And still in the hospital context Cristina: is there any difference in terms of the financing of the hospital itself and of the outpatient specialized care services? Guillem López-Casasnovas: Eh, the normal thing is what happened last year more or less and ends up being from the total, a percentage is outpatient visits, a percentage is inpatient and this remains fairly constant. Those who have made more innovation in this field, what they have done is consider as if the ambulatory part was a different program, such as emergencies and then hire or analyze the budget according to the activity that is done in outpatient consultation In the same way that they analyze the activity that is done in the emergency room They try to link the payment, the budget, to the number of outpatient visits, to the number of emergencies that the hospital has Eh, that’s fine in principle, but you have to take into account that a more complex hosptial will have a more complex outpatient visit and emergency visits and this is when the whole newer discussion of how to adjust the elements of severity what comes in, what you attend, the demand side, what reaches the hospital and what is the offer, the structure that a hospital has, what we would call a stand-by. You are a hospital that has been accredited or that you belong to the regional health service, you have been accredited, you have been planned for a set of services, the emergencies of certain levels, you have a cobalt pump, you have been accredited for neurosurgery, etc. Imagine, burned unit. Cristina: right Guillem López-Casasnovas:You are a burn unit You are a burn unit, how do you pay for a burned unit, you cannot pay for it by activity because the worse, the more burned, the more income the center would make. Then the part of the specialization, the part of the structure, the part of the supply needs a different treatment to the part of the demand that is the severity, the complexity of what you get And here is the discussion. All those that have tried to move forward to link emergencies of different levels because the hospital has different levels and because the demand of the emergencies has a different complexity or in outpatient visits more of the same, it is because they have separated the general budget of the hospital as if the outpatient part was a different program to the inpatient part Cristina: but it is more common to have it as separate or all together Guillem López-Casasnovas: it’s simply controlling their growth. If you put everything together spending increases and you do not know why it is increasing. If it increases because you have an oversized structure or if it is increasing because you have a higher complexity of the people that come to outpatient, specialized consultation of dermatology do I make myself clear? then to manage the hospital you have to know which of the vectors is increasing your spending. For example, there are hospitals that in the same way that are taking out dialysis are taking out very basic pediatrics tests or obstetrics and gynecology tests because they want their structure to focus on this and for the rest, they can hire other hospitals that have a minor level of complexity, because the complexity required by dialysis, etc.is less than they can offer as third-level hospitals. For the person who manages, what I am talking about are important variables. For the one who simply administrates, the resources come to him and last year’s more or less when you have complied with the general scoping you no longer have political problems. Cristina: okay, and to change the subject a little bit, how often, uh, is money distributed to hospitals? It is something that is done annually or monthly or as. Guillem López-Casasnovas: Yes, in the hospitals that are owned by the system, to the extent that they generate an invoice, they commit an expense, the auditor says ok, they go to the general treasury and it is paid Therefore, you can calculate to 30 days which is what the law says Normally, depending on the needs of the treasury, there may be some delay, but more or less all of this is known. There have been very hard times, when financing was insufficient, the delay in payment to suppliers was a way to finance the system when the transfer of the state did not arrive. The expense had to be borne and the suppliers themselves were able to withstand the bills. They were processed, but they were delayed in the payment. Under normal conditions, this should not happen. The contracting-out hospitals are different. Concerted hospitals as they have agreements, the same applies for concessions, as they have already arranged agreements ex ante, they know at the beginning of the year what activity they have contracted. Then this activity, as they do it, each month they check the list of activity they have done, to 30 days. and in 30 days more are paid. Therefore, it is not a medicine, it is not an x-ray device, that has been purchased that has been certified as in the system-owned hospitals. But rather, of the activity that we have agreed, twelve thousand ambulatory visits, you have done six thousand as the certification at the end of the month says: you have made six thousand I am going to pay them according to the rate that we have agreed at the beginning of the year and you will receive this income in 30 days. Cristina: all