Academic journal article Research in Healthcare Financial Management

Does Service "Leak" to the Fee-for-Service Sector under an Alternative Funding Method? Experience at a Canadian Academic Health Center

Academic journal article Research in Healthcare Financial Management

Does Service "Leak" to the Fee-for-Service Sector under an Alternative Funding Method? Experience at a Canadian Academic Health Center

Article excerpt

ABSTRACT

This study was designed to determine whether shifting specialists from fee-for-service practice to annual block funding at an academic health center in Ontario, Canada, would be accompanied by shifts in some of the services provided in the center to specialists who remained in the fee-for-service sector. A data set of the procedural workload was collected for four specialties (Cardiology/Cardiothoracic Surgery, Obstetrics/Gynecology, Orthopaedics, and Urology). Catchment areas were defined for the study center, the four other academic health centers in the province, and for nearby hospitals in the study center's region, using patient postal codes from provincial health insurance data. Patient volumes and patterns of service provision were compared for each provider specialty for 2.5 years before and after the change in funding. The study found no clear trend in migration of care to other centers following initiation of a non-fee-for-service payment plan at an academic health center.

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In 1994 Queen's University and its hospital partners formed the Southeastern Ontario Academic Medical Organization (SEAMO) in order to initiate the Alternative Funding Plan (AFP). Under the new plan, negotiated with the Ontario Ministry of Health and Long-Term Care, the academic health center was to receive a fixed annual sum for five years. Clinical faculty would be remunerated for all medical care from this fixed sum that had been based largely on previous fee-for-service billing levels. Under the AFP, as under any fixed payment system, the Ministry's virtual monopsony on the purchase of medically-necessary physicians' services meant that the volume of clinical activity would be de-linked from faculty members' incomes. A review of planning documents (Queen's Health Policy, 1996) revealed the program was intended to alter financial incentives so as to eliminate marginally-necessary care, thus allowing faculty additional time for research, educational activities, or enhanced patient care.

Did the new payment system achieve its intended clinical impact? Our evaluation studies have demonstrated that at SEAMO there was, indeed, a decline in the volume of clinical activity between 1992 and 1996. In the case of outpatient appointments, however, the trend began well before the AFP and continued to decrease at its previously-established rate throughout the study period (Shortt, 2002). We have previously shown that the decrease in inpatient services was consistent with changes that were associated with hospital restructuring initiatives seen throughout the province (Stanton & Shortt, 2003). However, documenting a decrease in the volume of clinical activity alone would establish only that some care was no longer provided at the study center. It would not address the important issue of whether this represented the complete elimination of care or simply transferal of care elsewhere to the fee-forservice sector.

STUDY OBJECTIVE

This study was designed to determine whether AFP implementation was followed by "leakage" of patients from SEAMO to the four other academic health centers in Ontario or to the eight nearby regional hospitals. Specifically, the study questions were as follows.

Was there a change in the proportion of patients from the SEAMO catchment area who received health services:

* at SEAMO after the implementation of the AFP?

* at the other academic health centers or regional hospitals area after the implementation of the AFP?

METHODS

1. Study Design

This retrospective study, based on five years of administrative data, used a pre-post design that included 2.5 years before and after the AFP was implemented. The data captured all of the procedural workload for four clinical specialties in SEAMO, the other Ontario academic health centers, and the regional hospitals in SEAMO's catchment area. For this study, only non-restrictive acute care hospitals affiliated with medical school's care were considered when defining academic health centers. …

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