1. By Hatim Jaber MD MPH JBCM PhD 16 + 18 - 04 - 2018
Faculty of Medicine Health Economics and Policies ( ) Health Markets and Regulation and Economic regulation of health markets Hospitals and pharmaceutical industry By
Hatim Jaber
MD MPH JBCM PhD

2. Course Content 31505391 Post Midterm
Week 9 Measurement and evaluation in health care.
Goods, Market Failures, and Cost-Benefit Analysis.
Week Economic evaluation . Economics and efficiency cost analysis and cost effectiveness.
:00 am GUEST LECTURE
Week 11 Economic effects of Bad habits including smoking and alcohol consumption
:00 am GUEST LECTURE
Week 12 Quality Improvements in healthcare delivery Methods to improve health care delivery.
Week 13 Human resources in Healthcare delivery.
:00 am GUEST LECTURE
Week 14 Health Markets and Regulation and Economic regulation of health markets.
Week Final assessment (Exams.)

3. Week 12 Hospital Classification
Do hospitals compete with one another on price or quality or reputation?
Should there be increased competition across hospitals and provider types?
Principles of Value-Based Competition
Price Differentials Between Brand Names and Generic Drugs
Regulation by the Food and Drug Administration
Pharmaceutical drug pricing.
How the government intervenes to promote the safety of the population.
Health of the market for prescription drugs.

4. Presentation outline 16 +18 - 4- 2018
Time
Health Care as an Enterprise
08:00 to 08:20
Hospital Classification
08:20 to 08:30
Principles of Value-Based Competition
08:30 to 08:40
Regulations :Economic and social regulation
08:40 to 08:50
Next السياسات والتشريعات الدوائية

5. 7 Principal Health Systems
Primary health service delivery system
Health workforce
Leadership and governance to assure quality
Health systems financing
Supplying medical products and technologies
Health systems information
Households

6. Health Care as an Enterprise
“Health care … is a moral enterprise and a scientific enterprise, but not fundamentally a commercial one.
We are not selling a product.
We don’t have a consumer who understands everything and makes rational choices – and I include myself here.”
Avedis Donabedian
Health Affairs – Volume 20, Number 1 (January/February 2001)

7. Health System Transformation: Current and Future
Variable quality; expensive, wasteful
Consistently better quality; lower cost, more efficient
Pay for volume
Pay for quality
Pay for transactions
Care-based episodes
Quality assessment based on provider and setting (process)
Quality assessment based on patient experience (outcomes)

8. 21st Century Health Care
Patients play a larger role, including involvement in making decisions about the future of health care
Innovative, adaptable and very scalable systems have the potential to become national solutions
Health IT makes it possible for doctors to know how patients are doing over time – and for patients to engage in new ways – and at their convenience!
Medical model (Western medicine) assumes that illness and disease require treatment.
Recently, some movement toward wellness model – the prevention of disease and maintenance of well-being

9. The Paradox of Health Care
The private system with intense competition But
• Costs are high and rising
• Services are restricted and often fall well short of recommended care
• In other services, there is overuse of care
• Standards of care often lag and fail to follow accepted benchmarks
• Diagnosis errors are common
• Preventable treatment errors are common
• Huge quality and cost differences persist across providers
• Huge quality and cost differences persist across geographic areas
• Best practices are slow to spread
• Innovation is resisted

10. Healthcare Triangle
Cost
Access
Quality

11. Market-driven health care
The most successful health systems pay attention to:
I. Political space. There is the political space for those providing an inadequate or unnecessary service to exit the market; and for those that can provide a better one to enter it.
ii. Information. There is adequate information about activity, cost and quality of care to make investment decisions.
iii. Motivated purchasers free to buy selectively. Purchasers have the analytic capacity and freedom to contract with alternative providers in instances of poor service.
iv. Providers capable of responding to market forces. Providers are able to invest to improve services and be paid more, or be rewarded with more custom, if patients think they are doing a better job than others.
v. Regulatory framework. Regulation ensures that: universal coverage is protected and assured; minimum standards of quality and finance are met; and competition policy is enforced.
vi. Capital markets. Providers and insurers/commissioners are able to retain savings and generate capital in order to finance expansion.
vii. Common language and currency. There is a common unit in which services are paid for, commissioned and ‘sold’.
viii. Local wage determination. There is competition not only for custom, but also for staff, enabling providers to send a powerful signal that wages depend on success.
ix. Culture. Staff consider quality and ‘customer service’ to be the name of the game; and are operating in an environment where pluralism and freedom of action is valued. Markets do not work so well, if at all, when immediate priorities are elsewhere.

