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Elements of Health System Financing Lecture 3 of 6

Elements of Health System Financing Lecture 3 of 6. Allocation of Resources in the Health System. Objectives of Third Lecture. Revisit the concept of ‘ Allocation ” Delineate different dimensions of allocation and identify options Describe the fundamental features of the different options

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Elements of Health System Financing Lecture 3 of 6

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  1. Elements of Health System FinancingLecture 3 of 6

  2. Allocation of Resources in theHealth System

  3. Objectives of Third Lecture • Revisit the concept of ‘Allocation” • Delineate different dimensions of allocation and identify options • Describe the fundamental features of the different options • Discuss how well each option serves different aims of the health system.

  4. Structure of Lecture • Review and introduction • Characteristics of different allocation options • Ranking of forms of allocation and recipient institutions by their potential impact on relevant health system aims • Summary.

  5. Part A: Review and Introduction

  6. Reminders • We are in the ‘public domain’: universal or categorical ‘public entitlement’ is secured through revenues raised using public finance principles • “Level” and “Sources” of finance are the subject of macro-economic policy, determined mostly outside the health system • “Allocation” (with “Payment to Providers”) is the subject of health policy, determined mostly within the health system • The ‘contributors’ to the system are not necessarily the ‘beneficiaries’ • Beneficiaries are by and large entitled only to services are in kind • The agency that raised funds for medical care needs to secure services for the beneficiaries

  7. The Basic Matrix: Health System Aims Vs. Financing Elements, Not Including “Level” and “Health”)

  8. The Options to Secure Service • Direct purchase from providers • Contracting and intermediary: • Region • OMCC – organization that manages the consumption of care • A combination of the two • These reflect the administration of the system, the nature of its decentralization, and its implicit or explicit priorities --- mirrors the health system

  9. The Concept of Allocation • Allocation –the mechanism or part thereof to secure the parameters or envelop of public entitlement • Related to the concepts of • ‘purchasing’ • ‘contracting’ • Is closer to ‘contracting’ in that the contracted entity is doing the purchasing…

  10. Contracting / Allocation Institutional Scheme – The Commonwealth / NHIS Model State Funding Budget Contracting –Administration -NHS Purchasing Providers

  11. Contracting / Allocation Institutional Scheme – The “Continental” /OMCC Model State Regulation Funding Pool Real or Virtual Contracting OMCC institutions: Sickness Funds, HMOs Purchasing Providers

  12. Dimensions of Allocation • Objectives or criteria of allocation • Forms of allocation • Recipient institutions • We focus on the first two

  13. Part B: Forms of Allocations

  14. Forms or Options of Allocation • Vouchers • Budgeting • Prospective capitation • Retrospective capitation.

  15. Forms of Allocation

  16. Criteria for Ranking Forms of Options • Equity: • Willingness of “contractor” to deal with specific needs • Macro-economic efficiency: • Ability of system to withstand ‘upward’ pressures to increase cost of care • Micro-economic efficiency • The incentive of the contractor to save on cost of service, given quality • Client satisfaction • The incentive of the contractor to look for clients and satisfy them by at least quality of service, if not care

  17. Potential Impact on Equity –(Ordinal Ranking)

  18. Potential Impact on Macro-Economic Efficiency or Cost Containment –(Ordinal Ranking)

  19. Potential Impact on Micro-Economic Efficiency–(Ordinal Ranking)

  20. Potential Impact on Client Satisfaction–(Ordinal Ranking)

  21. Potential Impact of Forum of Allocation – Summary(Ordinal Ranking)

  22. Part C: Recipient of Allocation

  23. Options for Recipient Institutions • Regional or local administrations (e.g., health regions or districts in the UK, or for that matter, states in federal systems); • OMCC institutions of different types (e.g., HMOs in the US, and sickness funds in the Netherlands and Israel) • ‘Budget holding’ general practitioners and clinics (as in GP budget holding in the UK) • Options are not mutually exclusive

  24. Potential Flows of Funds or Allocation Arrangements

  25. Potential Impact on Equity –(Ordinal Ranking)

  26. Potential Impact on Macro-economic Efficiency–(Ordinal Ranking)

  27. Potential Impact on Micro-economic or Production Efficiency –(Ordinal Ranking)

  28. Potential Impact on Client Satisfaction –(Ordinal Ranking)

  29. Potential Impact of Allocation by Recipient – Summary (Ordinal Ranking)

  30. What Next? Provider payment mechanisms

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