Healthcare Funding Models Question Answer 2022

Running head: HEALTHCARE FUNDING MODELS 1
Healthcare Funding Models
Name
Institution

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Healthcare Funding Models
1. Identify which of the four funding models defined by Egar et al. (2013) are used
by the public hospitals in Australia and briefly describe their use.
Eagar et al. (2013) propose four essential funding models that the IHPA could adopt. The
models are part of the health sector’s significant shift from fixed service fee payment modes.
Instead, as Magid et al. (2018) point, there is a shifting towards value-based payment models that
rewards health safety and quality. Notably, IHPA (2017) recognises the significant potential of
such innovative funding models in enhancing efficiency in health service delivery. Thus, the
organisation has adopted and implemented some of these models in its pricing framework.
Best practice pricing
Notably, this is one of the essential pricing models that the IHPA has incorporated in its
pricing framework. The primary use of this model is to promote the adoption of best treatment
pathways. The best treatment pathway entails the best treatment practice for a particular
condition (Eagar et al., 2013). Therefore, in this model, premium tariffs and additional income
incentives are given to institutions who adopt and show evidence of meeting the best treatment
practices (Hinterhuber & Liozu, 2013). Notably, the critical basis of this funding model is
evidence-based practice. Whereby, as per Hughes (2008), there is a strong emphasis on the
research and identification of the best treatment practice of a particular condition.
The application of this model is well evident in IHPA’s pricing policies. Crucially, IHPA
(2017) recognises the vital role that data and evidence play in improving treatment practices.
Thus, in cases where evidence indicates that a particular treatment path leads to better outcomes,
this specific treatment path is incentivised. A key example is the special attention given to the

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new Australian Mental Health Care Classification in the pricing framework for the year
2016/2017. According to IHPA (2017), data indicated that the new classification contributed to
better patient outcomes. Thus, this example suggests the prominence that the IHPA gives to
research and innovation across the health sector. Whereby, the IHPA is continually looking to
provide incentives to new treatment discoveries that produce better patient outcomes.
Normative pricing
According to Eagar et al. (2013), the primary use of this model is to influence how care is
delivered. Normative pricing is based on the fact that specific patterns of care produce better
outcomes as compared to others. Thus, the desirable patterns of care are incentivised, whereas
non-beneficial care activities are discouraged. Notably, this model is similar to the Best practice
pricing in that both models focus on improving the practices adopted by health personnel in
treatment. However, according to Eagar et al. (2013), there is a significant distinction between
the two models. Best practice pricing focuses on promoting a set of procedures directed towards
a particular condition. Normative pricing, on the other hand, focuses on just a few distinct
activities that carry either a positive or negative patient outcome.
A vital example of the application of Normative pricing in Australia’s healthcare is in regards
to Australia’s indigenous population. IHPA (2017) recognized the need for interpreter services
for patients from indigenous communities such as the Aboriginal. The realization as per Biddle
et al. (2014), is that individuals from these cultures usually face culture and language barriers as
they attempt to access health services. Thus, an indigenous adjustment was included in the 2018-
2019 pricing framework to encourage institutions to appoint interpreters. Therefore, the
incentivization of this practice will remove the various barriers that indigenous communities

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have been facing in accessing health care. Consequently, the delivery of care to these
communities will improve.
Payment for Performance (P4P) or Safety and Quality pricing
One of the key objectives of the overall health sector is to improve safety and quality.
According to Magid et al. (2018), one of the ways the IHPA is employing to achieve this is by
incorporating safety and quality in its pricing framework. The fundamental purpose of the
Payment for Performance model is to incentivise excellent quality health services. Additionally,
poor quality and unsafe practices are disincentivised. Therefore, the primary focus of this model
is on patient outcomes. Whereby, price adjustments are applied in regards to the results achieved.
Thus, in this case, positive results are rewarded while on the other hand, adverse outcomes are
penalised.
The adoption of this model has been one of the critical reforms of the IHPA (IHPA, 2017).
According to the IHPA (2017), pricing for safety has been applied to improve patient outcomes
in the three areas of avoidable hospital readmissions, sentinel events, and hospital-acquired
complications. Some of the adopted practices include no funding and reducing funding for
institutions where these vices are prevalent. In this way, the IHPA hopes to reduce these
incidences and improve patient outcomes.
2. To what extent do you agree or disagree that the National Efficient price may
provide an incentive to improve the health status of any selected segment of the
Australian population.

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I agree that to a greater extent, the National Efficient price will provide an incentive to
improve the health status of the Australian indigenous communities. As earlier stated, the IHPA
included an indigenous adjustment in its NEP for the year 2018-2019 (IHPA, 2017). The
indigenous adjustment is an incentive to institutions encouraging them to appoint indigenous
language interpreters. It is worth noting that indigenous communities face unique challenges in
their interactions with health services. Among the most common problems include cultural and
language barriers (Biddle et al., 2014). Obstacles like this significantly impact on their access to
healthcare.
Therefore, through the NEP, this barrier to access will be removed. Thus, more indigenous
language individuals will feel encouraged to access health services. Also, as Wright (2016)
points, holistic care significantly depends on both communication and relationship formation
between care providers and patients. Thus, the inclusion of an interpreter will facilitate this
communication and the creation of relationships. Consequently, this will facilitate the better
delivery of care, leading to better patient outcomes among indigenous populations. Additionally,
these indigenous communities face unique health issues due to the various social, political, and
economic issues that they face (Greenwood, de Leeuw & Lindsay, 2018). Thus, this incentive
will also enable health actors to understand these issues better, and hence, guide intervention.
Therefore, it can be said that the new NEP adjustments will facilitate the improvement of
indigenous communities’ health status.

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References
Biddle, N., Al-Yaman, F., Gourley, M., Gray, M., Bray, J., & Brady, B. et al. (2014). Indigenous
Australians and the National Disability Insurance Scheme. ANU Press.
Eagar, K., Sansoni, J., Loggie, C., Elsworthy, A., McNamee, J., Cook, R., & Grootemaat, P.
(2013). A Literature Review on Integrating Quality and Safety into Hospital Pricing
Systems [Ebook]. Centre for Health Service Development. Retrieved from
https://www.safetyandquality.gov.au/sites/default/files/migrated/Literature-Review-on-
Integrating-Quality-and-Safety-into-Hospital-Pricing-Systems1.pdf
Greenwood, M., de Leeuw, S., & Lindsay, N. (2018). Determinants of Indigenous Peoples'
Health: Beyond the Social (2nd ed.). Canadian Scholars.
Hinterhuber, A., & Liozu, S. (2013). Innovation in pricing: Contemporary Theories and Best
Practices. Routledge.
Hughes, R. (2008). Patient safety and quality: An Evidence-Based Handbook for Nurses.
Rockville, MD: Agency for Healthcare Research and Quality.
IHPA. (2017). Pricing Framework for Australian Public Hospital Services 2018-19 [Ebook].
Independent Hospital Pricing Authority. Retrieved from
https://www.ihpa.gov.au/sites/default/files/publications/pricing_framework_for_australia
n_public_hospital_services_2018-19.pdf
Magid, B., Murphy, C., Lankiewicz, J., Lawandi, N., & Poulton, A. (2018). Pricing for safety
and quality in healthcare: A discussion paper. Infection, Disease & Health, 23(1), 49-53.
doi: 10.1016/j.idh.2017.10.001

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Wright, B. (2016). Communication skills: Challenges, Importance for Health Care Professionals
and Strategies for Improvement. Hauppauge, New York: Nova Science Publisher's, Inc.