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FINANCING OF HEALTH CARE

by Dr PHUA Kai Lit
School of Medicine and Health Sciences
Monash University Sunway Campus
Bandar Sunway, Malaysia


HEALTH CARE COSTS

1. Why should doctors be concerned with health care financing?

Rising health care costs in all nations leading to:
Government cost control measures e.g. regulation of prices
Insurance company scrutiny of actions of doctors
Loss of clinical autonomy for doctors e.g.
doctors cannot prescribe expensive drugs or order expensive procedures without getting permission from other parties first

2. Reasons for Rising Health Care Costs
New technology e.g. MRI, organ transplants, renal dialysis, patented drugs
Population ageing
Epidemiological transition
Medicalisation of social problems
Rising expectations of the public e.g. expect better "hotel services" in hospitals
Systems of health care financing without proper cost control mechanisms
Unwise spending by governments e.g. building more and more hospitals
Inefficient privatisation e.g. privatisation of Government Medical Store in Malaysia

3. How do We Pay for Health Care?
Out-of-pocket i.e. patient and family pays
Employer pays e.g. employer reimburses the employee who sees the doctor
Private insurance scheme
Charity or PVOs (Private Voluntary Organisations) like the National Kidney Foundation
Government i.e. through tax money (Britain's National Health Service)or through a National Health Insurance scheme (South Korea and Taiwan)
Medical Savings Accounts (Singapore's Medisave)
Foreign aid (important in poor countries)

4a. How to Control Costs? (New Technology)
a. Control import and introduction of new technology e.g. technology assessment law and "certificate of need" law
b. Get doctors to practise medicine more cost-effectively e.g. prescribe generic drugs, do not order expensive lab tests unnecessarily
c. Better planning and utilisation of facilities e.g. whole of Australia has fewer MRI machines than the Kuala Lumpur region! Reduce the number of machines and utilise them more fully

4b. How to Control Costs? (Population Ageing)

a. Promote healthy lifestyles among the young as well as the old
b. Alternative ways of caring for the aged e.g. care at home rather than in institutions if possible
c. Place aged in long term care facilities rather than hospitalise them
d. Avoid "heroic medicine" if patient is a terminal case

4c. How to Control Costs? (Epidemiological Transition)

a. Prevention and health promotion at the individual level
b. Spend more on environmental health and occupational health programmes
c. Better regulation of food industry (including fast food industry)

4d. How to Control Costs? (Medicalisation of Social Problems)

a. Non-medical programmes to tackle social problems such as smoking and drug/alcohol abuse e.g. ban cigarette advertising, heavy taxes on tobacco and alcohol products

4e. How to Control Costs? (Rising Expectations)

a. In government hospitals, do not provide unnecessary "hotel services"
b. Patients should be made to pay more if they want better "hotel services"
c. For chronic conditions, teach patients and their families better self-care so as to avoid expensive complications e.g. diabetics and proper foot care
d. Insurance companies should not pay for newer drugs and medical procedures i.e. those which have not been subjected to rigorous clinical trials

4f. How to Control Costs? (Financing Schemes without Proper Cost Control Mechanisms)

a. Pay doctors and other health care providers through capitation, salaries or negotiated fees
b. Lessen "fee-for-service" payments to reduce "supplier-induced demand"
c. Utilisation reviews to identify high cost health care providers
d. More cost-sharing by patients e.g. co-payments, deductibles and co-insurance (to reduce unnecessary care-seeking, to promote more appropriate care-seeking)

4g. How to Control Costs? (Unwise Spending by the Government)

a. Spend more on prevention and health promotion e.g. spend more on antenatal care rather than on neonatal intensive care
b. Reduce hospitalisation rates (i.e. wherever possible, treat on an outpatient basis) and have quicker discharges of hospitalised patients
c. Utilise lower cost health personnel to treat routine medical problems e.g. use nurse practitioners and medical assistants to treat simple cases
d. Don't build so many hospitals

4h. How to Control Costs? (Inefficient Privatisation)

a. Privatise only if this will increase competition and result in greater efficiency (lower prices, better service quality, better access)
b. Better laws and better enforcement of existing laws regulating the private sector e.g. one (controversial) proposal would be to allow doctors and hospitals to advertise and inform the public about their charges for various procedures
c. Where privatisation is failing, the government should take over from the private sector

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