The effects of hospitals' governance on optimal contracts: bargaining vs. contracting

Buying efficiency: optimal hospital payment in the presence of double upcoding

BACKGROUND

With DRG payments, hospitals can game the system by 'upcoding' true patient's severity of illness. This paper takes into account that upcoding can be performed by the chief physician and hospital management, with the extent of the distortion depending on hospital's internal decision-making process. The internal decision making can be of the principal-agent type with the management as the principal and the chief physician as the agent, but the chief physicians may be able to engage in negotiations with management resulting in a bargaining solution.

RESULTS

In case of the principal-agent mechanism, the distortion due to upcoding is shown to accumulate, whereas in the bargaining case it is avoided at the level of the chief physician.

CONCLUSION

In the presence of upcoding it may be appropriate for the sponsor to design a payment system that fosters bargaining to avoid additional distortions even if this requires extra funding.

[Management by objectives: an experience by transfusion and immunology service in Rabat]

The management by objectives method has become highly used in health management. In this context, the blood transfusion and haemovigilance service has been chosen for a pilot study by the Head Department of the Ibn Sina Hospital in Rabat. This study was conducted from 2009 to 2011, in four steps. The first one consisted in preparing human resources (information and training), identifying the strengths and weaknesses of the service and the identification and classification of the service's users. The second step was the elaboration of the terms of the contract, which helped to determine two main strategic objectives: to strengthen the activities of the service and move towards the "status of reference." Each strategic objective had been declined in operational objectives, then in actions and the means required for the implementation of each action. The third step was the implementation of each action (service, head department) so as to comply with the terms of the contract as well as to meet the deadlines. Based on assessment committees, the last step consisted in the evaluation process. This evaluation was performed using monitoring indicators and showed that management by objectives enabled the Service to reach the "clinical governance level", to optimize its human and financial resources and to reach the level of "national laboratory of reference in histocompatibility". The scope of this paper is to describe the four steps of this pilot study and to explain the usefulness of the management by objectives method in health management.