Towards a new health care system

ESRI Director, Professor Frances Ruane, outlines the recommendations put to the Department of Health and Children for a complete reform of the health care system.

The Expert Group on Resource Allocation and Financing in the Health Sector, established by the Minister for Health and Children, released its report ‘Towards a better and sustainable health care system – resource allocation and financing issues for Ireland’ in July 2010. It was asked, based on an analysis of the strengths and weaknesses of the current resource allocation arrangements for health and personal social services:

• to recommend appropriate changes in these arrangements which would support and incentivise the achievement of the core objectives of the health reform programme;

• to take a view (in the light of its work) on the most appropriate financing mechanism for the Irish health service; and

• to base its examination and recommendations on the existing quantum of public funding for health.

The group concluded that Ireland needs a health care structure with integrated decision-making to take account of quality, accessibility, safety and cost-effectiveness. This structure must explicitly link policy, implementation and delivery transparently at every level, and take account of private as well as public dimensions. The present system lacks these features.

Greater clarity is needed in relation to the responsibilities of the Department of Health and Children (DoHC) for policy and strategy, and the responsibilities of the Health Service Executive (HSE) for implementing national policy at local level. Changing patterns of health needs require that we have a fully integrated system covering the hospital, primary and continuing and community care sectors.

Allocation

In relation to resource allocation, the group established five guiding principles, together with 22 specific recommendations, drawn up on the basis of a review of Irish health policy documents, submissions to the group and an analysis of international best practice.

Principle 1: There should be a transparent resource allocation model based on population health need.

This implies a major overhaul of the DoHC which should move to a system of coherent integrated planning of the health care sector, covering both public and private providers, and both capital and current funding decisions. It also means linking resources systematically to current population health need.

Principle 2: The resource allocation model should support local implementation of national priorities based on nationally-set clinical accountability and governance standards.

This effectively means a move to a geographically distributed system, with local implementation of national standards which are set and supervised by HSE corporate. The group noted that this proposal is emphatically not a return to the old health board system.

Principle 3: The resource allocation model should support the delivery of safe, sustainable, cost-effective, evidence-based care in the most appropriate setting, whether public or private.

This means having a funding model that ensures resources systematically follow the requirements of the new integrated model of care, while simultaneously promoting greater quality and safety. Adopting this principle ensures that what is planned is resourced and resources are not provided unless there has been proper planning.

Principle 4: The resource allocation model should promote the integration of care within and across the hospital, primary and community and continuing care sectors at local level.

This means that resources must support integrated care so that users can get the best combination of health care to support them on clearly defined pathways across all three sectors. The group advised that the current governance infrastructure in the primary care and community and continuing care sectors is inadequate to support this approach.

Principle 5: Financial incentives should align as far as possible across all actors (including users and providers) in the system, consistent with promoting health and well-being and in line with nationally-determined priorities.

This principle implies that the HSE must develop new contracts that fund health care providers on a prospective and transparent basis, and reward quality of care and cost-efficiency throughout the system. For example, contracts for the primary care sector must have clearly defined deliverables, while hospital contracts must move from historic block budgeting to budgeting based on deliverables. To complete this process, a split will be required between purchasers of care and providers of care, which will involve a major change in governance within the HSE.

In relation to financing, the group concluded that significant reform is necessary to encourage appropriate behaviours by patients and clinicians and to ensure equitable access. The group took the view that such reform could take place either through a social health insurance system or by the development of the mainly tax-funded system currently in place. The group proposed a single guiding principle and five recommendations in relation to financing.

Principle 6: The methods of financing health care should be as effective and equitable as possible.

This principle commends a coherent system of financing that supports efficient use of services across the whole health care system and removes current inequitable and inefficient barriers to appropriate care. This involves reducing payment or co-payment rates at point of use and supporting the transfer of health care out of hospitals and into the primary and community care settings. Lower co-payments can be achieved over time either by the orderly development of the existing medical card system or by the development of a social health insurance system.

While the terms of reference did not specifically focus on sustainability, the group concluded that sustainability should feature as its seventh guiding principle, with seven associated recommendations:

Principle 7: All aspects of the health-care system should be sustainable

A sine qua non for having a sustainable system is an information framework that brings together all the costs of health care into a transparent setting, allowing major costs to be continuously subject to careful analysis and value for money audits. Furthermore, Ireland’s cost base for health care must be brought into line with relevant comparator countries, as is currently being done in the safety domain. Consequently, policy needs to focus on economic and as well as fiscal sustainability.

The Minister has publicly endorsed the report’s recommendations and was bringing proposals to government in November.

The report is published on the Department of Health and Children website at www.dohc.ie/publications/resource_allocation_financing_health_sector.html