Financing

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Health System Structure and
Function
Dr. Shahram Yazdani
Shahid Beheshti University of Medical Sciences
School of Medical Education
Strategic Policy Sessions: 22
Health Related Activities
Health Sector
Health System
Healthcare System
PHC
Dr. Shahram Yazdani
Relations between functions and objectives of a health system
Functions the system performs
Stewardship
(oversight)
Creating resources
(investment
And training)
Dr. Shahram Yazdani
Financing
(collecting, pooling
And purchasing)
Objectives of the system
Responsiveness
(to non-medical
expectations)
Delivering services
(provision)
Health
Fair (financial)
contribution
Goodness and Fairness:
Both Level and Distribution Matters
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Dr. Shahram Yazdani
A good health system, above all,
contributes to good health. But it is not
always satisfactory to protect or improve
the average health of the population, if at
the same time inequality worsens or
remains high because the gain accrues
disproportionately to those already
enjoying better health.
Goodness and Fairness:
Both Level and Distribution Matters
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1.
2.
Objective of good health is really twofold:
The best attainable average level:
goodness
The smallest feasible differences among
individuals and groups: fairness
Dr. Shahram Yazdani
Level and Distribution of
Responsiveness
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Dr. Shahram Yazdani
The distinction between the overall level and
how it is distributed in the population also
applies to responsiveness.
Goodness means the system responds well on
average to what people expect of it, with
respect to its non-health aspects.
Fairness means that it responds equally well to
everyone, without discrimination or differences
in how people are treated.
The distribution of responsiveness matters, just
as the distribution of health does.
Measuring Goal Achievement
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The overall level of health;
The distribution of health in the
population;
The overall level of responsiveness;
The distribution of responsiveness;
The distribution of financial contribution.
Dr. Shahram Yazdani
Relations between functions and objectives of a health system
Functions the system performs
Stewardship
(oversight)
Creating resources
(investment
And training)
Dr. Shahram Yazdani
Financing
(collecting, pooling
And purchasing)
Objectives of the system
Responsiveness
(to non-medical
expectations)
Delivering services
(provision)
Health
Fair (financial)
contribution
Relations between functions and objectives of a health system
Functions the system performs
Stewardship
(oversight)
Objectives of the system
Responsiveness
(to non-medical
expectations)
Oversight
Policy Setting; Information, Disclosure & Advocacy;
Creating resources
Developing Partnerships; Regulation & Standard Setting;
Delivering services
(investment Monitoring & Evaluation; Strategic Incentives
Health
And training)
Dr. Shahram Yazdani
Financing
(collecting, pooling
And purchasing)
(provision)
Fair (financial)
contribution
Relations between functions and objectives of a health system
Functions the system performs
Objectives of the system
Stewardship
(oversight)
Responsiveness
(to non-medical
expectations)
Financing
Revenue Generation and Collection
Creating resources
Pooling
Delivering services
(investment Allocation & Purchasing
And training)
Dr. Shahram Yazdani
Financing
(collecting, pooling
And purchasing)
(provision)
Fair (financial)
contribution
Health
Relations between functions and objectives of a health system
Functions the system performs
Stewardship
(oversight)
Creating resources
(investment
And training)
Dr. Shahram Yazdani
Financing
(collecting, pooling
And purchasing)
Objectives of the system
Responsiveness
(to non-medical
expectations)
Input Management
Delivering
services Knowledge;
Human Resources;
Pharmaceuticals;
(provision)
Technology;
Consumables Capital
Fair (financial)
contribution
Health
Relations between functions and objectives of a health system
Functions the system performs
Stewardship
(oversight)
Creating resources
(investment
And training)
Dr. Shahram Yazdani
Financing
(collecting, pooling
And purchasing)
Objectives of the system
Service Delivery
Responsiveness
Public Health Services
Ambulatory Care (to non-medical
Inpatient Care
expectations)
Delivering services
(provision)
Health
Fair (financial)
contribution
Performance on level of health (disability-adjusted life expectancy) relative to
health expenditure per capita, 191 Member States, 1999
Dr. Shahram Yazdani
The situation for I.R. Iran (2000)
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Dr. Shahram Yazdani
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The overall level of health: 96
The distribution of health in the population: 113
The overall level of responsiveness: 100
The distribution of responsiveness: 94
The distribution of financial contribution: 113
Overall goal attainment: 114
Health Expenditure Per Capita: 94
Performance on level of health: 58
Overall health system performance: 93
The Situation

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Low and middle income countries
account for only 18% of world income
and 11% of global health spending
($250 billion or 4% of GDP In those
countries).
Yet 84% of the world’s population live
in these countries and they bear 93%
of the world’s disease burden
Dr. Shahram Yazdani
How much cost for health is
rational?

