Regulating private hospitals
Professor EK Yeoh
Harding-Preker Framework
Issues and Goals
Assessment
Focus
Private
Sector
Strategy
•Gather available information
•In-depth studies
Activities
• Hospitals
• PHC
• Diagnostic labs
• Producers / Distributors
(equity)
•Efficiency
•Quality of Care
Ownership
• For-profit corporate
• For-profit small business
• Non-profit charitable
Public
Sector
Harness
Convert
PHSA
•Identify additional needs
•Distribution
Grow
Formal/ Informal
Source: Adapted from Harding & Preker, Private Participation in Health Services, 2003.
Instruments
Policy Tools
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Regulation
Contracting
Training/Info
Social marketing
Social franchising
Info. to patients
Demand-side
(incl. Vouchers)
PPP transactions
Enable environment
improvement
Harding-Preker Framework
Issues and Goals
Assessment
Focus
Private
Sector
Strategy
•Gather available information
•In-depth studies
Activities
• Hospitals
• PHC
• Diagnostic labs
• Producers / Distributors
(equity)
•Efficiency
•Quality of Care
Ownership
• For-profit corporate
• For-profit small business
• Non-profit charitable
Public
Sector
Harness
Convert
PHSA
•Identify additional needs
•Distribution
Grow
Formal/ Informal
Source: Adapted from Harding & Preker, Private Participation in Health Services, 2003.
Instruments
Policy Tools
•
•
•
•
•
•
•
•
•
•
Regulation
Contracting
Training/Info
Social marketing
Social franchising
Info. to patients
Demand-side
(incl. Vouchers)
PPP transactions
Enable environment
improvement
Outline for Presentation
• Define regulations
• Regulatory strategies and instruments
• Regulating quality
– Compliance-based
– Incentive-based
– Self-regulation
• Regulatory regime and effectiveness
• Key Messages
• Further Reading and References
Regulation
Three basic categories
• Regulation as setting forth mandatory rules
that are enforced by a state agency
• Regulation incorporates all efforts by state
agencies to steer the economy… include state
ownership and contracting, taxation and
disclosure requirements
• Regulation to include all mechanisms of both
intentional and unintentional social control
Saltman and Busse (2002)
Baldwin et al (1998)
Regulation
• Regulation is the range of factors exterior to
the practice or administration of medical care
that influences behaviour in delivering health
care
Brennan and Berwick (1996)
Dimensions [Purposes]
of health sector regulation
Policy Objectives
• Normative and value driven
• Broad public interest
• Specific policy goals [ends and objectives]
Managerial
mechanisms
• Specific regulatory mechanisms to attain policy
objectives
• Technical in nature, emphasis on efficient and
effective management of human and financial
resources
Saltman and Busse (2002)
Social and economic policy objectives
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Equity and justice
Social cohesion
Economic efficiency
Health and safety
Informed and educated citizens
Individual choice
Harding and Preker (2003)
Saltman and Busse (2002)
Health sector management mechanisms
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Regulating quality and effectiveness
Regulating patient access
Regulating provider behaviour
Regulating payers
Regulating pharmaceuticals
Regulating physicians
Harding and Preker (2003)
Saltman and Busse (2002)
Regulatory strategy
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Command and control
Self regulation
Incentive-based regimes
Market harnessing controls
Disclosure
Direct action
Rights and liabilities laws
Public compensation and social insurance
Saltman and Busse (2002)
Actors
• Government
• Professional/ provider organizations
• Patients’/ Consumers’ organizations
Regulatory actors
• self-regulators tend to be strong on specialist knowledge but
weak on accountability to the public;
• local authorities strong on local democratic accountability,
weak on coordination;
• parliament strong on democratic authority, weak on sustained
scrutiny;
• courts and tribunals strong on fairness, weak on planning;
• central departments strong on coordination with the
government, weak on neutrality;
• agencies strong on expertise and combining functions, weak
on neutrality;
• directors general strong on specialization and identification of
responsibility, weak on spreading discretionary powers.
