Master in Health Economics and Policy Ethics and Health (April 10-June 19, 2012) Marc Le Menestrel Raquel Gallego

Session 1: Why the ethics debate? Managerialism in health care systems. 1.Managerialism and value change in the public sector. 2.Health care systems reforms since the 80s. Essay: What are the main threads of the health care reforms carried out over the turn of the century? What can we learn from them? Required reading: Docteur, E.; Oxley, H Health-care systems: Lessons from the reform experience. Paris: OECD, pp ( Optional reading: Ferlie, E. et al (eds.) The new public management in action. Oxford: Oxford University Press. Ch. 1, pp Lane, J.E New Public Management, London: Routledge, pp.1-15 Le Grand, J.; Bartlett, W (eds). Quasi-markets and social policy. London: Macmillan. Ch 2-4, pp Paris, V., M. Devaux and L. Wei. 2010, “Health Systems Institutional Characteristics: A Survey of 29 OECD Countries”, OECD Health Working Papers, No. 50, OECD Publishing. ( Pollitt, C Managerialism and the public services. Oxford: Blackwell. 2nd edition, pp.1-27.

1. Managerialism and value change in the public sector Managerialism as an ideology 1.2. Dualities past/present: private sector 1.3. Dualities past/present: public sector 1.4. Exercise 1.5. Doctrinal components of NPM and performance assumptions

1.1. Managerialism as an ideology (I) Ideology: set of believes and practices assuming that (better?) management can effectively solve economic and social problems: –Route to social progress lies through the achievement of continuing increases in economically defined productivity. –Productivity increases come from the application of ever-more sophisticated (information and organization) technologies. –Application of technologies can only be achieved with a labor force ‘disciplined in accordance with the productivity ideal’. –‘Management’ is the organizational function that plays the crucial role in achieving such productivity. Qualities and professionalism of managers are the key to business success. –To perform this crucial role managers must be granted ‘room to maneuvre’ (i.e. ‘right to manage’)… Apocalyptic role. Source: (Pollitt 1990)

1.1. Managerialism as an ideology (II) ‘Classic’/private sector management functions: –POSDCORB: Planning, Organizing, Staffing, Directing, Co- ordinating, Reporting, Budgeting (Gulick and Urwick, 1937) ‘Public’ management: –Expenditure planning and financial management –Procurement –Civil service and labour relations –Organization and methods –Audit and evaluation (Source: Barzelay 2001)

1.1. Managerialism as an ideology (III) 1. Set of values and ideas in relation to society: –Society should have clear objectives, motivated workers, no red-tape, freedom of transaction –Best management practices are in the private sector, not in the public sector 2. Identification of social groups: –Better off: managers, business people –Worse off: politicians, unions, professions, public sector employees

1.1. Managerialism as an ideology (IV) 3. Justifies behaviours and attitudes: –Favours autonomy, confidence, individualism, competitition –Downplays control, hierarchy, equality

1.2. Dualities past/present: Private sector DimensionsTraditional firmNew firm JobsSimpleMultidimensional RolesControlledEmpowered ValuesProtectiveProductive ManagerSupervisorCoach StructureHierarchiesFlat PerformanceActivitiesResults AptitudeTrainingEducation Source: Hammer and Champy (1993)

1.3. Dualities past/present: Public sector (I) Traditional Public Administration New Public Management Providers orientation Monopolistic provision Compulsion Uniformity Dependency culture Users orientation Pluralistic provision Freedom of choice Organizations form diversity Self-sufficiency culture Soruce: Adapted from Ranson and Stewart (1994) and Metcalfe (1996)

1.2. Dualities past/present: Public sector (II) Bureaucratic paradigmPost-bureaucratic paradigm Public interest Efficiency Administration Control Specification of functions, authority and structures Justification of costs Imposition of responsibility Complying with norms and procedures Functioning of administrative systems Outcome value for citizens Quality and value Production Achieve norms acceptance Identifying mission, services, clients and impacts Value of provision Building accountability processes Focus on human resources Understanding and applying norms Identifying and solving problems Ongoing improvement of processes Separating service and control Building support for norms Widen consumer choice Facilitate collective action Provide incentives Measuring and analyzing results Learning from evaluation Source: Barzelay (1992)

Managerialism as an ideology: Some references… Osborne and Gaebler (1992) Reinventing Government Peters and Waterman (1993) In search of Excellence Moore (1995) Creating public value.

