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Paying for hospital care: the experience with implementing activity-based funding in five European countries

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  • O'Reilly, Jacqueline
  • Busse, Reinhard
  • Häkkinen, Unto
  • Or, Zeynep
  • Street, Andrew
  • Wiley, Miriam

Abstract

Following the US experience, activity-based funding has become the most common mechanism for reimbursing hospitals in Europe. Focusing on five European countries (England, Finland, France, Germany and Ireland), this paper reviews the motivation for introducing activity-based funding, together with the empirical evidence available to assess the impact of implementation. Despite differences in the prevailing approaches to reimbursement, the five countries shared several common objectives, albeit with different emphasis, in moving to activity-based funding during the 1990s and 2000s. These include increasing efficiency, improving quality of care and enhancing transparency. There is substantial cross-country variation in how activity-based funding has been implemented and developed. In Finland and Ireland, for instance, activity-based funding is principally used to determine hospital budgets, whereas the models adopted in the other three countries are more similar to the US approach. Assessing the impact of activity-based funding is complicated by a shortage of rigorous empirical evaluations. What evidence is currently available, though, suggests that the introduction of activity-based funding has been associated with an increase in activity, a decline in length of stay and/or a reduction in the rate of growth in hospital expenditure in most of the countries under consideration.

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  • O'Reilly, Jacqueline & Busse, Reinhard & Häkkinen, Unto & Or, Zeynep & Street, Andrew & Wiley, Miriam, 2012. "Paying for hospital care: the experience with implementing activity-based funding in five European countries," Health Economics, Policy and Law, Cambridge University Press, vol. 7(01), pages 73-101, January.
  • Handle: RePEc:cup:hecopl:v:7:y:2012:i:01:p:73-101_00
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    Citations

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    Cited by:

    1. Chris Bojke & Katja Grasic & Andrew Street, 2015. "How much should be paid for Prescribed Specialised Services?," Working Papers 118cherp, Centre for Health Economics, University of York.
    2. Milstein, Ricarda & Schreyoegg, Jonas, 2016. "Pay for performance in the inpatient sector: A review of 34 P4P programs in 14 OECD countries," Health Policy, Elsevier, pages 1125-1140.
    3. Berentsen, Aleksander & McBride, Michael & Rocheteau, Guillaume, 2017. "Limelight on dark markets: Theory and experimental evidence on liquidity and information," Journal of Economic Dynamics and Control, Elsevier, pages 70-90.
    4. Brown, Paul & Panattoni, Laura & Cameron, Linda & Knox, Stephanie & Ashton, Toni & Tenbensel, Tim & Windsor, John, 2015. "Hospital sector choice and support for public hospital care in New Zealand: Results from a labeled discrete choice survey," Journal of Health Economics, Elsevier, pages 118-127.
    5. Mark Stabile & Sarah Thomson, 2014. "The Changing Role of Government in Financing Health Care: An International Perspective," Journal of Economic Literature, American Economic Association, pages 480-518.
    6. Krachler, Nick & Greer, Ian, 2015. "When does marketisation lead to privatisation? Profit-making in English health services after the 2012 Health and Social Care Act," Social Science & Medicine, Elsevier, pages 215-223.
    7. Sutherland, Jason M., 2015. "Pricing hospital care: Global budgets and marginal pricing strategies," Health Policy, Elsevier, pages 1111-1118.
    8. Søgaard, Rikke & Kristensen, Søren Rud & Bech, Mickael, 2015. "Incentivising effort in governance of public hospitals: Development of a delegation-based alternative to activity-based remuneration," Health Policy, Elsevier, pages 1076-1085.
    9. Raulinajtys-Grzybek, Monika, 2014. "Cost accounting models used for price-setting of health services: An international review," Health Policy, Elsevier, pages 341-353.
    10. Karmann, Alexander & Roesel, Felix, 2016. "Hospital policy and productivity: Evidence from German states," CEPIE Working Papers 07/16, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    11. Socha, Karolina, 2014. "Mixed reimbursement of hospitals: Securing high activity and global expenditures control?," COHERE Working Paper 2014:3, COHERE - Centre of Health Economics Research, University of Southern Denmark.
    12. Finocchiaro Castro, Massimo & Guccio, Calogero & Pignataro, Giacomo & Rizzo, Ilde, 2014. "The effects of reimbursement mechanisms on medical technology diffusion in the hospital sector in the Italian NHS," Health Policy, Elsevier, pages 215-229.
    13. Philippe Widmer, 2015. "Does prospective payment increase hospital (in)efficiency? Evidence from the Swiss hospital sector," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 16(4), pages 407-419, May.
    14. Or., Zeynep, 2014. "Implementation of DRG Payment in France: Issues and recent developments," Health Policy, Elsevier, pages 146-150.
    15. Brammli-Greenberg, Shuli & Waitzberg, Ruth & Perman, Vadim & Gamzu, Ronni, 2016. "Why and how did Israel adopt activity-based hospital payment? The Procedure-Related Group incremental reform," Health Policy, Elsevier, pages 1171-1176.
    16. Sutherland, Jason M. & Liu, Guiping & Crump, R. Trafford & Law, Michael, 2016. "Paying for volume: British Columbia’s experiment with funding hospitals based on activity," Health Policy, Elsevier, pages 1322-1328.
    17. Ansgar Belke & Christian Dreger & Irina Dubova, 2016. "On the Exposure of the BRIC Countries to Global Economic Shocks," Discussion Papers of DIW Berlin 1594, DIW Berlin, German Institute for Economic Research.
    18. Baxter, Pamela E. & Hewko, Sarah J. & Pfaff, Kathryn A. & Cleghorn, Laura & Cunningham, Barbara J. & Elston, Dawn & Cummings, Greta G., 2015. "Leaders’ experiences and perceptions implementing activity-based funding and pay-for-performance hospital funding models: A systematic review," Health Policy, Elsevier, pages 1096-1110.

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