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Regulating private hospitals Professor EK Yeoh. Harding-Preker Framework Distribution (equity) Efficiency Quality of Care Source: Adapted from Harding.

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Presentation on theme: "Regulating private hospitals Professor EK Yeoh. Harding-Preker Framework Distribution (equity) Efficiency Quality of Care Source: Adapted from Harding."— Presentation transcript:

1 Regulating private hospitals Professor EK Yeoh

2 Harding-Preker Framework Distribution (equity) Efficiency Quality of Care Source: Adapted from Harding & Preker, Private Participation in Health Services, PHSA Gather available information Identify additional needs In-depth studies PHSA Gather available information Identify additional needs In-depth studies Activities Hospitals PHC Diagnostic labs Producers / Distributors Ownership For-profit corporate For-profit small business Non-profit charitable Formal/ Informal Activities Hospitals PHC Diagnostic labs Producers / Distributors Ownership For-profit corporate For-profit small business Non-profit charitable Formal/ Informal Grow Harness Convert Strategy Assessment Issues and Goals Instruments Focus Private Sector Public Sector Policy Tools Regulation Contracting Training/Info Social marketing Social franchising Info. to patients Demand-side (incl. Vouchers) PPP transactions Enable environment improvement Policy Tools Regulation Contracting Training/Info Social marketing Social franchising Info. to patients Demand-side (incl. Vouchers) PPP transactions Enable environment improvement

3 Harding-Preker Framework Distribution (equity) Efficiency Quality of Care Source: Adapted from Harding & Preker, Private Participation in Health Services, PHSA Gather available information Identify additional needs In-depth studies PHSA Gather available information Identify additional needs In-depth studies Activities Hospitals PHC Diagnostic labs Producers / Distributors Ownership For-profit corporate For-profit small business Non-profit charitable Formal/ Informal Activities Hospitals PHC Diagnostic labs Producers / Distributors Ownership For-profit corporate For-profit small business Non-profit charitable Formal/ Informal Convert Strategy Policy Tools Regulation Contracting Training/Info Social marketing Social franchising Info. to patients Demand-side (incl. Vouchers) PPP transactions Enable environment improvement Policy Tools Regulation Contracting Training/Info Social marketing Social franchising Info. to patients Demand-side (incl. Vouchers) PPP transactions Enable environment improvement Assessment Issues and Goals Instruments Focus Private Sector Public Sector Grow Harness Regulation

4 Outline for Presentation Define regulations Regulatory strategies and instruments Regulating quality – Compliance-based – Incentive-based – Self-regulation Regulatory regime and effectiveness Key Messages Further Reading and References

5 Regulation Regulation as setting forth mandatory rules that are enforced by a state agency Regulation incorporates all efforts by state agencies to steer the economy… include state ownership and contracting, taxation and disclosure requirements Regulation to include all mechanisms of both intentional and unintentional social control Saltman and Busse (2002) Baldwin et al (1998) Three basic categories

6 Regulation Regulation is the range of factors exterior to the practice or administration of medical care that influences behaviour in delivering health care Brennan and Berwick (1996)

7 Dimensions [Purposes] of health sector regulation Policy Objectives Normative and value driven Broad public interest Specific policy goals [ends and objectives] Managerial mechanisms Specific regulatory mechanisms to attain policy objectives Technical in nature, emphasis on efficient and effective management of human and financial resources Saltman and Busse (2002)

8 Social and economic policy objectives Equity and justice Social cohesion Economic efficiency Health and safety Informed and educated citizens Individual choice Harding and Preker (2003) Saltman and Busse (2002)

9 Health sector management mechanisms Regulating quality and effectiveness Regulating patient access Regulating provider behaviour Regulating payers Regulating pharmaceuticals Regulating physicians Harding and Preker (2003) Saltman and Busse (2002)

10 Regulatory strategy Command and control Self regulation Incentive-based regimes Market harnessing controls Disclosure Direct action Rights and liabilities laws Public compensation and social insurance Saltman and Busse (2002)

11 Actors Government Professional/ provider organizations Patients’/ Consumers’ organizations

12 Regulatory actors Saltman and Busse (2002) Baldwin and Cave (1999) self-regulators tend to be strong on specialist knowledge but weak on accountability to the public; local authorities strong on local democratic accountability, weak on coordination; parliament strong on democratic authority, weak on sustained scrutiny; courts and tribunals strong on fairness, weak on planning; central departments strong on coordination with the government, weak on neutrality; agencies strong on expertise and combining functions, weak on neutrality; directors general strong on specialization and identification of responsibility, weak on spreading discretionary powers.

