Week 8 - Funding of Healthcare Flashcards
1
Q
what does funding and delivery of healthcare meaning?
A
funding = refers to how health care is paid for
delivery = refers to how health care services are managed, structured, and distributed
2
Q
what are Canada’s three largest health expenditures?
A
1) hospitals
2) physician services
3) drugs
3
Q
how are services in Canada funded and delivered?
A
- all medically necessary services are publicly funded
- these services are delivered by either private for-profit (private clinics) or private not-for-profit (i.e hospitals) businesses or organizations
4
Q
private versus public healthcare delivery
A
- in canada, the mix of public vs private health expenditures stands at around 70/30%
–> physicians, hospitals and public health are almost entirely paid out of the public purse
–> expenses involving other professionals (dentists, vision care) and drugs are paid primarily out of private dollars
5
Q
do private healthcare clinics exist in canada?
A
- not all healthcare is delivered publicly in canda
- there are private healthcare clinics that exist in some provinces
- some clinics offer non medically necessary services, such as 3D imaging of fetuses and optional MRI’s
- some clinics offer primary care for those that can afford to may for increase service speed and/or quality
6
Q
what is the concern with private healthcare?
A
- private clinics that provide primary healthcare may divert resources and personnel away from the public healthcare system
- as a result, this may lengthen the wait time for others waiting in the public system
- these private clinics are essentially permitting queue-jumping for those who can afford to pay
7
Q
role of for-profit vs non-for-profit organizations in healthcare
A
8
Q
types of federal health transfer payment models
A
- territorial formula financing
- equalization payments
- the canada health transfer
- the canada social transfer
9
Q
what is the canada health transfer?
A
- the largest annual cash transfer of funds from the federal government to the provinces and territories
- is based on the funding formula where the amount paid to provinces is tied to the gross domestic product (GDP) and guaranteed not to fall below 3% of the GDP
10
Q
what is the canada social transfer?
A
- provides funding to the provinces and territories through a two-part payment formula, cash and tax points
- the dollar value of the CST transferred is calculated on an equal per capita cash basis to ensure that the funds are equally distributed
- CST funding targets social programs, including post-secondary education, social assistance, and services programs for children
–> provinces/ territories can allocate the money as they see fit but it must be assigned to the programs outlined by the federal government
11
Q
what is territorial formula financing?
A
- the federal government uses the Territorial Formula Financing (TFF) to calculate money given to the territorial governments for public services
- the money is allotted to these jurisdictions because of their unique geography, population distribution, and related high cost of delivering health care and other public services
- funding is provided by the federal government through taxes paid by Canadians across the country.
12
Q
what are equalization payments?
A
- refer to the federal-to-provincial transfer of funds to address fiscal inequities among the provinces (not to territories)
- some provinces have more money than others and thus can provide more public services to their residents
- provinces with less money cannot provide equivalent services and therefore receive equalization payments to ensure that they have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation
- money for equalization payments comes from federal taxes
- provinces do not contribute money to this program
- there are no restrictions on how this money is spent
–> provinces with more money are sometimes referred to as the “have” provinces and those that have less money, the “have not” provinces.
13
Q
how has healthcare spending in Canada changed over the years?
A
- Canada’s total health care spending in 2019 was an estimated $265.5 billion, representing 11.5% of Canada’s GDP
- in 2021, it rose to about $308 billion following an upswing in spending in response to the COVID-19 pandemic in 2020
- this represents a 12.8% increase in expenditures (three times the growth rate experienced between 2015 and 2018, which was 4.4% per year)
- over the past few years, spending on health has consumed approximately 40% of both provincial and territorial health care budgets
–> as a result of the pandemic, health care resources have been strained to almost unthinkable limits, with spending on the health sector reaching heights not seen in recent memory.
14
Q
what factors per-capita spending among provinces/territories?
A
- the services paid for by the public plan (i.e., what is considered medically necessary)
- the type and extent of social programs
- the mix of health care providers delivering health care
- the relative age of the population (e.g.,community and home care programs)
- the number of individuals in publicly funded health care facilities (e.g.,long-term care)
- the population density versus geographic profile of the jurisdiction
15
Q
how does per-capita health spending vary by province?
A
- per capita health spending in the Northwest Territories, Yukon, and especially Nunavut is considerably higher than in other jurisdictions
- these regions have a lower population base, but their large geographic area and distance between communities make the delivery of health care more complicated and more expensive
- ontario’s per capita spending was lowest, at $7,773
- Newfoundland and Labrador’s spending was the highest, at $9,585 (CIHI, 2021a)
- of the territories, Nunavut had the highest per capita spending, at $23,023.
16
Q
how does hospital funding work?
