Financing Health Services: Balancing Sources and Uses from Public and Private Sectors James A. Rice, Ph.D. James A. Rice, Ph.D. Kuwait Healthcare

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4 Overview of Remarks: 200 Countries. All disappointed with performance of their health sectors. Move to balance government and non- governmental organizational participants. Must avoid confusion over sources and uses of funds within health sector... Health gain and health care must be balanced.

5 Themes of Reforms: Cross-National Lessons? Move toward Universal Coverage Strengthen government control over percent health consumes of GDP Decentralize the public system More cost sharing by users New risk-coverage/pooling programs More reliance on market forces to induce responsiveness and accountability by all Government role evolving to goal setter/payer and performance monitor/assurer Move to rely on “contracts” to clarify accountabilities Renewed Focus on behavioral determinants of health status...Healthy Communities/Lifestyles

6 The Economy is the Engine that Generates Funds for All Sectors... Healthy Economies beget strong health sector spending; Sectors compete for funds in a society; Segments compete for funds within sectors; Institutions compete for funds within a segment Where does good leadership enter the picture?

7 Segments differ on funding Nations struggle to balance spending for Health Gain and Health Care

8 Often Confusion Among Policy Makers and Implementers

9 Sources and Uses of Funds: Donations Philanthropy Bonds & Mortgages Fees Sickness Tax Insurance Premiums Dedicated V.A.T. or Excise Taxes General Treasury Capital Investments: -- facilities -- technology Public Health Protection & Promotion Research & Development Health Restoration: -- hospitals -- doctors -- pharmacies -- alternate modes Professional Education & Training 5% 2% 85% 3%

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11 Complex Policy Choices: The Purchaser Side Covered Groups Civil Servants Employed Local Employed Expats Children Pensioners All groups Covered Benefits Basic Public Health Primary care Hospital Care Dental Vision Care Transplants Pharmaceuticals Catastrophic Cases Level of Coverage First dollar Cost above limit Shared Risk Corridors Deductible Amount Co-payments Percent of fee schedule Degree of Private Insurance companies Brokers sell public Outsource full admin Outsource functions: Enrollment Contribution collection Subscriber relations M.I.S. Quality assurance Provider contracting Claims adjudication Accounting Investment portfolio Forms of Insurance National Health Insurance Mandated Private Voluntary Private: Top-up Supplemental Opt-out Full Medical Savings Accounts: Alone With NHS With re-insurance Catastrophic Re-Insurance Combinations are possible Form of “Premium” Per capita from treasury Per capita by Employer or Association Premium risk based Premium community based Percent of wage Who Pays for Whom?

12 Aging Population Drives Costs.

13 Pay for Performance (P4P) is Global

14 New Balance of Risk-Incentives

15 Tax payers frustrated with out-of-pocket spending, with questionable value.

16 “Value for Money” is Global Mantra.

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20 Payment for Inpatient services: 1.Billed Charges 2.Bed-days; 3.Type of admission: Peds, OB, Med-Surg, Psych 4.Type diagnosis physician specialty 5.Finished cases of DRGs; 6.Global budget in exchange for negotiated and planned utilization and structure of inpatient care. 7.Per capita payment for defined population group

21 DRG Common Pay Metric

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23 1.For technological operations and procedures performed (per detailed service). 2.Per visit. 3.Per finished outpatient case. 4.Per capita funding of primary care provided to enrollees. 5.Per capita funding of the entire scope of outpatient services provided to enrollees (complex outpatient service). 6.Per capita funding of the entire scope of outpatient services and part of inpatient services provided (partial fund-holding). 7.Per capita funding of the entire scope of outpatient and inpatient services provided (full fund-holding). Payment for Outpatient services:

24 New Provider Payment Systems: Mix and Match Methods Depending on Goals at Given Point in Time: Politics and Economy Per Finished Case or Fee-for-Service for Outpatient Care and Per Finished Case for Inpatient Care Per Finished Case or Fee-for-Service for Outpatient Care and Per Diem for Inpatient Care Per Capita for Outpatient Care Per Finished Case for Inpatient Care Polyclinic Expenditure Budget Funding and Per Finished Case for Inpatient Care Per Capita for Outpatient Care and Per Diem for Inpatient Care

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28 U.S. Wastes Resources. What is it in Kuwait? Source: PriceWaterhouseCooper

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