Saltman and Busse (2002)
Baldwin and Cave (1999)
Targets
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Quality
Capacity
Price
Market structure and levels of services
Entitlements
Saltman and Busse (2002)
Regulatory instruments
• Control-based regulation
– Licensing
– Registration
• Incentive-based regulation
– Contracts
– Accreditation
• Market-structure regulation
– Encourage desired behaviour
Harding and Preker (2003)
Control-based regulatory
instrument
Area
Method of
regulation
Application
Target
Healthcare
facilities
Facility licensing
Operation of new facility
Minimum facility structure
Certificate of need
programs
New facility construction
or facility expansion
Community need for service
Resource allocation
Health maps (carte
sanitaire)
Health planning and
distribution of health
facilities
Efficient distribution of
health facilities
Health system
agencies
New facility construction
or facility expansion
Rationalization of capital
investment
Antitrust regulation
Relationship between
providers
Price and quality of services
Facility accreditation
Facility structure and
performance
Quality of services
Harding and Preker (2003)
Control-based regulatory
instrument
Area
Method of regulation
Application
Target
Healthcare
personnel
Licensing
Minimum qualifications
Quality of services
Primary and specialty
certification
Specialized competence
Quality of services
Recertification
Maintained competence
Quality of services
Practice guidelines
and outcomes research
Clinical practice
Quality of services
Professional standards
review organizations
Utilization review
Quality of services
Cost of care
Peer review
organizations
Utilization review
Quality of services
Cost of care
Fines, penalties and
sanctions
Provider compliance with
regulation
Varied
Harding and Preker (2003)
Incentive-based regulatory
instrument
Financial Incentives
Capital markets
• Provide government loans at low interest.
• Provide government guarantees for borrowing on private markets.
• Improve access to low-cost credit and simplified loan application processes.
• Provide access to foreign currency.
Taxes and tariffs
• Introduce tax waivers, exemptions, and deductibles.
• Provide favorable tariffs and duty-free imports of medical equipment and supplies.
Other subsidies
• Give direct government subsidies targeted to public health objectives.
• Provide government grants targeted to public health objectives.
Provider payment
• Ensure appropriate provider payment mechanisms.
• Assure reasonable profit margins (if prices are controlled by the government).
• Pay government obligations to providers in a timely manner.
• Protect overdrafts in response to government payment delays.
• Give bonuses to serve in underserved areas.
Harding and Preker (2003)
Incentive-based regulatory
instrument
Nonfinancial Incentives
Regulatory environment
• Improve ease of entry to the market.
• Improve regulatory processes and reduce bureaucratic controls.
• Disseminate information on regulations and laws.
• Confer legal authority to transform public providers into public corporations.
Market and business environment
• Purchase selectively.
• Provide referral systems with the public sector.
• Grant access to use government facilities and equipment.
• Provide consumer and market information.
• Support development of an adequately skilled work force.
Human resource development
• Offer training and professional development opportunities in needed specialties.
• Improve career path for specialties that are in short supply.
Public-private sector relations
• Assure clarity and predictability of provider-performance expectations.
• Promote public and private sector provider dialogue.
• Formal partnership where appropriate (such as engage private providers in public health programs).
Harding and Preker (2003)
Regulatory instruments by regulatory
strategy and target of regulation
Target of regulation/
regulatory strategy
Controls
Incentives
Indirect regulatory instruments (aimed at the input-provider interface)
Capital funding
• Regulation of capital markets
• Mechanisms for allocating public funds (such as
contracting, prospective/ retrospective reimbursement)
• Government low-interest loans
• Government guarantees for borrowing
on private markets
Manpower
• Control of medical school admissions
• Pay scales for public managerial personnel
• Accreditation of educational institutions
Facilities, equipment, and
supplies
• Import restrictions
• Global budgets
• Testing requirements and quality controls on production
of equipment and supplies
• Health system agencies
• Duty-free imports of medical equipment
and supplies
Technology/ knowledge
• National health technology agencies/advisory panels
• Research funding
Direct regulatory instruments (aimed at the provider-consumer interface)
Price of services
• Rate setting and price controls
• Government subsidies
Health system capacity
(quantity and distribution
of services)
• Certificate of need programs
• Health maps
• Bonuses to serve in undeserved areas
Quality of services
• Registration/licensing requirements
• Practice guidelines
• Medical technology/equipment safety acts
• Voluntary facility accreditation
• Personnel credentialing
Combinations of the
above targets
• Fines , penalties, and sanctions
• Antitrust law (to control prices and quality of services).
