Pricing health services for purchasers - A review of methods and experiences

Hugh R. Waters, Peter Hussey

Research output: Contribution to journalArticle

Abstract

This article reviews methodologies and international experience related to costing and pricing health services for health care purchasers. The main factors affecting price-setting methods are: (1) provider payment systems; (2) information available on actual costs, service volumes and outcomes; and (3) characteristics of providers and purchasers. These factors are strongly interrelated. Provider payment systems determine the unit of services to be priced. In order to minimize incentives for under- or over-utilization, the prices that purchasers pay for health care services should be related to the actual unit costs of services, but accurately calculating real unit costs is intensive in terms of resources and information. Pertinent provider characteristics influencing price-setting include provider autonomy, provider negotiating power, and the degree of competition. The article presents a series of examples that run through each of these three sets of factors. The examples are from Denmark, the UK, and Thailand (for capitation); Australia, Hungary, and the United States (for case-based payment); and Germany, Korea, and Taiwan (for fee-for-service payment mechanisms). From these experiences, the article concludes with appropriate lessons for low- and middle-income countries, where the principal constraint on the development of provider payments systems is the limited availability of information on costs, volumes, and patient characteristics.

Original languageEnglish (US)
Pages (from-to)175-184
Number of pages10
JournalHealth Policy
Volume70
Issue number2
DOIs
StatePublished - Nov 2004

Fingerprint

Health Services
Costs and Cost Analysis
Delivery of Health Care
Fee-for-Service Plans
Hungary
Negotiating
Thailand
Denmark
Korea
Taiwan
Germany
Motivation

Keywords

  • Costing
  • Health services
  • Pricing
  • Provider payment
  • Purchasing

ASJC Scopus subject areas

  • Public Health, Environmental and Occupational Health
  • Health Policy

Cite this

Pricing health services for purchasers - A review of methods and experiences. / Waters, Hugh R.; Hussey, Peter.

In: Health Policy, Vol. 70, No. 2, 11.2004, p. 175-184.

Research output: Contribution to journalArticle

Waters, Hugh R. ; Hussey, Peter. / Pricing health services for purchasers - A review of methods and experiences. In: Health Policy. 2004 ; Vol. 70, No. 2. pp. 175-184.
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