Accounting for 36% of public spending on health care in Canada, hospitals are a major target for cost reductions through various efficiency initiatives. Some provinces are considering payment reform as a vehicle to achieve this goal. With few exceptions, Canadian provinces have generally relied on global and line-item budgets to contain hospital costs. There is growing interest amongst policy-makers for using activity based funding (ABF) as means of creating financial incentives for hospitals to increase the 'volume' of care, reduce cost, discourage unnecessary activity, and encourage competition. British Columbia (B.C.) is the first province in Canada to implement ABF for partial reimbursement of acute hospitalization. To date, there have been no formal examinations of the effects of ABF policies in Canada. This study proposal addresses two research questions designed to determine whether ABF policies affect health system costs, access and hospital quality. The first question examines the impact of the hospital funding policy change on internal hospital activity based on expenditures and quality. The second question examines the impact of the change on non-hospital care, including readmission rates, amount of home care provided, and physician expenditures.
A longitudinal study design will be used, incorporating comprehensive population-based datasets of all B.C. residents; hospital, continuing care and physician services datasets will also be used. Data will be linked across sources using anonymized linking variables. Analytic datasets will be created for the period between 2005/2006 and 2012/2013.
With Canadian hospitals unaccustomed to detailed scrutiny of what services are provided, to whom, and with what results, the move toward ABF is significant. This proposed study will provide evidence on the impacts of ABF, including changes in the type, volume, cost, and quality of services provided. Policy- and decision-makers in B.C. and elsewhere in Canada will be able to use this evidence as a basis for policy adaptations and modifications. The significance of this proposed study derives from the fact that the change in hospital funding policy has the potential to affect health system costs, residents' access to care and care quality.
Cites: Soc Sci Med. 1982;16(10):1033-86955965
Cites: Med Care. 1980 Feb;18(2 Suppl):iii, 1-537188781
Cites: Health Care Manag Sci. 2006 Aug;9(3):211-317016926
Cites: CMAJ. 2008 May 20;178(11):1407-818490628
Cites: Health Policy. 2008 Jul;87(1):82-9118276032
Cites: Med Care. 2009 Feb;47(2):226-3319169124
Cites: Int J Qual Health Care. 2009 Apr;21(2):119-2919155288
Cites: N Engl J Med. 2009 Apr 2;360(14):1418-2819339721
Canadians spent almost dollars 15 billion, over dollars 460 per capita, on prescription drugs in 2002, yet there is little published evidence regarding the nature and causes of these expenditures.
: The objective of this study was to describe the nature and determinants of prescription drug expenditures in Canada during a recent period of rapid expenditure inflation, 1998 to 2002.
: Trends in overall expenditures and investment in specific therapeutic categories are decomposed using nonstochastic index-theoretical methods.
Changes in per capita expenditures on oral solid prescription drugs are attributed to the cost-impact of changes in the 6 determinants that fall into 3 broad categories: volume effects, price effects, and therapeutic choices.
A majority of spending was concentrated among only 5 therapeutic classes. After adjusting for generic drug use, prices for unchanged drugs declined over the period of analysis. Increased utilization of prescription drugs explained over half of the overall increase in per capita spending. Changes in therapeutic choice also contributed to cost increases.
Findings suggest that the combined affect of federal price regulations, provincial price freezes, and generic substitution policies are controlling price-related determinants of drug spending in Canada. However, the cost-impact of increased drug utilization and changes in therapeutic choices illustrate the potential pitfalls of cost-management strategies that focus primarily on prices.
The need for change in the system of health care delivery in the United States has finally emerged as a political issue alongside continuing budget deficits, a growing national debt, declining educational outcomes, and decreased competitiveness of American business in the global economy. The two most pressing health care problems at the present time are rapidly increasing costs and lack of access to the system. A more distant but potentially more recalcitrant problem is the ageing of our population. This paper outlines and discusses some of the options for reform which are currently under consideration in the United States.
Many health policy reformers and researchers in the United States have focused on the Canadian health care system and its lessons for design of a national health care program in the U.S. Yet minimal attention has been given to Canadian mental health policy in this discussion. The author reviews the historical development of mental health services in Canada and discusses five current sources of tension in Canada's mental health care system, many of which are familiar to the American setting: restriction on fee-for-service payments, a two-tiered pattern of care involving provincial mental hospitals and general hospital psychiatric units, shortages of mental health care resources, limited funding of community-based programs, and lack of coordination of care. The author concludes that universal insurance coverage patterned after the Canadian model would ameliorate only some problems faced by mentally ill persons in the United States. Mental health benefits must be structured to ensure the availability and organization of a full spectrum of long-term health care and supportive services.
Reference price systems for prescription drugs constitute widely adopted cost containment tools. Under these regimes, patients co-pay a fraction of the difference between a drug's pharmacy retail price and a reference price that is set by the government. Reference prices are either externally (based on drug prices in other countries) or internally (based on domestic drug prices) determined. We study the effects of a change from external to internal reference pricing in Denmark in 2005. We find that the reform led to substantial reductions in retail prices, reference prices and patient co-payments as well as to sizable decreases in overall producer revenues and health care expenditures. The reform induced consumers to substitute away from branded drugs for which we estimate strong preferences. The increase in consumer welfare due to the reform therefore depends on whether or not we take perceived quality differences into account in its calculation.
This paper reports the use of vocational rehabilitation among applicants for disability benefits in Norway before and after the eligibility criteria were tightened in 1991. The data sources were documents of 668 applicants from 1990 and 1993 in two countries. Vocational rehabilitation is the preferred benefit in the National Insurance Act, and was a core issue in the restriction reform. Nevertheless, rehabilitation was tried by only 14% of the applicants in 1990, and by no more than 19% in 1993. Eight per cent of the applicants were referred to an employment officer before determination in 1990, and 14% in 1993. In order to study different pathways from work to applying for disability benefits, six types of 'social security careers' were constructed. The commonest comprised sick pay only, the second led through unemployment, and the third included rehabilitation. Rehabilitation may also be offered to applicants who are refused disability benefits. This was the alternative determination for 4% of the refused cases in 1990, a proportion that increased to 12% after the reform. The main reason for the relatively infrequent use of rehabilitation is probably the continuous downgrading over many years of resources and institutions for this task.
As a result of public outrage over lower prescription drug prices in Canada, Congress passed legislation that would allow these drugs to be imported into the US. The lower Canadian prices reflect price regulation. Opponents of allowing these imports have argued that the US will import Canadian price controls and that profits of pharmaceutical companies will be hurt. In this paper, a model is developed in which a good sold in the foreign country is subject to a negotiated price which is determined in a Nash bargaining game. When imports back into the home country are allowed, this negotiated price also becomes the domestic price. This causes the home firm to make fewer price concession in the Nash bargaining game. Home firm profits are found to rise under the reimport regime for both of the demand functions analyzed in this paper.