12. Healthcare Marketplace
Hospitals
Physicians
Insurance
Consumers
Medical Device
Long-term care
Employers
Government
Pharma-ceuticals IT

13. Stakeholders Consumers Providers
Hospitals
Physicians and Clinics
Long-term care facilities (e.g., nursing homes)
Pharmaceuticals, Medical Device, Biotechnology firms
Insurers
Employers
Government

14. HOSPITALS Can be public or private
Private hospitals can be for profit or non-profit
Many different types and classifications
General hospitals treat a wide variety of illnesses and ages
Joint Commission on the Accreditation of Healthcare Organizations (JCAHO) – helps hospitals maintain quality of care, establishes guidelines for the operation of hospitals, conducts inspections to ensure that standards are being met.

15. Specialty Hospitals
Specific conditions, age groups, or other ways of grouping patients
For example:
Cancer hospitals
Pediatric hospitals
Psychiatric hospitals
Rehabilitation centers

16. Ambulatory Facilities
Also called “outpatient services” – they often provide diagnostic and treatment services that were previously performed in hospitals
Surgical clinics (surgicenters) outpatient surgery
Urgent care centers
Outpatient clinics
Optical centers
Genetic counseling centers (fertility clinics)

17. Long Term Care Facilities
Mainly care for elderly patients (residents)
May also care for individuals with disabilities or handicaps
Residential care (nursing homes) – basic physical care
Extended care (skilled nursing) facilities – provide skilled nursing care and rehabilitation services
Assisted (independent) living facilities – provide basic services (meals, housekeeping, etc.) and basic medical care.

18. Home Health Care
Became more common in late 1980s – now an area of tremendous growth
Nurse or other skilled professional visits patient in his/her home to provide treatment/education
Less expensive than admission to hospital or long term care facility
States require licensing of home health agencies to assure the quality of care

19. Medical and Dental Offices
Vary from small (one doctor) to large complexes with multiple specialties and other healthcare professionals
Some treat a wide variety of illnesses and conditions, others specialize

20. Mental Health Services
Counseling centers
Psychiatric clinics and hospitals
Chemical (drug and alcohol) abuse treatment centers
Physical abuse treatment centers, dealing with child abuse, spouse abuse and elderly abuse

21. GOVERNMENT AGENCIES
Can be at local, state, national and international levels
Services are tax supported
Veterans Administration Hospital

22. Food and Drug Administration (FDA)
Federal agency
Responsible for regulating food and drug products sold to the public

23. World Health Organization (WHO)
International agency
Sponsored by United Nations
Compiles disease statistics, promotes healthy living, and investigates serious health problems throughout the world

24. Occupational Safety and Health Administration (OSHA)
Part of the U.S. Department of Labor
Establishes and enforces standards that protect workers from job-related injuries and illnesses

25. Public Health System (Health Departments)
Part of the MoH Department of Health and Human Services
Provide services to states and local communities
Examples of services
Immunizations
Environmental health and sanitation
Collection of health statistics and records
Health education
Clinics for health care and prevention

26. Veterans Administration
Federally supported
Hospitals and other services
Care for veterans who served in the armed forces

27. NON-PROFITS Also called voluntary agencies
Most deal with specific diseases or groups of diseases
They provide funding for research, promote education, and services for victims of disease.
They also influence laws, create standards, and educate health professionals

28. Hospice
Hospice movement began in England, rapidly growing in United States
Provides palliative care (relieves but does not cure) to dying patients and their families
Involves healthcare professionals and volunteers
Emphasis is to make patient’s last days as pain-free and meaningful as possible

29. Value-Based Competition in Health Care
Creating a Value-Based Health Care System
Universal insurance is not enough
The core issue in health care is the value of health care delivered
Significant improvement in value will require fundamental restructuring of health care delivery, not incremental improvements
Competition must be harnessed as a powerful force to encourage restructuring of care and continuous improvement in value
Creating competition around value is the central challenge in health care reform

