Optimisation of annual payments to public hospitals accounting for quality, access, and efficiency

Since the creation of the Portuguese National Health Service (SNS, from the Portuguese abbreviation of Serviço Nacional de Saúde), it is the State’s responsibility to ensure the access of the population to quality healthcare, regardless of its economic and social conditions. Efforts for attaining efficiency and reducing wastage, brought along by the successive reforms of the SNS, continue, as the 2009 financial crisis still lingers its effects on the social performance of the provided health services (now again affected by the COVID-19 pandemic). Public hospitals in Portugal are paid following a prospective budget scheme. These contracts define the level of production for each hospital through the computation of unitary costs but do not include variables concerning the access to and quality of health services, which, ultimately, may lead to inefficiencies and misallocation of resources. This study proposes a framework that considers the quality, access, efficiency, and complexity of the Portuguese public hospitals in their payments through the optimisation of the unitary costs established in the contracts, by testing and adapting a ‘best practices payment-based’ tool. Significant cost savings of 64 million € arose for the inpatient service of a relatively small sample of nineteen hospitals, showing high potential for cost containment while aiming for quality, access, and efficiency improvements.