Resource Allocation, Financing and Sustainability in Healthcare

19 October 2010

The Irish Healthcare System: Resource Allocation, Financing and Sustainability

The Minister for Health, Mary Harney TD, presided at the opening of a conference on Resource Allocation, Financing and Sustainability in Healthcare at the Economic and Social Research Institute (ESRI) on 19th October 2010. The conference, which was attended by an audience of health policy makers and health professionals, provided an opportunity to explore some of the findings and recommendations of the independent Expert Group on Resource Allocation and Financing in the Health Sector which reported to the Minister in July 2010. The conference also provided an occasion to discuss the survey of international research on healthcare undertaken for the Group by ESRI researchers and to hear the views of Dr Josep Figueras, Director of the European Observatory, on international trends in health systems and policies and on how the Irish healthcare system might be viewed in a European context. A Panel including Cathal Magee, the new CEO of the HSE, Michael Scanlan, the Secretary General of the Dept of Health and Children, and Professor Jose Martin-Moreno from the World Health Organisation responded to the presentations. The Expert Report is at http://www.dohc.ie/publications/resource_allocation_financing_health_sector.html A short paper summarizing the key elements in the Report and its 34 recommendations is at https://www.esri.ie/UserFiles/publications/WP358/WP358.pdf Press releases for each of the presentations [with the exception of Dr Figueras] are attached. Link to event details.

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Media Release "How can we make our healthcare system deliver on its objectives?" Professor Frances Ruane, Director, ESRI and Chair of the Expert Group In her presentation Professor Ruane explained how the expert group had been established to address how resource allocation and financing in the Irish health sector could be improved. The methodology adopted by the group, comprising policy makers, economists, clinicians, and managers, was to establish a set of guiding principles for resource allocation and financing, drawing on the stated objectives of health policy, the international evidence of best practice, the submissions received from interested parties and the requirement for a more sustainable system. The Group identified key weaknesses in the present system including fragmentation, inappropriate incentives, absence of efficiency drivers, planning system weaknesses, and practices which lead to healthcare costs being higher than they might be. The Group’s Guiding Principles covered transparency, integrated healthcare delivery, the fair geographic allocation of budgets, implementation of clearly defined national standards, incentives to ensure appropriate and cost-effective use and delivery of healthcare, equity of access and economic sustainability. Noting the magnitude of the current challenges, Professor Ruane suggested that there is a momentum for change in the system because of the current economic/fiscal crisis, the very visible inefficiencies in the present system, and the increased recognition of the need to improve quality and safety and address inequality of access. Notwithstanding these facilitators of change, Professor Ruane identified some key impediments to improvements, such as the historic power of vested interests in the health sector and the absence of the structures to support the delivery of more cost-effective care. Concluding her remarks, Professor Ruane said: “Even before the present crisis, Ireland was facing major challenges in delivering on its stated healthcare objectives. The present shortage of resources lends itself to cutting expenditure where it is easy to cut, risking much greater damage to the system than a systematic approach grounded in reallocating funds from where they have less benefit to where they have more. This Report provides guidance on where expenditure reductions might be made”.

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Media Release "Reviewing the International Evidence on Resource Allocation, Financing and Sustainability in Healthcare" Aoife Brick, Anne Nolan, Jacqueline O’Reilly, and Samantha Smith (ESRI) In a presentation to the conference on Irish healthcare at the Economic and Social Research Institute on 19th October 2010, Aoife Brick, Anne Nolan, Jacqueline O’Reilly and Samantha Smith (ESRI) provided an overview of the international evidence on resource allocation, financing and sustainability in healthcare, drawing out some lessons for Ireland. Reviewing the Irish experience, as well as that in eight comparator countries (Australia, Canada, England, Germany, Netherlands, New Zealand, Sweden, USA), they found that:

• Since 2000, Irish public health expenditure has more than doubled in real terms to reach a level of over €15bn in 2009.
• Current concerns over the sustainability of healthcare expenditure are not new in Ireland and are not unique to Ireland. However, in the present economic situation these concerns are becoming more acute in Ireland.
• International evidence suggests that measures to ensure sustainability should focus on those that reduce costs through enhanced efficiency and effectiveness (e.g., increasing use of day surgery, use of less costly drugs), rather than those that seek to shift the costs of care to patients.
• International best practice is for the allocation of resources to be based on population health rather than by historic allocations to existing providers and facilities, as is the case in Ireland.
• International experience shows that the mechanisms used to pay for healthcare can influence providers’ financial incentives to deliver appropriate, integrated healthcare in a cost-effective manner. Increasingly pay-for-performance components are being combined with blended systems of capitation and fee-for-service for GPs to ensure efficient delivery of appropriate care, while casemix funding for hospitals is being used to incentivise quality improvement and identify where efficiency can be increased.
• Since chronic care is now the largest component of healthcare cost, integrated care is necessary, requiring financial incentives to be aligned across patients and providers.
• International evidence shows that there are advantages and disadvantages associated with different health financing mechanisms and that these impact on the resource allocation process. For example:
  • Public taxation and social health insurance allow healthcare to be financed according to ability to pay and independently of people’s need for healthcare.
  • Some attributes of social health insurance (e.g., transparent link between resources and entitlements) can be incorporated into the tax mechanism.
  • Out-of-pocket payments should be minimized for equity reasons and because they can discourage necessary as well as unnecessary utilization rates.
  • There are important lessons for Ireland on how to reduce the role of out-of-pocket payments in key health services (e.g., GP care) in order to support integrated healthcare delivery and improve equity in the system.