13 Targets Quality Capacity Price Market structure and levels of services Entitlements Saltman and Busse (2002)

14 Regulatory instruments Control-based regulation – Licensing – Registration Incentive-based regulation – Contracts – Accreditation Market-structure regulation – Encourage desired behaviour Harding and Preker (2003)

15 Control-based regulatory instrument Harding and Preker (2003) AreaMethod of regulation ApplicationTarget Healthcare facilities Facility licensingOperation of new facilityMinimum facility structure Certificate of need programs New facility construction or facility expansion Community need for service Resource allocation Health maps (carte sanitaire) Health planning and distribution of health facilities Efficient distribution of health facilities Health system agencies New facility construction or facility expansion Rationalization of capital investment Antitrust regulationRelationship between providers Price and quality of services Facility accreditationFacility structure and performance Quality of services

16 Control-based regulatory instrument Harding and Preker (2003) AreaMethod of regulationApplicationTarget Healthcare personnel LicensingMinimum qualificationsQuality of services Primary and specialty certification Specialized competenceQuality of services RecertificationMaintained competenceQuality of services Practice guidelines and outcomes research Clinical practiceQuality of services Professional standards review organizations Utilization reviewQuality of services Cost of care Peer review organizations Utilization reviewQuality of services Cost of care Fines, penalties and sanctions Provider compliance with regulation Varied

17 Incentive-based regulatory instrument Harding and Preker (2003) Financial Incentives Capital markets Provide government loans at low interest. Provide government guarantees for borrowing on private markets. Improve access to low-cost credit and simplified loan application processes. Provide access to foreign currency. Taxes and tariffs Introduce tax waivers, exemptions, and deductibles. Provide favorable tariffs and duty-free imports of medical equipment and supplies. Other subsidies Give direct government subsidies targeted to public health objectives. Provide government grants targeted to public health objectives. Provider payment Ensure appropriate provider payment mechanisms. Assure reasonable profit margins (if prices are controlled by the government). Pay government obligations to providers in a timely manner. Protect overdrafts in response to government payment delays. Give bonuses to serve in underserved areas.

18 Incentive-based regulatory instrument Harding and Preker (2003) Nonfinancial Incentives Regulatory environment Improve ease of entry to the market. Improve regulatory processes and reduce bureaucratic controls. Disseminate information on regulations and laws. Confer legal authority to transform public providers into public corporations. Market and business environment Purchase selectively. Provide referral systems with the public sector. Grant access to use government facilities and equipment. Provide consumer and market information. Support development of an adequately skilled work force. Human resource development Offer training and professional development opportunities in needed specialties. Improve career path for specialties that are in short supply. Public-private sector relations Assure clarity and predictability of provider-performance expectations. Promote public and private sector provider dialogue. Formal partnership where appropriate (such as engage private providers in public health programs).

19 Regulatory instruments by regulatory strategy and target of regulation Harding and Preker (2003) Target of regulation/ regulatory strategy ControlsIncentives Indirect regulatory instruments (aimed at the input-provider interface) Capital fundingRegulation of capital markets Mechanisms for allocating public funds (such as contracting, prospective/ retrospective reimbursement) Government low-interest loans Government guarantees for borrowing on private markets ManpowerControl of medical school admissions Pay scales for public managerial personnel Accreditation of educational institutions Facilities, equipment, and supplies Import restrictions Global budgets Testing requirements and quality controls on production of equipment and supplies Health system agencies Duty-free imports of medical equipment and supplies Technology/ knowledge National health technology agencies/advisory panels Research funding Direct regulatory instruments (aimed at the provider-consumer interface) Price of services Rate setting and price controls Government subsidies Health system capacity (quantity and distribution of services) Certificate of need programs Health maps Bonuses to serve in undeserved areas Quality of services Registration/licensing requirements Practice guidelines Medical technology/equipment safety acts Voluntary facility accreditation Personnel credentialing Combinations of the above targets Fines, penalties, and sanctions Antitrust law (to control prices and quality of services). Professional standards review organizations and peer review organizations (to control cost and quality of services) Tax laws (to influence volume and price of private provision Provider-payment schemes (can influence volume and quality of services) Harding and Preker (2003)

20 Self-regulation A state-generated mandate that allows certain professionals or enterprises to set standards for the behaviour of its membership – Private self-regulation without state enforcement e.g. some professional organisations or voluntary organisations – Publicly mandated self-regulation e.g. professional self-regulation by physicians, dentists and pharmacists, etc. – Joint self-regulation with non-governmental actors Saltman and Busse (2002) Baldwin and Cave (1999)

21 Self-regulation AdvantagesDisadvantages High commitment to ownership of rulesSelf-serving Well-informed rule makingImpetus toward monopolistic behaviour Low costs to governmentCommand and control problems cannot always be avoided Close fit of regulatory standards with those seen as reasonable by actors Exclusion of public from rule-making procedures Potential for rapid adjustmentEnforcement bias toward industry Enforcement and complaints procedures potentially more effective Public distrust of enforcers Potential for combining with external oversight Problematic legal oversight Public preference for governmental responsibility Harding and Preker (2003) Baldwin and Cave (1999)

22 Regulatory body in Hong Kong The Medical Council of Hong Kong Hong Kong Academy of Medicine Hong Kong Hospital Authority

23 The Medical Council of Hong Kong Empowered by the Medical Registration Ordinance, Cap. 161, Laws of Hong Kong, the Medical Council maintains a register of eligible medical practitioners, administers the Licensing Examination, issues guidelines and a Professional Code and Conduct, exercises regulatory and disciplinary powers for the profession, and answers general enquiries from doctors and the public.