30. Principles of Value-Based Competition
1. The goal should be value for patients, not just lowering costs
2. The best way to contain costs is to drive improvement in quality
3. There must be unrestricted competition based on results
4. Competition should center on medical conditions over the full cycle of care
5. Value is driven by provider experience, scale, and learning at the medical condition level
6. Competition should be regional and national, not just local
7. Results must be universally measured and reported
8. Reimbursement should be aligned with value and reward innovation
9. Information technology is an enabler of restructuring care delivery and measuring results, not a solution itself

31. Moving to Value-Based Competition Government
Measure and report health results
Create IT standard data definitions and interoperability standards to enable the collection and exchange of medical information for every patient
Enable the restructuring of health care delivery around the integrated care of medical conditions across the full care cycle
Shift reimbursement to bundled prices for cycles of care instead of payments for discrete treatments or services
End provider price discrimination across patients
Open up competition among providers and across geography

32. 11/14/2018
Regulations
Government can attempt to control price, quantity, or quality of health care products.
Example: Price Ceilings in The Jordanian Health Care System.
Consumers are fully insured by the government.
The government fixes the price the physician receives for each visit.

33. Regulation? Government intervenes to restore efficiency and/or equity.
“Public interest theory.”

34. The Health and Social Care Bill proposes to increase and extend Monitor’s responsibilities substantially, to include:
price-setting
tackling anti-competitive behavior
ensuring continuity of essential services (in the event of financial failure).

35. Guiding principles for the regulation of public services, including health care:
Maximize competition
Transfer risk to the private sector
Appoint a strong pro-competition regulator
Set out clearly the standards that must be met and how operators will be held accountable for them
Be clear about how and by whom universal service obligations are to be met
Ensure high-quality information for customers n have more consumers rather than fewer (that is, don’t have a few monopolistic health authority purchasers). (Lansley 2005)

36. Types of Government Intervention
11/14/2018
Types of Government Intervention
Provide public goods.
Correct for externalities
Impose regulations.
Enforce antitrust laws.
Sponsor redistribution programs.
Operate public enterprises.
Fund medical research.
Tax cigarettes, pollution.
FDA

37. 11/14/2018
Regulations
Because consumers are fully insured, they will demand the number of visits as if the price per visit = 0.

38. ECONOMIC ANALYSIS OF REGULATION
Two Types of Market Regulation
Economic regulation and social regulation
Economic regulation is the traditional form of regulation. It is usually industry-specific. The deregulation movement of the last two decades has been primarily focused on reducing economic regulation of markets.
Social regulation is a newer form of market regulation that grew up during the 20th century, mostly since the 1960’s. While economic regulation has been declining, social regulation has grown rapidly.

39. ECONOMIC ANALYSIS OF REGULATION
Economic Regulation of Markets
Restrictions on entry, price, quantity, and market share
Economic regulation limits entry into a market or sets prices, restricts quantities, and allocates market shares among sellers. While anti-trust policy is intended to open markets up to new competition, economic regulation limits competition.
Examples of economic regulation that often limit competition include
Public franchises
Occupational licensing
Other licensing requirements

40. ECONOMIC ANALYSIS OF REGULATION
Social Regulation of Markets
Regulations prescribing how products must be designed or how they must be produced
features in the product.
Social regulation prescribes how products must be designed or how they must be produced or mandates the inclusion of specific
Social regulation includes health and safety regulations, environmental regulation, and occupational safety regulations.

41. REGULATION AND PUBLIC INTEREST
Regulation: Principle and Practice
Regulation often benefits producers and regulators, not consumers
Regulation often promotes the special interests rather than the public interest
Markets and prices are often superior to regulation
Regulation is often based on unscientific analysis, misinformation, and faulty data
In principle, regulation is supposed to improve consumer welfare. In practice, regulation negative effects on consumer welfare.

42. REGULATION AND PUBLIC INTEREST
Example: Motorcycle Registrations and Fatalities in Helmet Law States and in Non-Helmet Law States
Non-Helmet Law States
Helmet-Law States
2.60
1.30
Motorcycle registrations per 1000 population
3.05
3.38
Fatalities per 10,000 registered motorcycles
2.89
2.93
Fatalities per 1000 accidents
Does the data support the proposition that motorcycle helmet laws reduce motorcycle accident fatalities?