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Hospital Budgeting המכון הלאומי לחקר שרותי הבריאות ומדיניות הבריאות )ע”ר( The Israel National Institute for Health Policy Research International Workshop Report HOSPITAL BUDGETING Chairmen: Gabi Bin-Nun & Yitzhak Berlovitz July 2016 Tiberias, Israel The Israel National Institute for Health Policy Research HOSPITAL BUDGETING International Workshop Report Chairmen: Gabi Bin Nun & Yitzhak Berlovitz July 2016 Tiberias, Israel Hospital Budgeting 3 Table of Contents Page Workshop Program 4 List of Speakers 7 Introduction and Summary 8 Abstracts 15 Biographies 29 List of Participants 52 4 International Workshop Report Workshop Program Wednesday, July 6th, 2016 09:00-10:00 Gathering & Welcome Coffee 10:00-13:00 OPENING SESSION Chair: Orly Manor, NIHP Introductory Remarks: Orly Manor, Chairwoman, Board of Directors, NIHP Moshe Bar Siman Tov, Director General, Ministry of Health INTERNATIONAL PERSPECTIVES Valérie Paris, OECD, OECD Health Alexander Geissler, Germany, Berlin University of Technology Donald Franklin, UK, NHS England ISRAEL PERSPECTIVE Gabi Bin Nun & Yitzhak Berlovitz - Background of Israel's Hospital Budgeting, Ben-Gurion University of the Negev, Wolfson Medical Center Discussion 13:00-14:00 Lunch 14:00-16:00 THE ISRAELI SCENE: PROBLEMS & CREATIVE THINKING Chair: Gabi Bin Nun, Ben-Gurion University of the Negev Vadim Perman - Budgeting and Hospital Reimbursement, Ministry of Health Eli Cohen - Budgeting in Clalit Hospitals, Clalit Health Services Orly Weinstein - The New Division of Government Hospitals, Ministry of Health Discussion Hospital Budgeting 5 16:00-16:30 Coffee Break 16:30-18:15 REFLECTIONS OF HOSPITAL MANAGERS Chair: Yitzhak Berlovitz, Wolfson Medical Center Shimon Reisner - Government, Rambam Medical Center Ehud Davidson - Sick Fund, Clalit's Soroka Medical Center Jonathan Halevy - Not-for-Profit (NGO), Shaare Zedek Medical Center Discussion 18:15-19:00 Matan Hodorov - The Privatization of the Israeli Health System in the Eye of the Media, Channel 10 News 20:30 - Dinner Thursday, July 7th, 2016 09:00-11:00 PLANNING REFORMS IN ISRAEL Chair: Shlomo Mor-Yosef, National Insurance Institute of Israel MK Rabbi Yakov Litzman, Minister of Health Moshe Bar Siman Tov, Ministry of Health Ran Ridnik, Ministry of Finance Commentators: Nisim Alon, Leumit Health Service Yitshak Kreiss, Sheba Medical Center Discussion 11:00-11:30 Coffee Break 11:30-13:00 RESPONDING PANEL Chair: Alik Aviram, NIHP Shuli Brammli-Greenberg, Myers-JDC-Brookdale Institute Yair Birnbaum, Clalit Health Services Avi Israeli, Ministry of Health Nir Kaidar, Ministry of Health Joshua Shemer, Assuta Medical Center's Salman Zarka, Ziv Medical Center 6 International Workshop Report 13:00-14:00 Lunch 14:00-16:00 CLOSING SESSION: REMARKS & SUMMARIES Chair: Bruce Rosen, Myers-JDC-Brookdale Institute Donald Franklin, NHS England Alexander Geissler, Berlin University of Technology Valérie Paris, OECD Health Moshe Bar Siman Tov, Ministry of Health Yitzhak Berlovitz & Gabi Bin Nun, Wolfson Medical Center, Ben-Gurion University of the Negev Coffee to Go Hospital Budgeting 7 List of Speakers Mr. Nisim Alon CEO, Leumit Health Service Prof. Alik Aviram Scientific Director, NIHP Mr. Moshe Bar Siman Tov Director General, Ministry of Health Dr. Yitzhak Berlovitz Director General, Wolfson Medical Center Prof. Gabi Bin Nun Ben-Gurion University of the Negev Dr. Yair Birnbaum Chief Medical Officer, Clalit Health Services Dr. Shuli Brammli-Greenberg Senior Researcher, Myers-JDC-Brookdale Institute Mr. Eli Cohen Deputy Director General, Head of Finance Division, Clalit Health Services Dr. Ehud Davidson Director General, Soroka Medical Center Dr. Donald Franklin Senior Economic Adviser, Dept. of Health, UK Dr. Alexander Geissler Senior Researcher, Dept. of Health Care Management, Berlin University of Technology Prof. Jonathan Halevy Director General, Shaare Zedek Medical Center Prof. Avi Israeli Chief Scientist, Ministry of Health Mr. Nir Kaidar Sr. Deputy Director General, Strategic & Economic Planning, Ministry of Health Prof. Yitshak Kreiss Director General, Sheba Medical Center Prof. Orly Manor Chairwoman, Board of Directors, NIHP & Prof. of Biostatistics, the Hebrew University-Hadassah Prof. Shlomo Mor-Yosef Director General, National Insurance Institute of Israel Ms. Valérie Paris Senior Policy Analyst, Health Division, OECD Mr. Vadim Perman Manager, Pricing Dept., Planning, Budgeting & Pricing Division, Ministry of Health Mr. Ran Ridnik Head, Healthcare Division, Budget Department, Ministry of Finance Prof. Shimon Reisner Associate Director, Rambam Medical Center Dr. Bruce Rosen Director, Smokler Center for Health Policy, Myers-JDC- Brookdale Institute Prof. Joshua Shemer Chairman, Assuta Medical Centers Dr. Orly Weinstein Head, Division of Government Medical