We pay people to do things. It’s an underpinning of western civilization, which has evolved to a point where we pay people to do more of things we want.
This is the idea behind merit-based pay, fundamental to bureaucracies and a large part of business practices. For example, Mark Carney, the soon to be former Governor of the Bank of Canada, is going to be paid over $1.3 million to fix England’s financial system. This concept holds remarkably true right up until we begin talking about healthcare. In healthcare, we either do not pay people to do things better (often in public systems), or paying people to do things better doesn’t seem to work.
Paying hospitals for what they do is common elsewhere. Specifically, volume-based payment systems, like activity-based funding (ABF), are relatively common in the rest of the OECD nations. Currently, only BC and Ontario pay a portion of hospital funding based on the type and volume of activity the hospitals engage in. Ironically, in an article on reforming Medicare, Rick Mayes identifies that in Canada the problem is managing volume of care, in the US it is managing expenditures (without volume control). Neither ABF nor global budgets appears to be ideal.
A new potential payment solution to healthcare woes (discussed in a previous post) are bundled payments (along with global or capitated payments). Aside from controlling the volume of care (and thus expenditures), both Canada and the US have policy goals that include increasing the quality of care provided.
Mayes indicates that moving from paying for healthcare based on amount to paying for healthcare based on how good it is (i.e. quality) will require a substantial investment in research to produce valid measures of quality. After all, how do you determine which hospital is doing better? What does better mean? Is it the same for all hospitals? These are things we remain unclear on.
A fair bit of research has been carried out in the US to try and tackle this question. How do we measure hospital quality? A new section of our website summarizes much of this research. It describes the three different types of quality measures that are commonly used: process measures, outcome measures and structural measures. It also lays out the strengths and weaknesses of each measure. We provide examples of some of the organizations that are collecting indicators, both in the US and internationally. Finally we being to provide examples of the ways that we can link between measuring hospital quality and funding hospitals based on those measures. We also explore some of the potential negatives in linking quality to funding, which, as a policy option, is one that remains controversial at times.
Mayes R. Moving (realistically) from volume-based to value-based health care payment in the USA: starting with medicare payment policy. Journal of health services research & policy. 2011:16(4):249–51.