right Guillem López-Casasnovas: this is in brief, the system Cristina: and, what happens if the hospital runs out of budget? Guillem López-Casasnovas: in the system-owned hospitals that run out of budget, there is usually an agreement with suppliers. he hospital that runs out of budget first calls the department, the politics, the health department and the counselor sees if it can cash-pull from other centers If it cannot be done, then it goes to the finance department to see if they can have a credit supplement, an extraordinary loan, okay. If all of this is not possible, the only thing they can say to the suppliers is, I fall this expense into debt, but your bill is going to come in next year. there have been times that this has been a generalized thing, to commit spending to pay in the future year’s budget. But this is legally prohibited. And the one that commits spending without authorization, without budgetary credit, according to the legislation can go to jail. Now that everything follows transparency procedures, I believe this, I do not know of anyone that does it at the moment. But I can assure you that in other times that was happening every day. Cristina: all right, and keeping on with the budget issue, does the assignment of this to each autonomous community depends on the introduction of new technologies or does it have nothing to do with this? Guillem López-Casasnovas: here there is a whole discussion that has to do with the role of the financier, of the state, of the one who collects the money, of the general health law, and of cohesion and quality. The criticism is called lack of institutional loyalty, which means that the autonomous communities complain that the state is very generous putting them in the catalog of benefits and then not financing them. This complaint has been general, the state is not institutionally loyal to the autonomous communities. But the last circumstances, especially with hepatitis C. regarding the avalanche that this implied, what the state did, because the autonomous communities were terrified Cristina: sure Guillem López-Casasnovas: of having to face this expense without additional financing. What the state did was create a silo, a fund only for hepatitis C and now it is being discussed whether the state for the new CAR-T and the CRISPR for leukemia and these innovations also fund them with separate funds. Because to put the equivalent of what this implies, costs, in the global of the financing and to distribute it with per capita criteria corrected by age is impossible because, in addition, this is distributed to everyone, when the possibility of making a CART is not for everyone At the moment there are only three hospitals It is no longer paying for medicine, it is paying for a process and it is what goes outside in the case of the industrial CAR-T not what you do inside, which is a more sophisticated hematology. Cristina: Very well and does something similar happen at the level of each autonomous community with respect to hospitals? That is, in terms of the assignment of the hospital budget. Guillem López-Casasnovas: Yes, the Autonomous Communities the ones with sufficient population thresholds, with more than one hospital, etc. What they are trying to do is to coordinate services, and they approve who is going to be the one who does the bone marrow transplants, who will have weekends open for neurological emergencies, here there is a planning that for their own sake, is the one that Regional health services do better. It is not done from the regional ministry of health department. The department plans, but the one that executes the plan on the territory and decides how to deploy the resources, how it coordinates them, how it encourages them, how it makes hospital specialists take visits in primary care, all this is the great task of the regional health services and this is generally done because it is a very important source of savings. The state does not … if you do it badly it will not pay you more. therefore, livestock fattens under the gaze of its master Cristina: ok, but it is more planning than an increase of resources or budget Guillem López-Casasnovas: no, no. It is given the budget, taking into account the planning. Given the budget of economy and finance, given the planning, the health department, how the regional services get to do the matching, not get the feet off the bed, that the thing fits. Because if they do it well combined, savings are important. Cristina: perfect, now if we turn to the subject of the DRGs, the question here is what their role in Spain is. Guillem López-Casasnovas: look eh… the DRGs started in the mid-70s, Robert Fetter and industrial engineering departments because they detected the importance of managing what is otherwise unmanageable, which is a 9-CM index with thousands of diagnoses. Then, grouping, making small clusters, and identifying costs has all the logic of the world. Here, as always in Spain there is the import of novelty, I remember very well, this is … 1979-80 etc. And the DRG’s innovation is taken as the future that is to come. The first mistake that is made in importing them directly from what the values were in the United States, is that in Spain the tariff covers everything, there is no fee for the franchised doctors, and a fee for the hospital. In the United States, you have