A
- the provincial/territorial ministry, or department of health, provides the majority of funds to hospitals to deliver services to the community (which covers about 85 to 100% of the costs of operating hospitals)
- additional revenue may be obtained from sources as parking, cafeterias, and additional federal revenue
- funds are also raised by community organizations (especially for specific expenditures such as a new wing or diagnostic equipment), grants, donations, and charitable giving, through hospital foundations, for example
- the hospital is then expected to operate as a business, ending the fiscal year with a balanced budget
- in all jurisdictions, hospitals are accountable for their operational plan and how they manage their funding allotment
- most hospitals sign agreements outlining target goals, as well as financial and performance outcomes
17
Q
types of hospital funding mechanisms
A
funding models are used to determine the amount of money the government provides to a hospital
- block or global funding
- line-by-line funding
- model of service-based funding (cased-mixed approach)
- activity-based funding
- population-based funding model (capitated funding)
18
Q
activity based funding
A
- this model is popular and used in several jurisdictions
- funding is provided according to the number and types of services the hospital provides to each patient
–> the goal of this model is to make the facility more efficient and reduce wait times.
19
Q
block or global funding
A
- a hospital’s funding amount is determined by its previous year’s expenditures and an annual lump sum of money is provided on the basis of that analysis
–> can be problematic, as there is no consideration of the population the hospital serves, or their specific health care needs
–> in addition, there is no incentive for a hospital to provide high-quality care using a best practices approach.
20
Q
model of service-based funding (cased-mixed approach)
A
- expenditure needs are analyzed according to the types of cases treated and the volume of patients seen (similar medical conditions and similar treatments are grouped)
- funding is provided in the form of a global budget (annual lump sum of money)
21
Q
line-by-line funding
A
- itemizes the costs of specific hospital services and equipment, referred to as inputs, and the hospital receives the amount of money required for each services
22
Q
population-based funding model (capacitated funding)
A
- funding granted according to patient demographics (e.g., age, gender, socioeconomic status) and the hospital’s size and location
example: A hospital located in an area with a large elderly population will receive more funding than a hospital with a primarily young clientele
23
Q
what are the requirements for funding?
A
- every hospital must be accountable for the funds it requests
- after completing its budget, the hospital assesses its financial needs, prepares documentation, and negotiates with the minister of health for appropriate funding
- to facilitate these activities, the hospital must track the expenses of all departments and services.
- at the end of the fiscal year, a hospital must report on its financial status—whether it is in the black (surplus) or in the red (deficit)
–> a hospital in the red must look for ways either to reduce costs or to be approved for extra funding. it must examine the services it offers and the cost of each and determine where cuts can be made
–> a hospital may have to reduce services and staff, close beds, or decrease operating time to keep within its budget
–> under certain circumstances, the ministry or department of health may grant extra money to hospitals with budget shortfalls
24
Q
factors that affect hospital costs
A
- the types and mix and location of hospitals in any jurisdiction
- the mix of inpatient and outpatient admissions and related procedures
–> larger hospitals with more inpatient beds, such as teaching hospitals and those that conduct research, typically have higher expenditures
25
what are hospitals major expenses?
- Staff compensation (salaries) is the largest cost driver for hospitals, consuming about 71% of the total budget.
- hospital supplies, sundry, equipment, in-hospital drugs, building and grounds, and contracted services make up the rest of the expenditures
26
what services in hospitals (functional areas) are most expensive?
- nursing services were the most expensive, responsible for 19% of expenditures, followed by support services at 17% and administrative support takes up 4.9% of the expenditures
- Operating rooms consumed just under 7% of expenditures
- medical imaging, 4.6%
- emergency department, 4.5%.
27
top 5 reasons for hospital admissions
- patients giving birth
- chronic obstructive pulmonary disease (COPD and bronchitis)
- heart attacks
- heart failure (HF)
- osteoarthritis
28
cost-reduction strategies at hospitals
- reducing length of stay = reduce costs and make more beds available
- the type of accommodation (standard vs private/semi-private)
- increasing the number of same-day admissions (shorten time of patient stay)
- increase number of same day surgeries (on outpatient basis)
- timely discharges (avoid extra costs)
- efficient bed management/ allocation
- increased outpatient and community support
- tax credits for caregivers
- merging and integration of services
29
what is hospital merging?
- a process by which two or more separate hospitals combine their operations and resources to form a single entity
- may involve several facilities and include acute care hospitals, specialty hospitals, or long-term care facilities
- typically involve hospitals that are located in one geographic area and are headed by a single administrative body or corporation
30
how can hospital mergers occur?
Hospital mergers occur in two main ways:
1. The horizontal model:
- merges several hospitals under one administration (one board, one CEO, one budget) but maintains several sites.
2. The vertical model:
- merges specific programs within a single organization
- however, the administration of various programs may remain independent of one another, thus not be under the direction of one board
31
advantages to hospital merging
- reduced duplication of services
- higher levels of efficiency
- lower administration and management costs
- ability to offer more services with better results for patient care and recovery
- larger institutions are also believed to attract more staff
--> mergers of smaller hospitals appear to be more successful because the resulting facility broadens its service base while retaining staff and improving care
32
disadvantages to hospital merging
studies have shown some negative outcomes when larger hospitals merge, particularly the adverse effects on staff
- mergers result in disruption of a hospital’s culture
- lost seniority
- displacement of staff members, either through a reorganization of positions or layoffs
33
what is continuing care?
