Remuneration in Health Care. Models, Effects and Recommendations

Peter Lindgren

The design of the economic governance of health care is of importance for the efficiency, quality and organisation of care. Since it is the county councils that are to decide how providers of care should be remunerated, there are large variations between different parts of Sweden. These are some of the conclusions of the research report Remuneration in Health Care. Models, Effects and Recommendations.

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The report provides an overview of those models that are currently used for remuneration in health care in Sweden and also presents what is known about their effects. Traditionally, health care providers in Sweden have been remunerated with a fixed amount based on the costs in previous years. In the last 30 years, there has been a change in the governance of health care. Health care providers are, to an increasing extent, being governed by economic incentives. Among other things, it has become common to connect the payment to such factors as the resource efforts of the activity, its achievements or the degree of fulfilment of objectives.

The report finds that there is no remuneration model that is optimal for all situations. There is no model that is neutral. All kinds of economic governance models for health care are associated with both positive and negative effects. This also applies to the traditional model with fixed grants.

PETER LINDGREN gives a number of recommendations for how the economic governance of health care can be improved:

Make visible and evaluate those incentives that are created by each model. Since the economic governance might affect how health care is organised, what is being supplied and at what cost, the effects of a model should be analysed before they are applied in practice.
Let the type of care determine what remuneration model that should be applied. The benefit of advanced follow-up and targeted economic incentives is the largest for health conditionswhere it can be defined what is a relevant patient outcome and when the volumes and costs for care are large.
Complicated remuneration models are best suited for clearly defined illnesses. For severe cases where the patients might, for example, have complicated comorbidity or where the patient group is very heterogeneous, it might be difficult to implement follow-ups, due to difficulties in defining relevant outcome measures. In these cases, traditional remuneration models are more suitable.
Take into consideration how the remuneration model affects other driving forces. Economic incentives are not everything. The internal driving forces of the medical staff, such as professional pride and a sense of duty, are also of great importance. It is important that the remuneration systems are not designed so that there are conflicts between the economic incentives and the internal driving forces of the staff. An advantage of using measures of control that focus on the health outcome of the patient is that it is in harmony with the professional sense of duty of the staff.

The report was presented at an SNS seminar on April 2 2014.

About the report

”This survey is really needed. There has been an increase in the conflict of goals in Swedish health care and this is a survey of primary care and specialist care where the effects are studied from both a theoretical and an empirical viewpoint in a Swedish context. This makes the report credible which is valuable.”

ANNA GLENNGÅRD, PhD in Economics, School of Economics and Management at Lund University

”This report will be used in the county councils when we work on developing remuneration models. We do not have the time to read all new research in this field and this is a complete summary which shows that remuneration models are a factor that has an impact.”

LARS KOLMODIN, Financial Manager, Region Halland

”The recommendations are very interesting. The report should be a standard readingfor those of us working with these kinds of questions in any way.”

STEFAN KALLSTRÖM-JANSSON, Chief Physician, Healthcare Provision Stockholm County (SLSO)

The report was presented at a seminar. The participants were Anna Glenngård, PhD in Economics, School of Economics and Management at Lund University, Stefan Kallström-Jansson, Chief Physician, Healthcare Provision Stockholm County (SLSO) (SLSO), Lars Kolmodin, Financial Manager, Region Halland, Peter Lindgren, Doctor of Medicine employed at IVBAR, and affiliated with Medical Management Centre at Karolinska Institutet, Jan Steen, Financial Manager, Region Skåne and Eric Wahlberg, Business District Area Manager Health- and Medical Care, Praktikertjänst. The meeting was chaired by Fredrik Hed, medical journalist.

The report is part of the SNS and IFN research programme From Welfare State to Welfare Society.

Author of the report
PETER LINDGREN, PhD in Economics, employed at IVBAR, and affiliated with Medical Management Centre at Karolinska Institutet.

PETER LINDGREN, or +46-73-76 032 13.