japan and South Korea, Taiwanese patients have many physician visits of short duration.  The average Taiwanese has 12.4 visits/year, although many of these visits can last less than 5 minutes.
  • Taiwan lags behind the U.S. in: the pace of adoption of technology (new drugs reach the market 2 years faster in the U.S. than in Taiwan), the quality of the medical education (a top tier Taiwanese medical school is of the same quality as an average American medical school), and R&D.

Source: Tsung-Mei Cheng (2009) “Lessons From Taiwan’s Universal National Health Insurance: A Conversation With Taiwan’s Health Minister Ching-Chuan Yeh” Health Affairs, 28(4): 1035-1044.

Tags:

Universal Laws of Health Care Systems

November 19, 2009 in Economics - General, International Health Care Systems, Public Policy | No comments

Economist Tsung-Mei Cheng has developed three Universal Laws of Health Care Systems.  These are:

  1. No matter how good the health care in a particular country, people will complain about it.
  2. No matter how much money is spent on health care, the doctors and hospitals will argue it is not enough.
  3. The last reform always failed.

Source: The Healing of America, p. 26-27.

Tags: ,

Scottish NHS pay £23 million in compensation, but U.S isn’t doing any better.

September 15, 2009 in International Health Care Systems, Malpractice | No comments

The Scotland Sun reports that the Scottish NHS paid £23 million ($40 million) to patients for subpar care. Is this due to the inherently substandard quality of care in a single-payer system?

The answer is likely no. This figure only amounts to about £4.50 ($7.34) for every person in Scotland however. Drug-related errors in the U.S. cost patients $3.5 billion per year or $11.50 per patient. Thus, it matters not whether a health care system is single payer or not; single-payer and private health care systems both have significant room for improvement.

Tags: , , ,

Paying for Le Treatment

August 29, 2009 in International Health Care Systems | No comments

When a N.Y. Times journalist’s husband felt chest pain during their stay in France, they  went to the emergency room.  Although it turned out to be pneumonia, the journalist generally lauds French health care system, despite some excessive bureaucracy.    

  • N.Y. Times: “For X-rays, an EKG, 10 hours in the emergency room, a doctor, a cardiologist, technicians, nurses, drugs and even the surly gatekeeper, we were required to pay $220.  I might put up with a lot of ugly bureaucrats for that.”

How can these services be so cheap?  Easy, it is funded by the French–and even American–taxpayers.

The French System is characterized by large premiums, paid for by taxpayers, a little out of pocket payments.  Whole Foods, on the other hand, supports expanding the amount of money patients pay out of their own pocket.  According to 20/20, Whole Foods advocates Health Savings Accounts for their employees.

Tags:

« Older entries