- refers to measures necessary to support and care for individuals who cannot manage independently
- these services can be provided in their private homes, in a seniors’ residence, or in long-term care facilities
34
types of long term care accomondations
- residential care
- alternate levels of care
- long term care facilities
- copayment
- home care and community care
35
how are long term care centres funded?
- under the Canada Health Act, continuing care is described in vague terms as “extended” services that are not subject to the terms and conditions of the Act
- as a result, individuals can be charged for continuing care services
- services do not have to be publicly owned or operated, offered on a universal basis, or accessible to everyone
--> the provinces and territories select which continuing care services are publicly funded, by whom and by how much
--> all jurisdictions publicly fund a huge portion of home care, community care, and long-term care services, although configuration and delivery of these services vary
36
what is alternate level of care
- the individuals in hospitals who cannot return to independent living and are waiting for home care services or placement in a long-term care facility
- these individuals are referred to as alternate level of care (ALC) patients
- they occupy more expensive acute care beds that should be used by those requiring an intensive level of care
- this creates a backlog of acute care patients who languish in the hallways of EDs and nursing unit corridors = hallway medicine
37
what is home care and community care
- people of all ages who require care in their home, at school or in the community
38
what is residential care
- refers to living accommodations that offer a variety of support needs, usually for older persons
- these accommodations include lodges (public or private), assisted living or supportive services in the community (e.g., supportive housing), and long-term care facilities
- the cost of most residential facilities, or portions, are covered by public health plans
39
what are long term care facilities
- these facilities provide varying levels of care to individuals:
--> from those who require less support but are unable to live on their own
--> to those who require total care and supervision for physical or cognitive reasons( 24 hours a day, 7 days a week)
- evels of care are classified as independent, semi-independent, and dependent
40
effects of rising costs of drugs in canada
-
41
why are costs for drugs rising in canada
- the rising cost of some newer medications
- the fact that more people are taking more medications
--> pharmaceutical companies are researching and producing more specialized and more expensive medications called biologics (derived from living material)
42
drug coverage in canada
- Canada lacks a national drug plan
- however, most regions have catastrophic drug coverage for expensive medications for specific conditions when families cannot afford them.
- povinces and territories offer drug insurance to certain groups, such as seniors, people with disabilities, and low-income individuals, often with copayments or deductibles.
- Québec has had a provincial drug plan since 1997 for those without private insurance.
- plans for a national pharmacare plan are under consideration, aiming to reduce overall medication costs for provinces and territories.
--> over-the-counter (OTC) medications don't require prescriptions and are rarely covered by health plans
--> while prescription medications need a prescription
43
what are human health resources?
- human health resources refers to to almost all people who work in the health care field
- ranges from primary care providers and nurses, to technologists and administrative management
- nurses, followed by physicians, are the largest group of regulated health professionals in Canada
- physicians and nurses are also the two largest cost drivers of health human resources
44
physician payment models
- population based funding (capitation)
- global budget
- fee for service
- indirect capitation
- specialists compensation
- salary and contract
- blended funding
45
what is population (capitation) based funding?
- the doctor receives an annual fee for each patient in their practice
- the doctor is paid for each rostered patient in his/her practice
- the doctor receives a set amount for each patient determined by the patient’s age and health care needs
46
what is global funding?
- doctors practicing in underserviced areas are paid a certain fee for maintaining these practices
47
what is fee for serving funding?
- doctors charge the provincial/territorial plan for every service they perform
- the amount the doctor bills relates to the complexity and length of the patient visit.
48
what is indirect capitation funding?
- an organization (e.g., a regional health authority) receives a set amount of money to manage health care (staff, services, administrative costs, and capital expenditures) for a population base.
- employees may be compensated in many ways
49
what salary/contract funding?
- doctors receive a negotiated amount of money per time frame (usually a month).
50
what is specialist compensation funding?
- a specialist may be employed by a hospital or primary health care reform group, or maintain his/her own practice
- payment is specific to the type of employment and may include fee-for-service, salary, or follow a payment formula for a particular group.
51
what is blended funding?
- physicians using a form of funding other than “fee-for-service” also use another method of payment
--> (i.e., some of physician’s practice is non-rostered and using a fee-for-service funding scheme and another portion of the practice funded based on capitation-based funding).
52
how does technology affect the cost of healthcare?
- provincial/ territorial governments fund IT services in public healthcare facilities.
- physicians typically cover expenses related to medical software systems in their offices, with some jurisdictions offering grants.
- hospitals bear the financial responsibility for changing and upgrading their systems (sometimes funds from the ministry)
- CT, MRI, and PET/CT scanners are costly to purchase, maintain, and operate.
- funding for equipment varies by province and territory, with some jurisdictions having PET/CT scanners funded by local organizations and operational costs.
- in most jurisdictions, selected diagnostic imaging services are contracted out to private facilities, with the provincial/territorial plan covering the costs.
53
what is Canada Health infoway?
- Canada Health Infoway is an independent nonprofit organization (NPO)
- it was established by the Canadian government in 2001 to provide digital solutions for Canada’s health care system
- projects like PrescribeIT and ACCESS Health aim to enhance connectivity and patient accessibility to health information