• Professional standards review organizations and peer
review organizations (to control cost and quality of services)
Harding and Preker (2003)
• Tax laws (to influence volume and price
of private provision
• Provider-payment
schemes (can
influence
Harding
and Preker
(2003)
volume and quality of services)
Self-regulation
• A state-generated mandate that allows certain
professionals or enterprises to set standards for
the behaviour of its membership
– Private self-regulation without state enforcement
e.g. some professional organisations or voluntary
organisations
– Publicly mandated self-regulation e.g. professional
self-regulation by physicians, dentists and
pharmacists, etc.
– Joint self-regulation with non-governmental actors
Saltman and Busse (2002)
Baldwin and Cave (1999)
Self-regulation
Advantages
Disadvantages
High commitment to ownership of rules
Self-serving
Well-informed rule making
Impetus toward monopolistic behaviour
Low costs to government
Command and control problems cannot
always be avoided
Close fit of regulatory standards with those Exclusion of public from rule-making
seen as reasonable by actors
procedures
Potential for rapid adjustment
Enforcement bias toward industry
Enforcement and complaints procedures
potentially more effective
Public distrust of enforcers
Potential for combining with external
oversight
Problematic legal oversight
Public preference for governmental
responsibility
Harding and Preker (2003)
Baldwin and Cave (1999)
Regulatory body in Hong Kong
• The Medical Council of Hong Kong
• Hong Kong Academy of Medicine
• Hong Kong Hospital Authority
The Medical Council of Hong Kong
Empowered by the Medical Registration Ordinance,
Cap. 161, Laws of Hong Kong, the Medical Council
maintains a register of eligible medical practitioners,
administers the Licensing Examination, issues
guidelines and a Professional Code and Conduct,
exercises regulatory and disciplinary powers for the
profession, and answers general enquiries from
doctors and the public.
http://www.mchk.org.hk
The Medical Council of Hong Kong
• Standards of practice
– Licensing
– Entry to the professions
– Re-certification not required
– Continuing medical education not required
– Clinical audit and quality assurance not required
• Accreditation of specialties
• Code of practices and ethics
The Medical Council of Hong Kong
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24 medical members, 4 lay members
Preliminary Investigation Committee
Licentiate Committee
Education and Accreditation Committee
Ethics Committee
Health Committee
Hong Kong Academy of Medicine
(HKAM)
In recognition of the need for essential postgraduate
medical education and training in Hong Kong, the
Hong Kong Academy of Medicine was formally
established under the Hong Kong Academy of
Medicine Ordinance (Cap 419) with the statutory
power to organise, monitor, assess and accredit all
medical specialist training and to oversee the
provision of continuing medical education.
http://www.hkam.org.hk
Role of HKAM
• To maintain the standard of specialist training
and specialist continuing medical education
(CME) and continuous professional
development (CPD) in the territory
• To assists the Medical Council of Hong Kong,
the Registration body, in the maintenance of
the Specialist Register (SR) since its inception
in 1997 (Medical Registration Ordinance)
Specialist training
• Standard 6-year format for basic and higher
specialist training leading to Fellowship
• Examinations and assessment
• Require continuing medical education and
continuous professional development to
maintain specialist status
Hong Kong Hospital Authority
• Public hospitals were corporatized in 1991
under the holding of a single statutory
nonprofit public corporation, the Hospital
Authority, independent of the government
bureaucracy and established with the
mandate to manage all public hospitals.
http://www.ha.org.hk
Hong Kong Hospital Authority
Under the Hospital Authority Ordinance, the Hospital
Authority is responsible for:
– Advising the Government on the needs of the public for
hospital services and of the resources required to meet those
needs;
– Managing and developing the public hospital system;
– Recommending to the Secretary for Food and Health
appropriate policies on fees for the use of hospital services
by the public;
– Establishing public hospitals;
– Managing and controlling public hospitals; and
– Promoting, assisting and taking part in education and training
of persons involved in hospital or related services.
