HEALTH SECTOR REFORM

THE CONTENTS OF OUR WORKSHOP

1. What is reform?

2. Why reform is common in the health sector

3. Why change is difficult in the health sector

4. A definition of health sector reform

5. Features of successful reform

6. Features of unsuccessful reform

7. The international health reform scene

1 A DEFINITION OF REFORM

o A process of making significant changes to overcome agreed weaknesses.

o It is different from a review.

A review might lead to significant changes. But we are unsure whether there are agreed weaknesses.

o It is different from a plan.

A plan is the product of an ongoing process to overcome weaknesses. It is therefore less likely to involve significant changes.

2 WHY REFORM IS COMMON IN THE HEALTH SECTOR

o We need reform to a greater extent than in other sectors. This is because:

  the problems are large and obvious (a review is not

really needed).  there is no ongoing planning process that leads to

continuous improvement (plans are not good)  change is so difficult to make.

3 WHY CHANGE DIFFICULT IN THE HEALTH SECTOR

o Technical complexity. Most other industries produce large volumes of a few

different products.

Health sector produces small volumes of a very large range of products.

o Vested interests of powerful groups. EG, Politicians want short-term gains before the next

election

Drug companies don't want rational prescribing.

MORE CONSTRAINTS TO CHANGE

o It's unclear who has the power and the responsibility. EG, The minister for health? The medical association? The health insurers? The citizens?

o Power is divided among groups with different attitudes and interests. EG, Doctors want more freedom and more resources Health insurers want more control and less spending Ministers want quick changes, public health specialists

want health promotion

THE MOST IMPORTANT CONSTRAINT?

o Consumers have too little power and knowledge.

It is the citizens' money It is the citizens' health

o But other people make decisions for them. EG,

Who decides how much to spend on health? Who decides the balance between hospital and

community-based care? Who decides whether to use care pathways?

4 DEFINITIONS OF HEALTH SECTOR REFORM

o Changes that affect at least two of these elements:

  health financing expenditure organization regulation consumer behavior.

William Hsiao

If we only change health financing, it’s not reform.

DEFINITIONS OF HEALTH SECTOR REFORM

o Changes intended to affect the attitudes and behavior of clinicians and consumers.

 o So that they become involved in continuous

reform of themselves. 

Don Hindle

If attitudes and behavior are the same, nothing has really been achieved. Nothing important has changed.

5 FEATURES OF SUCCESSFUL REFORM

o We create a 'purposeful system', one that continuously reforms itself without external pressures.

 Russell Ackoff

 o We create a 'learning organization', one where everyone

is continually trying to learn from everyone else.

Peter Senge o We establish 'continuous quality improvement', meaning

that everyone is continuously committed to improving themselves and the system.

Charles Deming

6 FEATURES OF UNSUCCESSFUL REFORM

 o It is based on the assumption

that more central control is needed.  Doctors and nurses and citizens are not to be trusted.

For example, the central planning model of norms and standards used in the former communist countries.

6 FEATURES OF UNSUCCESSFUL REFORM

o It is imposed top-down.  

For example, Margaret Thatcher's health sector reform policy in 1990 in the UK.

(She personally chaired the committee designing the reform strategy.)

FEATURES OF UNSUCCESSFUL REFORM

o It is based on simple slogans. EG, 

We will centralize (command economies in the 1950s and 1960s)

We will nationalize (the UK in the late 1940s)

We will decentralize (many countries in the 1990s)

We will privatize (most countries in the 1980s and 1990s)

We will give citizens more choice (many countries since 2000)

FEATURES OF UNSUCCESSFUL REFORM

o There’s confusion about objectives. EG,

  Some people think that equity of

payment of care providers is a useful end in itself.

Some people think that it is always useful to increase citizens’ choices of care provider.

Some people think it’s possible to create additional health financing by having private insurance.

PATIENT CHOICE

UK government policy on patient choice:

If waiting more than 1 month

You can be advised where to go to get quicker access

Costs of transport paid for patient

PATIENT CHOICE

“If I choose the best surgeon, I reduce choice for the less

articulate”

“Once Downing Street had decided, the economics was irrelevant” …

“… but economists were falling over themselves to prove Blair right”

“Why not move services to people?”

“2000 pages about choice BUT no mention of its costs”

7 THEMES OF REFORM: THE INTERNATIONAL SCENE

o Ideas that are no longer popular:

Large-scale health planning (and instrumental rationalism in general)

Privatisation and corporatization of hospitals

Competition in the market place

Rationalisation of hospitals by top-down planning

Licensing and accreditation

Voluntary health insurance

Importation of ‘good managers’ from other industries

Employment of bad economists as business managers and contract negotiators

Decentralisation-centralisation

o Ideas that are popular right now:

Better output-based payment of care providers

Patient safety

Coordinated (integrated, seamless) care

Clinical practice guidelines

Care pathways (clinical pathways)

Referral guidelines

Utilisation review

Finding and managing standard costs

o Ideas that will be dominant in future:

Organisational culture

Clinical teamwork

Purposeful systems

Managing complexity

Social solidarity

Balancing evidence and attitude

Consumer empowerment

o Big-bang reform is bad, but sometimes necessary.

o The goal of big-bang reform is to establish continuing reform through TQM (learning organizations, purposeful systems, etc).

o Health reform requires agreement on a long-term vision.

o It requires us to manage the technical, social, cultural, professional, and political aspects.

o Start by talking about talking.

o Fix organizational cultures so that (EG) people will be open about mistakes

people will understand themselves and others.

A SUMMARY: THE ESSENTIAL STEPS

QUESTION 1

o It is said that health sector reform is unsuccessful if it is imposed top-down.

o It is also said that health sector reform is unsuccessful if it is left to commercial interests in the marketplace.

o Are these two statements conflicting?

o Is there a third option? If so, what is it?

QUESTION 2

o In the 1980 election campaign, Ronald Reagan promised to deregulate the health sector if elected. He would:

dismantle government health insurance schemes like Medicare and Medicaid

remove regulations on bed numbers, types of equipment, etc

allow the marketplace to determine the locations and prices of health insurance and health care.

o In 1984, he passed the prospective payment laws that set national payment rates for Medicare and Medicaid. This meant greater government control than ever before.

o Why was Reagan’s promised reform unsuccessful? Why do leaders like Reagan and Thatcher get it wrong?

QUESTION 3

o In 1982, the Chinese government announced a health sector reform strategy as part of creating its ‘socialist market economy’.

o One reform was deregulation of the manufacture and sale of drugs. Until 1982, there was no competition at all.

o By 1985, there were thousands of local drugs manufacturers, and about 30% of drugs were imported or manufactured locally under license.

o The cost of drugs rose from 11% of hospital expenditures to 48%.

o Was the reform strategy successful? Explain why or why not.