Limited Consequences of a Transition From Activity-Based Financing to Budgeting: Four Reasons Why According to Swedish Hospital Managers

Activity-based financing (ABF) and global budgeting are two common reimbursement models in hospital care that embody different incentives for cost containment and quality. The purpose of this study was to explore and describe perceptions from the provider perspective about how and why replacing variable ABF by global budgets affects daily operations and provided services. The study setting is a large Swedish county council that went from traditional budgeting to an ABF system and then back again in the period 2005-2012. Based on semistructured interviews with midlevel managers and analysis of administrative data, we conclude that the transition back from ABF to budgeting has had limited consequences and suggest 4 reasons why: (1) Midlevel managers dampen effects of changes in the external control; (2) the actual design of the different reimbursement models differed from the textbook design; (3) the purchasing body’s use of other management controls did not change; (4) incentives bypassing the purchasing body’s controls dampened the consequences. The study highlights the challenges associated with improvement strategies that rely exclusively on budget system changes within traditional tax-funded and politically managed health care systems.

Coping with autonomy: Managers’ responses to the pendulum between activity-based and fixed reimbursement systems in Swedish hospital care

Governance and management in publicly funded services includes the processes that governments use to ensure that the activities of organizations involved in the delivery of public services are in line with those expected. In hospital care, the reimbursement model is viewed as an important tool to motivate providers to act in the interest of the funding body. The purpose of this study was to analyse consequences of a change from activity-based funding (ABF) to global budgeting for the governance and management of hospitals in a Swedish county council. The paper furthers previous research by illustrating how managers at different levels and in different hospital types adopt different strategies to cope with the increased autonomy inherent to the budget model. A single case study with an explorative onset was used to study different levels of management and cover different specialties in the county council Region Skåne (RS). The main source of data is semi-structured interviews with managers at different levels of the health care organisation. A key result is that shifting reimbursement system had potentially large consequences for the processes of management and governance. The results suggest that a reform aimed at increased professional autonomy may have different effects depending on the way that managers handle the change and that such differences may be attributable to type of hospital. i.e. university versus non-university hospitals. Two potential strategies for managers to cope with a change from variable ABF to fixed global budgets have been identified: One is to compensate for the low level of detail in assignments by continuing or even increasing the use of other coercive controls. Another is to adapt and align other controls with the new reimbursement model and focus on more enabling types of governance and management overall.

Does the Extent of per Case Payment System Affect Hospital Efficiency?

Recently increasing public pressure to contain costs in the health care sector has led many national governments to introduce some type of prospective payment system and reduce the scope of global budgeting. This study investigates the extent to which the reimbursement systems of the Italian hospital sector have an impact on hospitals’ technical efficiency. Because of high variation in the financing and provision of health care services among regions and hospitals, Italy represents an interesting case study to test these effects. A two-stage data envelopment analysis was employed, in which the efficiency scores of all Italian hospitals were first calculated and then regressed on different environmental variables to capture the role of reimbursement systems. The results found a significant impact of the use of diagnostic-related group-based prospective payment systems on hospitals’ efficiency.