Exercise: Management models Are there any differences between private sector and public sector management? –Values –Aims –Decision-making (-ers) –Evaluation criteria –Property rights –Responsibility/accountability rules

Management models: Some authors… Metcalfe Ranson and Stewart Flynn Hughes Self Walsh Dunleavy Hood

2. Health care systems reforms since the 80s Health care markets 2.2. Health system models 2.3. Health care reforms since the 80s

2.1. Health care markets (I) Health markets involve agency relations between: Insurers P/A Purchasers A/P Providers P/A Professionals A/P Citizens P/A

2.2. Health systems models (I) Institutional models of health systems Reimbursement model: governmental grants to mutualities (private insurance in Switzerland and Netherlands) Public contract model: National health insurance (Social security contribution in France and Germany) Integrated model: National health service (pre-90s in the UK and New Zealand, and Spain)

Reimbursement model

Public contract model

Integrated model

2.3. Health care reforms since the 80s (I) Problems common to all health system models –Inequity of access to services, of resource distribution, and of health states/levels between groups and regions (waiting lists…) –Increase in health expenditure without an impact on the population health state (pressures from both demand and supply sides) –Inefficiency: variability in medical activity and costs; poor coordination between health care levels (primary and specialized)

2.3. Health care reforms since the 80s (II) Problems common to all health system models (cont’d): –Citizens’ dissatisfaction with impersonality and bureaucracy in service delivery –Third-party payer (mal)functions: Insurance/coverage: assumption of health financial risk Access: to health services by the population Agency: intelligent buyer on behalf of its principal

2.3. Health care reforms since the 80s (III) “New public management” –Purchaser/provider separation –Disaggregation of hierarchically integrated institutional structures into quasi-autonomous and single function- organizations (regulation, financing, purchasing, provision…) –Managed competition on the basis of contracts

2.3. Health care reforms since the 80s (IV) Adequacy, equity and income protection –Extensions to compulsory insurance systems (Spain, Netherlands, Ireland) Macro-economic efficiency Micro-economic efficiency Convergence towards the public contract model

2.3. Health care reforms since the 80s (V) Macro-economic efficiency measures: Cost containment and overall expenditure limits –Demand side: cost-sharing through co-payment (fixed amount for a service) co-insurance (set proportion of a service cost) deductibles (fixed amount to be paid for a service before any benefit payment is received); negotiation of fees for service and pharmaceutical prices; publicly financed basic insurance

2.3. Health care reforms since the 80s (VI) Macro-economic efficiency measures (cont’d): –Supply side: Limits to global activity volume Global budgets for physicians (Germany, Belgium) Global budgets for hospitals (Netherlands, Belgium, France, Germany) Capitation payment for primary care providers

2.3. Health care reforms since the 80s (VII) Micro-economic efficiency measures: productivity and efficiency in the system –Switch from integrated to social insurance contract model (former Eastern Germany) –Managed competition between: Medical professionals (Germany, United Kingdom) Pharmaceutical products (Germany, Netherlands) Hospitals (Germany, United Kingdom, Netherlands) Insurers or fundholders (United Kingdom and Netherlands)

2.3. Health care reforms since the 80s (VIII) Convergence towards the public contract model: –Reimbursement model: more strict regulations and contracts (France, Belgium) –Integrated model: introduction of contracts and disaggregation (United Kingdom) –Competition between public purchasers/insurers (United Kingdom, Netherlands) –Wider consumer choice (Germany, Belgium and Netherlands) –Mix financing systems (budget limits and fee for service) –Selective and informed purchasing rather than passive financing

Conclusions: What relevance for ethics? Definition of actor/function: –Legal personality –Ownership –Regulation Mecanisms of interrelation between actors/functions: –Caracteristics of the contractual relation –Regulation Governance structure: –Hierarchy –Network –Market Dynamic context: –Politics –Economy –Society