Centers, Ministry of Health Dr. Salman Zarka Director General, Ziv Medical Center 8 International Workshop Report Introduction and Summary Hospital budgeting is a “hot” issue in Israel as it is in many other countries that try to slowdown the growth of their health expenditure and achieve better “value for money”. The Director General of the Ministry of Health (MOH) raised the initiative to conduct the International Workshop on hospital budgeting as part of the foundation for a plan to implement hospital budgeting reform in Israel. During the workshop that took place in Tiberias in June 2016, leaders of all the health sectors throughout Israel joined together to create a “think tank” for hospital - budgeting reform. Additionally, the workshop hosted three international experts who provided us with perspectives from the OECD countries, England and Germany. Together, we tried to identify the underlying problems and then provide creative solutions. The workshop focused on the existing process of hospital budgeting in Israel; pointing out the advantages, disadvantages and the current alternatives that are available for decision makers. During the workshop discussion, we covered core issues in hospital budgeting such as: What are the criteria for budget allocation to the government owned hospitals and for Clalit's hospitals? Is the decision based on the previous years' budget, or are there additional criteria to consider? To what extent should the hospital's budget be dependent upon income from services? And additional questions regarding hospital budgeting process. During the discussion we all agreed that “hospital budget” is a mean - one among a set of tools to encourage efficiency, safety, quality and satisfaction. We also agreed to limit the discussion to a given budget (and not to discuss the need for increasing the budget). The workshop began with welcoming remarks from Orly Manor, the chair of the Israel National Institute for Health Policy Research, who outlined the main issues for the discussion in the workshop, such as: How to determine an objective and transparent framework for setting hospital budgeting? What is the appropriate way to reflect variable volume of activities? In the session on international perspectives, the three speakers - Valerie Paris, Hospital Budgeting 9 Donald Franklin, and Alexander Geissler - reviewed hospital budgeting practices in the OECD countries, Germany and the UK. In all of these countries, some elements of budgeting and pricing are determined at the national level, while others are determined at the local level. Moreover, there is also a mixture of decision-making: made through negotiation and government regulation. Another interesting variation from the Israeli situation is the practice, in both Germany and the Netherlands, for the health plans to coordinate amongst themselves in their negotiations with the hospitals. Valerie Paris provided an overview of the organisation and financing of hospital care in OECD countries (share of public and private supply, hospital spending by the financing agent, share of hospital spending in total health spending, how hospitals are paid and how budgets and/or unit prices are set etc.). Valerie explored hospital care expenditures in Israel in comparison with the OECD average. She highlighted several striking similarities: that hospitals account for about a third of health care spending, that most of the financing of hospitals is via insurers, and that subsidies are often provided to hospitals facing serious financial problems. Alexander Geissler described hospital financing in Germany: Hospitals are financed from two different sources: investments in infrastructure are covered directly by state budgets, while operating costs are reimbursed by sickness funds and private health insurance through a DRG-based payment system. A hospital acquires a legal claim for a subsidy only as long as it is included in the ‘hospital plan’ of the respective state. Reimbursement of operating costs is, to a certain extent, limited by volume and case- mix related budgets, which are negotiated annually between every hospital accredited in the hospital plan and the sickness funds. If a hospital treats more cases than negotiated, the DRG-based reimbursement rate is reduced by a certain percentage. Donald Franklin emphasized the weak bargaining power of purchasers in the UK, which is quite different from the situation in Israel. The NHS funding system for hospitals aims to achieve dynamic incentives for efficiency whilst avoiding the risk of skimping. The NHS National Tariff Payment System sets administrative prices for nearly 2,000 Health Resource Groups (HRGs). These prices are derived from historic average cost (averaged across all NHS providers), to reward efficiency. The
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