There have been calls for the scrapping of the casemix system under which hospitals are penalised or rewarded for efficiency. Eithne Donnellan, Health Correspondent, reports
The announcement last week that 22 hospitals across the State had been hit by a €9 million penalty for inefficiencies has again focused attention on the contentious issue of how hospitals are funded.
While they get billions to spend every year, it seems they could always do with more and any mention of cuts in their funding can be demoralising.
Some 30 per cent of funding allocated to the main hospitals this year has been calculated on the basis of the volumes of patients treated in 2004, the complexity of those treatments and the amount they cost to provide. The allocations are calculated under a system called casemix.
Latest figures show 15 hospitals are being financially rewarded on the basis of the casemix model this year and the budgets of another 22 are being subjected to, what's referred to in the sector as, "negative adjustments".
Cork University Hospital came out on top, getting an extra €1.9 million this year while Mayo General Hospital has been hit with the biggest penalty, a deduction of €1.2 million from its 2006 budget.
Questions have been raised about the fairness of this system, with some claiming hospitals which have been "struggling" will be demoralised by these financial penalties.
Eyebrows have also been raised at the fact that a hospital which scored lowest in the recent national hygiene audit - Waterford Regional Hospital - could have come out second from the top under casemix. It gets an extra €1.2 million for efficiencies in its budget this year. Labour's health spokeswoman Liz McManus says this just does not make sense.
"There's a real problem with this method of evaluating hospitals . . . The casemix method of measuring efficiency is too crude. The criteria need to be refined and developed. It's very limited in how it measures hospitals and it needs to be brought up to date," she says.
Prof Ray Kinsella, who is on the Faculty of the Smurfit Business School at UCD, also believes the casemix system should be reviewed, particularly in light of Health Minister Mary Harney's plans to allocate 50 per cent of hospital funding on this basis by 2007. "If it's going to extend to 100 per cent we had better get it right and it's not right at the moment," he says.
He describes casemix as both a performance measure and a funding mechanism. As a performance measure there was something to be said for it but as a funding mechanism "it is incomplete and it leads to unfairness", he says.
"The idea of fining some hospitals and rewarding more is plain silly because a lot of hospitals simply don't have control over their casemix . . . and then to punish them is counterproductive because the impact will be on the patient," he adds.
However, Prof Miriam Wiley, research professor with the ESRI, defends the system. She suggests much of the criticism of the system stems from a lack of understanding of how it actually works. She explains that it only measures inpatients and day case activity. It does not, for example, look at hygiene in hospitals or A&E activity.
She acknowledges the system has limitations and says a better IT system would be required if measurement of A&E and outpatient activity were to be included.
Casemix, she also says, is more focused on throughput than quality of care. "It isn't a measure of quality . . . what we would hope is that, if you think of it as a platform that . . . the next layer of a national information system should address issues to do with quality which would look at issues like readmission, hospital-acquired infections and so on," she says.
Prof Wiley stresses casemix is a model used for funding hospitals not just in the Republic but in many EU member states, the US and Australia.
It was introduced in the Republic in 1993, following a recommendation from the Commission on Health Funding in 1989. At first there were a small number of hospitals involved. Now there are 37 (they account for some €3.5 billion of health expenditure) included and they are grouped into different bands to ensure similar hospitals are compared with each other when it comes to comparing how much they spend on treating patients. For example, large teaching hospitals are grouped together, as are non-teaching, paediatric and maternity hospitals.
Prof Wiley says it's all about ensuring hospitals are appropriately rewarded for the patients they treat.
When hospitals get "a positive adjustment" it means "these hospitals had been underfunded for the workload that they supported, adjusted for complexity. And those hospitals that got negative adjustments, the issue there is that relative to the workload supported, adjusted for complexity, they would have been relatively overfunded."
If we did not have casemix, the hospitals that got a reward would continue to be underfunded, she claims. "So there would be unfairness within the system. . . this is trying to level the playing field" and have funding following patients, she says.
Given that two-thirds of hospital funding goes on pay, any extra funding a hospital can get under casemix is very important to it.
The Mid Western Regional Hospital in Limerick, which received one of the largest deductions from its 2006 budget on the basis of casemix - a cut of more than €1 million - argues that casemix is "a crude instrument" which sees hospitals with 450 beds compared with ones with just 100. "This operates to the disadvantage of the Mid Western Regional Hospital," a spokesman said.
The Department of Health claims casemix takes account of each hospital's unique issues and unique patients. It also says that comparing hospitals in each group with their peers creates an incentive for better performance.
Factors outside a hospital's control can affect its inpatient and day case activity levels and thereby its casemix adjustment in a given year. An outbreak of the winter vomiting bug could curtail admissions as could overcrowding in A&E. A higher than normal bill for agency nurses could also have an impact.
Prof Wiley says if one hospital cannot treat patients, the patients have to go elsewhere and casemix attempts to ensure the hospital that actually ends up treating them gets the funding to do so.
Mayo General Hospital said its negative adjustment this year was partly due to the fact that money was spent on a new orthopaedic service at the hospital in 2004 but it did not begin to operate until 2005. The new service will have resulted in extra activity for the hospital in 2005 which, in theory at least, would be likely to see it receiving a positive casemix adjustment next year.
Liz McManus says factors such as the numbers of patients on waiting lists, the numbers of patients on trolleys in A&E, the overall cleanliness of a hospital and a hospital's success in tackling MRSA should be taken into consideration when efficiencies are calculated.
"The Department of Health has said that these fines will in no way impact on the delivery of vital services, but that's just ridiculous. Any time you take money from a hospital you reduce their capacity to deliver for the patient," she says.
But Health Minister Mary Harney says she is committed to the usage of performance-related funding into the future. So too is the chief executive of the HSE, Prof Brendan Drumm.