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Introducing activity-based financing: a review of experience in Australia, Denmark, Norway and Sweden

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Author Info

  • Andrew Street

    (Centre for Health Economics, University of York)

  • Kirsi Vitikainen
  • Afsaneh Bjorvatn
  • Anne Hvenegaard

Abstract

We review and evaluate the international literature on activity-based funding of health services, focussing especially on experience in Australia (Victoria), Denmark, Norway and Sweden. In evaluating this literature we summarise the differences and pros and cons of three different funding arrangements, namely cost-based reimbursement, global budgeting and activity-based financing. The institutional structures of the four jurisdictions that are the main focus of the review are described, and an outline is provided about how activity-based funding has been introduced in each. We then turn to the mechanics of activity-based funding and discuss in detail how patients are classified, how prices are set and how other services are funded. Although concentrating on the four jurisdictions, we draw on wider international experience to inform this discussion. We review evidence of the impact of activity-based funding in the four jurisdictions on efficiency, activity rates, waiting times, quality and overall expenditure. Finally we conclude with a brief commentary of some of the challenges that would have to be faced if implementing activity-based funding.

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File URL: http://www.york.ac.uk/media/che/documents/papers/researchpapers/rp30_introducing_activity-based_financing.pdf
File Function: First version, 2007
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Bibliographic Info

Paper provided by Centre for Health Economics, University of York in its series Working Papers with number 030cherp.

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Length: 52 pages
Date of creation: Oct 2007
Date of revision:
Handle: RePEc:chy:respap:30cherp

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References

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  1. Street, Andrew & Duckett, Stephen, 1996. "Are waiting lists inevitable?," Health Policy, Elsevier, vol. 36(1), pages 1-15, April.
  2. Anni Ankjær-Jensen & Pernille Rosling & Lone Bilde, 2006. "Variable prospective financing in the Danish hospital sector and the development of a Danish case-mix system," Health Care Management Science, Springer, vol. 9(3), pages 259-268, August.
  3. Ellis, Randall P. & McGuire, Thomas G., 1986. "Provider behavior under prospective reimbursement : Cost sharing and supply," Journal of Health Economics, Elsevier, vol. 5(2), pages 129-151, June.
  4. Keeler, Emmett B. & Carter, Grace M. & Trude, Sally, 1988. "Insurance aspects of DRG outlier payments," Journal of Health Economics, Elsevier, vol. 7(3), pages 193-214, September.
  5. David Epstein & Anne Mason, 2006. "Costs and prices for inpatient care in England: Mirror twins or distant cousins?," Health Care Management Science, Springer, vol. 9(3), pages 233-242, August.
  6. Llewellyn, Sue & Northcott, Deryl, 2005. "The average hospital," Accounting, Organizations and Society, Elsevier, vol. 30(6), pages 555-583, August.
  7. Jonas Schreyögg & Tom Stargardt & Oliver Tiemann & Reinhard Busse, 2006. "Methods to determine reimbursement rates for diagnosis related groups (DRG): A comparison of nine European countries," Health Care Management Science, Springer, vol. 9(3), pages 215-223, August.
  8. A. Street & D. Dawson, 2002. "Costing hospital activity: the experience with healthcare resource groups in England," The European Journal of Health Economics, Springer, vol. 3(1), pages 3-9, March.
  9. Mikkola, Hennamari & Keskimaki, Ilmo & Hakkinen, Unto, 2002. "DRG-related prices applied in a public health care system--can Finland learn from Norway and Sweden?," Health Policy, Elsevier, vol. 59(1), pages 37-51, January.
  10. Marisa Miraldo & Maria Goddard & Peter C Smith, 2006. "The incentive effects of payment by results," Working Papers 019cherp, Centre for Health Economics, University of York.
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Cited by:
  1. Longo, R & Miraldo, M & Street, A, 2009. "Price regulation of pluralistic markets subject to provider collusion," Working Papers 1454, Imperial College, London, Imperial College Business School.
  2. Zeynep Or & Thomas Renaud, 2009. "Activity based payment in hospitals: Principles and issues drawn from the economic literature and country experiences," Working Papers DT23, IRDES institut for research and information in health economics, revised Mar 2009.
  3. Anne Mason & Marisa Miraldo & Luigi Siciliani & Peter Sivey & Andrew Street, 2008. "Establishing a Fair Playing Field for Payment by Results," Working Papers 039cherp, Centre for Health Economics, University of York.
  4. Zeynep Or & Thomas Renaud & Laure Com-Ruelle, 2009. "One price for all? Sources of cost variations between public and private hospitals," Working Papers DT25, IRDES institut for research and information in health economics, revised May 2009.

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