They key sentences in the 2nd scenario are:
A recent satisfaction survey showed that only 45% of patients were satisfied with the service. Most of the patients visit the hospital merely because it is affordable and even free of charge (under arrangement of health insurance program).
Physician’s income in hospital X is lower than in private hospitals. Their income is also influenced by the drug prescribed. By prescribing branded drugs, doctors receive more incentives from the pharmaceutical companies.
Observations from the data given in the tables, most doctors also work in around three and even four hospitals at the same time, which of course will affect their quality of care.
Percentages of patients satisfied with the services are significantly higher in all four private hospitals (83%, 92%, 91% and 95% accordingly) compared to public hospital with 45% satisfied patients.
How physicians are paid?
There are two main ways which are capitation/salary based and fee for service. Let me explain both payment mechanism before we move to pros and cons for each mechanism.
1. a) salary based: fixed monthly payments for medical doctors which medical treatment is not influenced by economic incentives. Method of payments in Malaysia government servants.
b) capitation: payment by insurance company to health providers for services they deliver, where the amount is not based on the type or amount of health services provided, but based on the number of members. (Feldstein, 1983)
example: The budget for Health Insurance for the Poor (AsKesKin) was calculated based on 5 000 per month per individual.
“We find that the program is indeed targeted to the poor and those most vulnerable to catastrophic out-ofpocket health payments. The public health insurance improves access to healthcare in that it increases utilization of outpatient healthcare among the poor, while out-of-pocket spending seems to have increased for Askeskin insured in urban areas.” (Social Health Insurance for the Poor: Targeting and Impact of Indonesia’s Askeskin Program, Sparrow R et al, 2010)
pros: - planning and budgeting is easier
- better in providing efficiency and quality control
cons: - Underutilization -> forprofit maximisation (supplier reduced demand)
- Doctor’s attention may be low
- Patient satisfaction tends to be low
- Excessive referral
2. fee for service: doctors are paid based on service provided. Most private hospitals implements this mechanism.
pros: - doctors are happy. the income depends on the productivity.
- patient satisfaction is high because the doctor gives more attention and good services.
cons: - Tendencies for supplier induced demand
- Under referral
- Increasing health cost inflation
- Difficult to have a proper budget
How to solve this? From my understanding, in general, these are some of the solutions:
Clinical Governance
A framework through which organizations are accountable for continuously improving the quality of their services, and safeguarding high standards of care by creating an environment in which clinical care will flourish (NHS-UK Department of Health, 1998)
Managed Care
any system that manages healthcare delivery with the aim of controlling costs, by:
- restricting the type, level and frequency of treatment
- limiting the access to care
- controlling the level of reimbursement for services
References:
1. Lecture Note: Payment Mechanism for Physician by Dr Laksono Trisnantoro and Dr. Sigit Riyarto
2. Social Health Insurance for the Poor: Targeting and Impact of Indonesia’s Askeskin Program, Sparrow R et al, 2010
3. Student Book Block 4.2 Health System and Disaster
