Chapter 1 Key Terms

Question 1

Beveridge system

Answer 1

A health system funded through public revenue raised by general taxation,
named after Sir William Beveridge.

Question 2

Bismarck system

Answer 2

A health system funded through payroll-based social insurance
contributions, named after Otto von Bismarck.

Question 3

Co-payments (user fees)

Answer 3

Direct payments made by users of health services as a contribution to
their cost (eg prescription charges)

Question 4

Financial management

Answer 4

Managerial activities of obtaining and disbursing funds, financial
planning, reporting and risk management.

Question 5

New public management

Answer 5

An approach to government involving the application of private
sector management techniques.

Question 6

Outcomes

Answer 6

Change in status as a result of the system processes (in health services context, the
change in health status as a result of care).

Question 7

Private/public mix

Answer 7

mix The mix of public and private funders and providers of health services.

Question 8

Provider payment methods

Answer 8

The different ways of paying health care providers such as fee for
service, capitation and case base reimbursement.

Question 9

Residual claimant status

Answer 9

The arrangements under which a person or agency – the residual
claimant – is entitled to

Question 10

Input

Answer 10

the resources which are used to produce health care (examples: staff, assets, facilities, equipment)

Question 11

Process

Answer 11

the various activities (employing inputs) so that the desired outcome is achieved

Question 12

Outcomes

Answer 12

measure the changes to a patient’s health status that can be attributed to the preceding health care and financial resources consumed

Question 13

Fixed Budgets

Answer 13

most commonly used for allocating resources to health care providers and programs. Overall expenditure can be controlled easily by defining limits for each spending category such as staff, equipment and medical supplies. Easy to administer, but not responsive to local needs. Managers are entrusted with more accountability for the financial performance of the organization for which they are responsible.

Question 14

Capitation

Answer 14

mainly used in primary care services and based on fixed payment per insured person to cover for a defined package of services. This gives an incentive to reduce costs per case, but can also lead to selection of low-risk cases or inappropriate referrals.

Question 15

Fee for service

Answer 15

involves each single item of service being paid for by the patient or third-party payer. If not combined with a budget cap, this may lead to inappropriate provision of care, known as supplier-induced demand. Conversely, FFS can be used as an instrument to increase service provision in underserved areas of care.

Question 16

Case based reimbursement

Answer 16

based on an agreed sum (or tariff) which is paid for each category of patient or episode of care. In the hospital sector, this form of payment has largely replaced retrospective payment on the basis of bed days provided which generated incentives to increase length of stay. The methods of defining cases vary widely. Many countries use only a few categories such as distinguishing between inpatient and outpatient cases, or for the most common operations. The more complex methods are based on diagnosis-related groups (DRGs), which may consist of several hundred categories for reimbursement.