two bills, DRGs cover one, the professional part is the relative scale values, there are other measures to manage what is the cost of the health professionals We take this, well we realize that this is wrong and then this doubt is born if in any case, if we build our own DRGs we could charge our health system, hospitals. And here there are two different topics, the first one is the capacity that we have in general hospitals, old-fashioned, without accounting, with budgetary accounting, without activity-based costing, without appropriate financial accounting to start imputing costs. The ministry tried to do some pilot tests, which locates them around the hospital, I remember, from Hellín which had a group of people Here there were others who had used DRGs, I am talking about Bellvitge, the Hospital del Mar who had already used DRGs, not for tariffs but for them to monitor their costs. Okay, so … this noise comes from that, in case we wanted to do it, which is debatable, to what extent you want to rate the hospital activity only with such a complex instrument alone, when primary care is not well quantified with information systems when in the concessions there is no talk of pricing the hospital activity, we talked about payment by population. Then from the population to the DRG there is a such a difference that here there were doubts. But in the end, how does this end? With a group of 15 hospitals that have spent 20 years quantifying costs. These costs in the group are added-up and the participants are given the information of the mean with respect to theirs. That is, all participants communicate their costs in a certain standard. They are hospitals that have made the effort to have a minimum of cost accounting. Although this cost accounting some argue if each hospital makes it the same way I mean, is not that they are obliged to, but they do it. A notary, an aggregator adds it and returns the means. So they know, for the DRG 313 its cost how far it is from the average of those hospitals. The second thing is to use the DRGs as a complexity tracking element. I mean, you can use the DGR not in terms of how much they cost for the purposes of pricing but you can establish a relative scale of values saying, the average DRG is normalized to 1 and the DRG 313, which costs 30% more is 1.3 and then you create a hospital complexity index according to the relative weights of the DRGs it does. If you do more DRG of 1.3 your average score as hospital complexity is higher So, this is done, in Catalonia for sure, and in other communities I think so too. But by doing this we solve the problem of the complexity of what you do, you do not solve the problem of the specialization that you have. You can be a very specialized hospital doing very complex cases. Your DRGs are very high, relative, okay? in relative terms, they are 1.4, 1.5 but you only do that. Imagine that you are a center specialized only in nephrology. You see the most complicated cases, but all your resources are nephrology oriented. By cost, by economy of scale, your cost will be lower, than a large hospital that has to have intensive care that has to have emergencies of all levels, which operates from bunions to neurosurgery. Because all the costs of the hospital structure will have to affect the activity and this higher activity, this higher complexity does not do justice. Therefore, when you translate the index of complexity relative to costs you can never be sure that you do justice to reality, because a hospital that is very little specialized, that has to see everything that comes to it. Imagine a “12 de Octubre” or “Vall d’Hebron Hospital”, you have to see everything, stand-by, and what’s more, it’s very complicated. This is very different from that, if you are the “Clinica San Jorge” and only see cardiovascular, because, although what you get is complicated you are specialized only in that. Health costs will be lower. Therefore, DRGs solve the issue of complexity, not that of specialization. Within the complexity, the costs we do not know, the most we can know is the scale of value. You could always say, the average DRG, equal to 1, I assign it a notional value of 350 € and from here you will scale everything These are not tariffs, it is simply to do a control, a follow-up, if your costs are similar to that of the group you belong to. This is done, there are consultants who have worked in this field, those who have made software for this, those who have exploited it and then this already has a culture of 20 years. That these days also, is being reviewed within the parameters that I am mentioning, because I always joke, that to DRGs I owe a good part of my reputation, because I took my first steps at the University of York, I was doing an analysis of hospital funding that was my doctoral thesis, I had to bet on the complexity of the activity of hospitals, then since the year 76 that I read the articles by Robert Fetter. Then I saw quickly, that in Spain the wave for importing DRGs was everywhere I made a call of attention, in favor of DRGs but not to use them for something for which the DRGs were not thought of, the public system is not Medicare that this was another thing, because the DRGs, not now, there is now the all patients refined DRGs but in the beginning, the DRGs that were imported were typical of Medicare, of old