Universal Health Coverage: Road map 3 : Giving providers the right incentives:
Raising sufficient levels of public financing is a necessary condition to achieve UHC, but only represents half of the financing story. To turn these resources into a health system capable of achieving UHC, these funds must be allocated and managed efficiently and fairly. There are many health systems in the world that spend a lot more than $86 per person per annum in public financing, but which are a long way from achieving UHC because of inefficiency and inequality in their health systems. A critical choice in the design of a UHC approach is how to pay providers. Such a decision can have a significant impact on the sustainability of the system, as financial incentives influence the behaviors of providers in ways that will affect quality, access and costs. Recognizing the incentives created by each mechanism is crucial: just like all economic agents, healthcare providers respond to financial incentives and will have a tendency to maximize their income.
For example, some payment systems might push them to over-supply services or use inputs that represent poor value for money (eg prescribing expensive branded medicines instead of cheaper generic equivalents). Others might incentivize them to under-supply services and cut costs inappropriately, compromising quality of care. There is no consensus on a preferred payment mechanism. The suitability of any method is highly contextual and its impact is strongly influenced by the governance and institutional arrangements to regulate and enforce payment systems that exist in a country. Moreover, several countries have adopted different payment mechanisms for different levels of care, or use a mix of mechanisms within the same contract. For example, family doctors in the UK are mostly paid on a capitation basis but receive additional performance bonuses based on their activities. The more broadly adopted payment mechanisms are
• Fee-for-service, in which providers are paid for each service they provide. While this mechanism can maximize supply, it also runs the risk of creating incentives to over-supply and escalate costs. Ensuring that the purchaser, not the providers, sets the price for services, and imposing global budget constraints can mitigate some of the risks of this approach.
• Bundled payments, in which providers are paid a fixed fee for a bundle of units of activity (ie episodes of care). It can foster efficiency within a bundle, but it is complex and could still incentivize over-supply.
• Global budgets, in which providers are paid a fee to provide services for a certain amount of time. It can stimulate productivity improvements, but also incentivize providers to limit access to services and compromise on quality.
• Capitation, in which providers are paid a fixed amount per head of population. This approach can be effective in limiting costs, but again could incentivize access restrictions.
Performance-based payments, in which providers are paid based on the outputs and outcomes they deliver. This could be a good option in some circumstances, but requires complex monitoring systems and may cause incentives to over supply some services at the expense of other vital services. One innovative approach at the system level is ‘Accountable Care’, where a group of providers are held jointly accountable for achieving a set of outcomes for a defined population over a period of time and for an agreed cost.
Source : Report of the WISH Universal Health Coverage Forum