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Management structure
Functions:
• Clinical effectiveness and
technology management
• Patient safety and risk
management
• Patient relations and
engagement
• Quality and Standards
• Infection, emergency and
contingency
• Chief Infection Control
Office
• Infectious Disease Control
Training Centre
Quality assurance/ clinical audit
• Monitoring, audit and inspection
• Implement pilot hospital accreditation
program, which includes defining the quality
of hospital services in line with international
standards and review by an international
accrediting agent
• Key performance indicators
• Satisfaction survey
Regulating quality
• Structure
– Facility licensing
– Healthcare personnel licensing
• Process
– Facility accreditation
– Clinical practice guideline
• Outcome
– Performance reporting
– Clinical audit
Complementary/ synthetic role of
regulatory instrument
• Licensing/ professional standards
– Compliance/ control based
– Self-regulatory
• Specialist practice
– Self-regulatory
– Non-financial incentive-based
A framework for comprehensive regulatory
assessment
Overall
country
profile
Existing or
potential
capacity for
regulation
Political economy
• Political ideology
• Culture, values, and norms
• Interrelationship or power balance between stakeholders
• Per capita income level
Demographic and
health indicators
• Demographic data
• Literacy rates
• Health status
Overall health
sector structure
• Provider mix and extent and forms of private provision
• Breadth of insurance coverage: public, private
• Health care utilization indicators
Current regulatory
system
• Status of current health care regulation
• Effectiveness of current regulation in encouraging private participation and ensuring
desirable performance
• Information systems, ease of data collection, and ability to process data efficiently
Government
capacity
• Organizational structure
• Level of government
• Technical capacity to perform regulatory functions (set standards, monitor, evaluate
and enforce)
• Availability of trained personnel
• Funding (public and private)
Harding and Preker (2003)
Regulatory decision-making
Is the issue correctly defined?
Is government action justified?
Is regulation the best form of government action?
Is there a legal basis for regulation?
What is the appropriate level of government for this action?
Do the benefits of regulation justify the costs?
Is the distribution of effects across society transparent?
Is the regulation clear, consistent, comprehensible and accessible?
Have all interested parties had the opportunity to present their views?
How will compliance be achieved?
OECD (2002)
Regulatory activity
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Legislation
Implementation
Monitoring
Evaluation
Enforcement
Judicial supervision
Saltman and Busse (2002)
Regulating legitimacy
• Acceptability
– Political
– Social
– Regulated
• Process
– Communication
– Transparency
• Independent creditability of regulatory body
• Legal foundation
Regulatory cycle
Decide to
regulate
Evaluate
system
performance
Secure legal
authority
Regulation
Impose
penalties for
violators
Peter Berman
Write rules
Monitor
compliance
Key Messages
• Regulations is an inherently complex and political
process.
• Regulation is a strategic, dynamic and on-going
process.
• Control/Compliance based regulations needs to
be complemented with other instruments (e.g.
(purchasing, self-regulations) to be effective.
• Legitimacy and wide awareness of quality
regulations are critical for effectiveness.
Reading and References
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Busse R, Hafez-Afifi N and Harding A (2000).
“Chapter 4: Regulation of Health Services.” Private
Participation in Health Services Handbook.
Washington, DC: The World Bank
Saltman R, Busse R and Mossialos Elias (2002).
European Observatory on Health Care Systems
Series: Regulating entrepreneurial behaviour in
European health care systems. Open University
Press. World Health Organization
http://www.ps4h.org/hospital_documents
http://www.ps4h.org/Bali_documents