The effect of financing on the allocation and production efficiency of the Hungarian health care system — Placing primary care into focus

The increased supply and the demand-driven explosion of global health care costs threaten the sustainability of health care services, mandating optimisation of cost-efficiency via health policy. As of July 1 2006, preventive-curative health care has been reimbursed using a centralised, closed prospective method; thus Hungarian health care providers operate budgets allocated through macro, mezzo or micro-level allocation mechanisms. Lacking sufficient incentives for patient care on the lowest level of care, production efficiency is the only tool left to increase efficiency. Nonetheless, one of the bigger challenges of the twenty-first century is managing chronic diseases that mandate continuous complex care encompassing all levels of care and the optimisation of patient referral methods. However, current allocation mechanisms have not yet reflected this paradigm shift. The paper discusses how capitation financing, by providing strict budgetary constraints, a framework for local political goals and enhancing allocation efficiency, could be a proper tool for optimising both allocation and production efficiency. Moreover, we propose that given the theoretical and legal framework of gate-keeping and the organisation of patient care by primary care physicians in Hungary, vertical allocation and horizontal production efficiency may be established by strengthening a primary care system that is reimbursed through complete capitation financing.