24 The Medical Council of Hong Kong Standards of practice – Licensing – Entry to the professions – Re-certification not required – Continuing medical education not required – Clinical audit and quality assurance not required Accreditation of specialties Code of practices and ethics

25 The Medical Council of Hong Kong 24 medical members, 4 lay members Preliminary Investigation Committee Licentiate Committee Education and Accreditation Committee Ethics Committee Health Committee

26 Hong Kong Academy of Medicine (HKAM) In recognition of the need for essential postgraduate medical education and training in Hong Kong, the Hong Kong Academy of Medicine was formally established under the Hong Kong Academy of Medicine Ordinance (Cap 419) with the statutory power to organise, monitor, assess and accredit all medical specialist training and to oversee the provision of continuing medical education.

27 Role of HKAM To maintain the standard of specialist training and specialist continuing medical education (CME) and continuous professional development (CPD) in the territory To assists the Medical Council of Hong Kong, the Registration body, in the maintenance of the Specialist Register (SR) since its inception in 1997 (Medical Registration Ordinance)

28 Specialist training Standard 6-year format for basic and higher specialist training leading to Fellowship Examinations and assessment Require continuing medical education and continuous professional development to maintain specialist status

29 Hong Kong Hospital Authority Public hospitals were corporatized in 1991 under the holding of a single statutory nonprofit public corporation, the Hospital Authority, independent of the government bureaucracy and established with the mandate to manage all public hospitals.

30 30 Hong Kong Hospital Authority Under the Hospital Authority Ordinance, the Hospital Authority is responsible for: – Advising the Government on the needs of the public for hospital services and of the resources required to meet those needs; – Managing and developing the public hospital system; – Recommending to the Secretary for Food and Health appropriate policies on fees for the use of hospital services by the public; – Establishing public hospitals; – Managing and controlling public hospitals; and – Promoting, assisting and taking part in education and training of persons involved in hospital or related services.

31 Management structure Functions: Clinical effectiveness and technology management Patient safety and risk management Patient relations and engagement Quality and Standards Infection, emergency and contingency Chief Infection Control Office Infectious Disease Control Training Centre

32 Quality assurance/ clinical audit Monitoring, audit and inspection Implement pilot hospital accreditation program, which includes defining the quality of hospital services in line with international standards and review by an international accrediting agent Key performance indicators Satisfaction survey

33 Regulating quality Structure – Facility licensing – Healthcare personnel licensing Process – Facility accreditation – Clinical practice guideline Outcome – Performance reporting – Clinical audit

34 Complementary/ synthetic role of regulatory instrument Licensing/ professional standards – Compliance/ control based – Self-regulatory Specialist practice – Self-regulatory – Non-financial incentive-based

35 A framework for comprehensive regulatory assessment Overall country profile Political economy Demographic and health indicators Political ideology Culture, values, and norms Interrelationship or power balance between stakeholders Per capita income level Demographic data Literacy rates Health status Existing or potential capacity for regulation Overall health sector structure Current regulatory system Government capacity Provider mix and extent and forms of private provision Breadth of insurance coverage: public, private Health care utilization indicators Status of current health care regulation Effectiveness of current regulation in encouraging private participation and ensuring desirable performance Information systems, ease of data collection, and ability to process data efficiently Organizational structure Level of government Technical capacity to perform regulatory functions (set standards, monitor, evaluate and enforce) Availability of trained personnel Funding (public and private) Harding and Preker (2003)

36 Regulatory decision-making Is the issue correctly defined? Is government action justified? Is regulation the best form of government action? Is there a legal basis for regulation? What is the appropriate level of government for this action? Do the benefits of regulation justify the costs? Is the distribution of effects across society transparent? Is the regulation clear, consistent, comprehensible and accessible? Have all interested parties had the opportunity to present their views? How will compliance be achieved? OECD (2002)

37 Regulatory activity Legislation Implementation Monitoring Evaluation Enforcement Judicial supervision Saltman and Busse (2002)

38 Regulating legitimacy Acceptability – Political – Social – Regulated Process – Communication – Transparency Independent creditability of regulatory body Legal foundation

39 Regulation Regulatory cycle Decide to regulate Secure legal authority Write rules Monitor compliance Impose penalties for violators Evaluate system performance Peter Berman

40 Key Messages Regulations is an inherently complex and political process. Regulation is a strategic, dynamic and on-going process. Control/Compliance based regulations needs to be complemented with other instruments (e.g. (purchasing, self-regulations) to be effective. Legitimacy and wide awareness of quality regulations are critical for effectiveness.

41 Reading and References Busse R, Hafez-Afifi N and Harding A (2000). “Chapter 4: Regulation of Health Services.” Private Participation in Health Services Handbook. Washington, DC: The World Bank Saltman R, Busse R and Mossialos Elias (2002). European Observatory on Health Care Systems Series: Regulating entrepreneurial behaviour in European health care systems. Open University Press. World Health Organization


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