Health care costs are increasing throughout the world (Stabile et al., 2013). US spend more on health more than any of its European peers. For instance, in 2013, US spent 17.1% of its total GDP on health care while France and Germany spent only 11.7% and 11.3% respectively, of their total GDP on health (World Bank, 2015). Despite this massive expenditure health, the Europeans receive better health care quality than the Americans. There is a correlation between health care spending and quality of care provided (Stabile et al., 2013). Therefore, reforms in the health care spending might be associated with better quality care. The US needs to introduce changes in its health care system to be able to provide better care at a lower cost. The changes are mainly related to payment and include improving payment adequacy and broadening the scope of payment (Quentin, Scheller-Kreinsen, Blumel, Geissler, & Busse, 2013). These reforms are expected to reduce costs and improve quality of care.
First, improving hospital payment adequacy ensures that hospitals receive adequate reimbursements for services they provide. Hospitals should be paid depending on the costs incurred to provide efficient and high-quality patient care, which is consistent with clinical guidelines. If Diagnosis-Related Group (DRG) based hospital payments are so low that they cannot cater for treatment costs, it is logical to assume that providers will reduce costs by compromising the quality of services, or cutting some services. On the other end, if DRG-based payments are too high, health care providers are not incentivized to behave in an efficient manner, which might lead to resource wastage and hence increased health care costs. As it is the case with Germany, Sweden, and Netehrlands, the US might consider employing a standardized bottom-up model of collecting costs-related data from a sample of hospitals to get reliable cost-weight collections. In addition, the US might consider abolishing the three-year lag between data collection and issuance of payment as this method suggests that payments may not reflect current practice. In Germany, France, and other major European economies except England, there is only a two-year lag between collection of cost-related data and payments. Further, US may also borrow the idea of best-practice tariffs from England. This involves setting payments depending on the costs incurrent in providing care that is consistent with clinical guidelines, with a view of encouraging efficiency and quality (Quentin et al., 2013).
The other change that might be introduced is broadening the scope of payment. The breadth of the scope of payment includes types of costs incorporated and the DRG and timeframe. Basically, one DRG should cover costs for all services that a patient receives during hospitalization. This strategy involves combining a broad scope of payment with add-on payments. It is about introducing a system whereby almost all hospitals get one DRG-based payment for every hospitalized patient, which should cover the costs of all hospitalization services. Unlike the manner in which it is done in Medicaid, the scope of the payment should extend beyond 24 hours following discharge. This involves transferring the responsibility for all for all cost of care to providers, including the costs incurred after discharge. When providers are given this broad responsibility, they are more likely to prioritize delivery the delivery of the most important services. This strategy is practiced in major European economies such as France, UK, and Germany. In these countries, there is broadened time scope such that DRG payments cater for hospital readmissions within 30 days for the same reasons. In Netherlands, the time scope is extended to 42 days. In addition, salaries for physicians are part of the DRG-based payment systems. The services that surgeons, anesthesiologists, radiologists, and other health care professionals provide may be covered by the DRG-based payment that is made to the hospital. However, there is a kind of narrow scope in some countries where there are add-on payments for specific high-cost priority health care services (Quentin et al., 2013) (Quentin et al., 2013).
Although the two reforms seem to be useful in an American context, contextual in the US might mean that the strategies need to be modified in some way to fit the American context. There might be differences in terms of institutional contexts of European and American hospitals, as well as relationships between purchasers and providers. In addition, the level of competition between healthcare providers might be different, and this might significantly affect the extent to which European payment designs fit in an American context. Nevertheless, the hospital payment designs may significantly influence reforms in the US (Quentin et al., 2013).
In conclusion, European countries such as France, Germany, England, and Sweden provide better quality health care at lower costs than the US. Hospital payments in these countries illustrate how hospital in the US may be reorganized to reduce health care costs and improve health care quality. US may consider drawing some lessons from these countries and introduce reforms in its DRG-based payment system. Payment reforms are capable of reducing health care costs significantly, while ensuring that patients receive high quality care. The proposed payment reforms here are improving payment adequacy and broadening the scope of payment.
References
Quentin, W., Scheller-Kreinsen, D., Blümel, M., Geissler, A., & Busse, R. (2013). Hospital payment based on diagnosis-related groups differs in Europe and holds lessons for the United States. Health Affairs, 32(4), 713-723.
Stabile, M., Thomson, S., Allin, S., Boyle, S., Busse, R., Chevreul, K., & Mossialos, E. (2013). Health care cost containment strategies used in four other high-income countries hold lessons for the United States. Health Affairs, 32(4), 643-652.
World Bank. (2015). Health expenditures, total (% of GDP). Retrieved from http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS
