hSNS publication in Operational Research – An International Journal

Pay for performance in health care: a new best practice tariff-based tool using a log-linear piecewise frontier function and a dual–primal approach for unique solutions

Auhtors: Diogo Cunha Ferreira; Rui Cunha Marques; Alexandre Morais Nunes.

Abstract: Health care systems worldwide have faced a problem of resources scarcity that, in turn, should be allocated to the health care providers according to the corresponding population needs. Such an allocation should be as much as effective and efficient as possible to guarantee the sustainability of those systems. One alternative to reach that goal is through (prospective) payments due to the providers for their clinical procedures. The way that such payments are computed is frequently unknown and arguably far from being optimal. For instance, in Portugal, public hospitals are clustered based on criteria related to size, consumed resources, and volume of medical acts, and payments associated with the inpatient services are equal to the smallest unitary cost within each cluster. First, there is no reason to impose a single benchmark for each inefficient hospital. Second, this approach disregards dimensions like quality (and access) and the environment, which are paramount for fair comparisons and benchmarking exercises. This paper proposes an innovative tool to achieve best-practices tariff. This tool merges both quality and financial sustainability concepts, attributing a hospital-specific tariff that can be different from hospital to hospital. That payment results from the combination of costs related to a set of potential benchmarks, keeping quality as high as possible and higher than a user-predefined threshold, and being able to generate considerable cost savings. To obtain those coefficients we propose and detail a log-linear piecewise frontier function as well as a dual–primal approach for unique solutions.

Keywords: Pay for performance; Best practice tariff; Hospital; Services; Log-linear piecewise frontier functions; Unique solutions-based log-data envelopment analysis.

[Bibliographic reference] Ferreira, DC; Marques, RC; Nunes, AM (2019). Pay for performance in health care: A new best practice tariff-based tool using a log-linear piecewise frontier function and a dual-primal approach for unique solutions. Operational Research. https://doi.org/10.1007/s12351-019-00502-3

About the journal: Operational Research – An International Journal (ORIJ) publishes high quality scientific papers that contribute significantly to the fields of operational research and management science (OR/MS). ORIJ covers all aspects of OR including optimization methods, decision theory, stochastic models, simulation, game theory, queueing systems, inventory and reliability, among others. Articles present new theoretical insights and developments, as well as real-world case studies illustrating the practical implementation of OR. Contents include papers exploring the interactions of OR/MS with other relevant disciplines such as information technology, computer science, artificial intelligence, soft computing and electronic services. This is a unique feature of ORIJ compared to other existing OR journals, providing a means to explore new directions in OR/MS research in a interdisciplinary context. Overview papers from eminent scientists in significant fields of OR/MS that review the state-of-the-art in these fields, are also welcome.