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Paying for hospital care: the experience with implementing activity-based funding in five European countries

Published online by Cambridge University Press:  05 January 2012

Jacqueline O'Reilly ,
Reinhard Busse ,
Unto Häkkinen ,
Zeynep Or ,
Andrew Street  and
Miriam Wiley
Jacqueline O'Reilly*
Affiliation:
Research Analyst, Health Research and Information Division, Economic and Social Research Institute, Ireland
Reinhard Busse
Affiliation:
Professor and Head of Department of Health Care Management, Berlin University of Technology, Germany
Unto Häkkinen
Affiliation:
Research Professor, Centre for Health and Social Economics, National Institute for Health and Welfare, Finland
Zeynep Or
Affiliation:
Research Director, Institute for Research and Information in Health Economics, France
Andrew Street
Affiliation:
Professor of Health Economics, Director, Health Policy team, Director, Economics of Social and Health Care Research Unit, Centre for Health Economics, University of York, England
Miriam Wiley
Affiliation:
Research Professor and Head of Health Research and Information Division, Economic and Social Research Institute, Ireland
*
*Correspondence to: Jacqueline O'Reilly, Health Research and Information Division, Economic and Social Research Institute, Whitaker Square, Sir John Rogerson's Quay, Dublin 2, Ireland. E-mail: [email protected]
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Abstract

Following the US experience, activity-based funding has become the most common mechanism for reimbursing hospitals in Europe. Focusing on five European countries (England, Finland, France, Germany and Ireland), this paper reviews the motivation for introducing activity-based funding, together with the empirical evidence available to assess the impact of implementation. Despite differences in the prevailing approaches to reimbursement, the five countries shared several common objectives, albeit with different emphasis, in moving to activity-based funding during the 1990s and 2000s. These include increasing efficiency, improving quality of care and enhancing transparency. There is substantial cross-country variation in how activity-based funding has been implemented and developed. In Finland and Ireland, for instance, activity-based funding is principally used to determine hospital budgets, whereas the models adopted in the other three countries are more similar to the US approach. Assessing the impact of activity-based funding is complicated by a shortage of rigorous empirical evaluations. What evidence is currently available, though, suggests that the introduction of activity-based funding has been associated with an increase in activity, a decline in length of stay and/or a reduction in the rate of growth in hospital expenditure in most of the countries under consideration.

Type
Articles
Information
Health Economics, Policy and Law , Volume 7 , Issue 1 , 05 January 2012 , pp. 73 - 101
Copyright
Copyright © Cambridge University Press 2012

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