If a car worth $10000 would cost
$15,000 to repair after an accident, an
insurer would only pay $10,000. The
impossibility of replacing the body, and
the consequent absence of a market
value for it, precluded any such ceiling
on health costs.
Dr. Shahram Yazdani
….Why Health Systems Matter

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There is an enormous gap between the
apparent potential of public spending to improve
health status and the actual performance
Many deaths of children under 5 years of age
could be averted for $10 or less, but the
average actual expenditure in poor countries
per death prevented as estimated from the
overall relation between spending and mortality
is $50,000 or more
Dr. Shahram Yazdani

In the USA between 1966 and 1979 the
introduction of safety features in automobile
design (laminated windshield, collapsible steering column,
interior padding, lap and shoulder belts, side marker lights,
head restraints, leak resistant fuel systems, stronger bumpers,
increased side door strength and better brakes) reduce the
Dr. Shahram Yazdani
vehicle accident fatality rate per mile traveled
by 40%. only three of these innovations added
more than $10 to the price of a car and in total
they accounted for only 2% of the average
price increase during 1975-1979. From 1975
to 1998, seat belts saved an estimated
112,000 lives in USA
Health Care Systems (Field, 1989)
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Type1: Emergent
Type2: Pluralistic
Type3: Insurance/Social Security
Type4: National Health Service
Type5: Socialized
Dr. Shahram Yazdani
Emergent HCS
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Health care viewed as item of personal
consumption
Physician operates as solo entrepreneur
Professional associations powerful
Private ownership of facilities
Direct payment to physicians
Minimal role in health care for the state
Dr. Shahram Yazdani
Pluralistic HCS
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Health care viewed mainly as consumer good
Physician operates as solo entrepreneur and in
organized groups
Professional organization very powerful
Private and public ownership of facilities
Payments for services direct and indirect
State’s role in health care minimal and indirect
Example: USA
Dr. Shahram Yazdani
Insurance/Social Security HCS
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Dr. Shahram Yazdani
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Health care as an insured/guaranteed consumer
good or service
Physicians operate as solo entrepreneurs and
members of medical organizations
Professional organizations strong
Private and public ownership of facilities
Payments for services mostly indirect
State’s role in health care central but indirect
Example: France
National Health Service
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Dr. Shahram Yazdani
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Health care as state-supported service
Physicians solo entrepreneurs and
members of medical organizations
Professional organizations fairly strong
Facilities mainly publicly owned
Payments for services indirect
State’s role in health care central and direct
Example: UK
Socialized HCS
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Dr. Shahram Yazdani
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Health care a state provided public
service
Physicians are state employees
Professional organizations weak or
non-existent
Facilities wholly publicly owned
Payment for services entirely indirect
State’s role in health care is total
Example: Former Soviet Union
France HCS: Finance
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Dr. Shahram Yazdani
About ¾ of health care costs are funded by
the state social security fund, raised by
levies on employers and employees.
For certain illnesses like cancer the state
funds 100% of the cost.
In other cases individuals pay the balance of
care costs, usually financed by subscriptions
to non-profit making insurance societies. The
scale of medical fees is negotiated between
the profession and the health ministry
France HCS: Ownership
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Dr. Shahram Yazdani
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About 2/3 of hospital beds are in
publicly owned hospitals under the
responsibility of the health ministry, the
remainder are in private hospitals.
Private hospitals tend to be smaller and
outnumber public hospitals by about
2:1. Most hospital physicians are
salaried but family doctors are
independent.
In all over half the doctors in France
are private practitioners
France HCS: Reform
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Dr. Shahram Yazdani
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Introducing new taxes on income and
expenditure to raise revenue
Tighter regulation of medical fees
Nationwide computerization to reduce
administrative costs
New system of hospital management
Encouraging referral networks
Clinical guidelines
New system of record-keeping
USA HCS: Finance
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Dr. Shahram Yazdani
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The state operates two main scheme:
Medicaid for the poor and Medicare for the
elderly and disabled
A further two third of the population is
insured privately the majority as part of their
employment package
A proportion of the privately insured (1/4 of
the total population) are enrolled with HMOs
This leaves around 16% of the population
(40 million people) without health insurance
Limited free care is provided by the public
hospitals and some private hospitals crosssubsidize patient who cannot pay
USA HCS: Ownership
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Dr. Shahram Yazdani
¾ of hospitals are privately owned, of which
a minority are operated for profit.
Involvement of for profit corporations in the
financing and provision of health care is
increasing progressively
The remaining hospitals are run by local or
state authorities
Traditionally the majority of the medical
profession has taken the form of
independent private practitioners charging a
fee for services provided. But increasing
numbers are employed directly by hospitals
and by third party organizations such as
HMOs
USA HCS: Reform
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Dr. Shahram Yazdani
After election of president Clinton in 1992 he
announced plans to create a managed market in
health care, while guaranteeing health insurance
to all citizens. Regional alliances would be
established to manage enrolment on insurance
plans, negotiate fees and premiums, monitor the
quality of health plans, and means test low
income subscribers
In spite of initial support from the general public,
big business, large insurers and from parts of the
medical profession, the proposals were defeated.
But individual states and health insurance market
move in the direction set by Clinton plan.
Increasingly hospital doctors and doctors are
forming provider networks to negotiate fees with
Thank You !
Any Question ?
Dr. Shahram Yazdani
Thank You !
Any Question ?
Dr. Shahram Yazdani
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