The evidence reports and a short summary of the research is available at: https://www.esri.ie/publications/latest_publications/view/index.xml?id=3059 https://www.esri.ie/publications/latest_publications/view/index.xml?id=3115

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Media Release "Why is integration essential to patient-led quality healthcare?" Professor Arnie Hill, Professor of Surgery at RCSI and national advisor for surgical oncology for the National Cancer Control Programme. In a presentation to the healthcare conference at the Economic and Social Research Institute on 19th October 2010, Professor Hill illustrated the importance of integration of services by considering how the centralisation of breast cancer care has led to a measurable improvement in quality performance indicators. He showed how an initial investment was needed to achieve this reconfiguration of breast cancer care but has produced a service with transparent resourcing with defined quality performance measures within a controlled budget. He also addressed current anomalies in our system of hospital care that promote inefficiency.

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Media Release "Developing primary care - the key to solving the integration challenge" Professor Andrew Murphy, Professor of General Practice, NUIG In a presentation to the healthcare conference at the Economic and Social Research Institute on 19th October 2010, Prof Andrew Murphy explored the central role of primary care in the delivery of health and healthcare, drawing on case studies. The presentation discussed the following issues: The decrease of almost one third in Irish cardiovascular mortality rates since 1985 has been delivered through primary care. Multimorbidity is growing in importance and can only be best managed efficiently in primary care. The presentation also looked at key impediments to developing Irish primary care, namely

• the lack of universal registration with a GP practice;
• confusion over eligibility to services;
• the failure of ‘money to follow the patient’;
• the antiquated GP contract;
• uncertainty about provider roles in the primary and secondary (hospital) sectors;
• the unregulated rise of private secondary care.

According to Professor Murphy, "the Expert Group Report on Resource Allocation and Financing in the Health Sector provides a considered and evidence based roadmap to, on a budget neutral basis, quickly overcome these impediments".

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Media Release "Developing primary care - making it happen" Professor Charles Normand, Trinity College Dublin In his presentation to the healthcare conference at the Economic and Social Research Institute on 19th October 2010, Professor Normand discussed the steps needed to strengthen the role of primary care, especially in managing chronic disease and multimorbidity. Professor Normand noted that, unusually for a country in the OECD, the relationship between the majority of the Irish population and their GP is commercial, with services financed on a pay-as-you-go basis. He suggested that while in many cases GPs provide good care on an ongoing basis, there is a need to bring primary care more fully into the overall health system in Ireland, and to encourage registration of patients with the service. The proposed model of chronic disease management also needs to change the incentives facing both patients and primary care professionals so that patients are encouraged to use the services as necessary and different professionals are encouraged to work in an effective team. He set out the steps required to strengthen the role of primary care. These include:

• New contracts for primary care providers that recognize their evolving roles.
• Developing further care protocols and care pathways for the major chronic diseases and defining the roles for GPs and other community services.
• Funding models that fund care in appropriate settings, ensuring that hospitals, primary and community providers and patients have incentives to provide and seek care in the most appropriate setting.
• Developing better working arrangements across primary, community and hospital care.
• Developing the primary care workforce.
• Developing primary care facilities.

Professor Normand also discussed the Expert Group’s recommendation that Ireland move to a new framework for primary care fees based on family incomes and needs for services. This would replace the existing complex system of entitlements, and would reduce the current disincentives to use services because of high costs at the point of use. In the long run there is a need to build a wider range of community based services, with wider use of specialised nurses and allied professionals, and to look in more detail at the match of service entitlements and needs for effective chronic disease management. Improving access to GP services is an important first step.

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Media Release "How do we ensure the future sustainability of the Irish healthcare system?" Professor Rowena Pecchenino, Department of Economics, NUI Maynooth In her presentation to the healthcare conference at the Economic and Social Research Institute on 19th October 2010, Professor Rowena Pecchenino discussed the challenges in moving towards a more sustainable healthcare system in Ireland. Professor Pecchenino outlined the necessary features of a well-functioning healthcare system. Drawing on parallels with the transport sector, she looks at the characteristics of a system that does not work well and one that does work well. Against this, the failings of the current healthcare system in Ireland are highlighted. Key to a well-functioning healthcare system is that it delivers care that is:

• Safe.
• High quality.
• Customer-centered.
• Prospectively planned.
• Team-based, integrated and co-ordinated.
• Protocol-driven.
• Cost effective.

Her presentation outlined how the key recommendations of the Expert Group support the creation of such a system and the key role that must be played through systematic planning, governance reform and changes in cultures and contracts.

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Note to Editors: 1. Professor Frances Ruane, Director, ESRI and Chairperson of the Expert Group on Resource Allocation and Financing in the Health Sector, published and presented the Report of the Expert Group on Resource Allocation and Financing in the Health Sector to Minister for Health and Children, Mary Harney, T.D on 9 July 2010. Download the Report of the Expert Group on Resource Allocation and Financing in the Health Sector (pdf) from the Department of Health and Children website at http://www.dohc.ie/publications/resource_allocation_financing_health_sector.html. A short paper summarizing the key elements in the Report and its 34 recommendations is at https://www.esri.ie/UserFiles/publications/WP358/WP358.pdf 2. Researchers from the ESRI assisted the Expert Group throughout its deliberations and it was agreed that the independent research findings should be published as a research report to accompany the Report of the Expert Group. Download the Evidence Report at: Resource Allocation, Financing and Sustainability in Health Care: Evidence for the Expert Group on Resource Allocation and Financing in the Health Sector. 3. Members of the media are invited to attend this conference. Link to event details. Ends