Purchasing Inpatient and Outpatient Care through Hospitals

Abstract

After considering the fulfillment of some basic criteria making purchasing a tool for effectiveness, a framework allows to review how to best buy hospital services. Who should benefit most from hospital care financing ? The answer to this question will rely on an investigation of hospital services utilization, and on a better understanding of patients profiles. This type of investigation is a baseline for further decisions on what to buy. A purchaser should wonder: to what public health priorities hospital responds best and how efficient and equitable is hospital care? But hospitals have also a unique role in helping people facing major hazards, in providing some essential public health services and in enabling training: these services should be considered when purchasing. Hospitals represent a large diversity of organizations. Having that in mind makes it easier to figure out from whom to buy. The potential provision of care depends on the level of the provider but is also related to hospitals status taking into consideration productivity. It is also worthwhile to investigate insurance's role in the provision of care. Payment mechanisms have a strong influence on performance, for that reason the major alternative schemes have to be considered, each of them having advantages and limits. But hospital cash flow is also a specific issue that should not be ignored. The price paid has to be determined before making an agreement. This should lead to cautious estimates of cost of services as the information systems are often weak. Moreover it might be worthwhile to play with margin to favor internal cross subsidies. The co-payments as well as the opportunity cost have to be included to understand how to get best from pricing. Dealing with subsidies is a cornerstone when seeking better performance while purchasing hospital services. How subsidies are going to be channeled and for what kind of services will determine if purchasing is really effective.