people not all patients. Therefore, with this issue of the DRGs, I made myself a reputation for being able to read things and sometimes in Spain, we import without many criteria This is a very personal note of what we are talking about here. Cristina: Yes, and then the role of the DRGs is not as much as it might be in other countries, where they are used to determine a rate for the reimbursement of a certain procedure but rather, so to speak, to track the activity of each hospital. Right? Guillem López-Casasnovas: as internal element, the DRG always has a value that is you with respect to the means. In external key of someone financing you for DRGs there have to be a lot of nuances here First, because the DRGs capture the complexity, but not the total cost, not the specialization. And secondly, because what is the average cost per DRG does not close a public budget, even if you fine-tune the cost rate a lot. imagine, that the financier got to standardize their cost accounting, the same level, that everyone correctly imputed costs. If then I ask for the information to create a tariff that’s what the theorists call the boomerang effect. You say something that can go against you. Therefore, in favor of the DRGs and in the external part, because in the internal part everything is correct, nothing to say against them. The external part, those who have gone further in this field have been the Catalans, who in the system of contracting-out hospitalization, have identified what they call the relative index of resources and the relative index of structure. Each hospital has a relative index of structure according to the specialization it has, this comes from the planning, from the technology it has authorized, etcetera, etcetera, and then the relative index of resources that has to do with the DRGs counted as a relative value scale The hospital that has many DRGs of 1.3 will be above 1 for sure. So how much does each thing have to weigh? The decision is political. If you say that the relative index of resources weights 100% what you do is that the competition is the highest You forget about the structures. They are saying, if you have an oversized structure, close it. Right? If you pondered 100% the relative index of structures, you are saying, I pay you for being who you are, for the structure you have, not for what you do. Cristina: right Guillem López-Casasnovas: So, the decision of the Catalan health service is what weight you give to the IRD, the relative index of structures and what weight do you give to the IRR, which is the relative index of resources. When we proposed this topic, because the creature, I helped him give birth to, it was 70-30, 70 of structure and 30 of complexity, with the commitment that this was going to evolve in time where there was a 70 that was a 60 within two years and where there was a 30 that was a 40 to give the system a lot, a more sensitive funding, not for what you are but for what you do. But then this each, each government, each Catalan health service has modulated it as it has wanted. Because in the end, these ideas are also to make a benchmarking of what should be, between everything structure or everything according to complex activity. To do the benchmarking that is very good, but to change the status quo this is more complex, behind the hospitals, 70% is employee invoice. And if on top of that it is a system-owned hospital, where the workers are your workers, your officials, your statutory staff, you will not be able to tell the manager to eliminate the structure by firing the workers which yourself as a financer, as a health department have hired. Therefore, these are the nuances Cristina: Yes, and there will also be differences, you mentioned it a little before, in terms of the role of the DRGs in the different autonomous communities, right? Catalonia, from what I see… Guillem López-Casasnovas: yes, of the 15 hospitals that are in the cost study, there must be 4 or 5 that are from Catalonia, and the rest of … from very different communities. Well there are 3 or 4 from Madrid but sometimes what I said before there were managements such as Hellín in Murcia who liked this topic and started and continue. I mean, no … it’s a just that regional governments let hospitals do those things. But basically, with that instrument, except for Catalonia that does a bit of benchmarking in the other regions, forget about it. Cristina: Perfect. Very well, then changing the subject a little bit, we are going to talk about what are the new financing trends of the different, health systems in Spain and to what these changes are due. Guillem López-Casasnovas: the most important difference is that of payment, the change from payment by activity to payment for population coverage. The DRGs lose weight in the analysis and what gains importance is the population weighed by the CRGs the clinical risk groups. That is, populations grouped by clinical risk. It is no longer the weighting by age. It is the weighting for the clinical risk that a certain type of population has. This is no longer within the hospital, it is the system, as was the question as a whole. the objective is not of assistance activity; it is of good coverage. Therefore, something that promotes prevention first. If the funding is by population, if you do good prevention all this improves your financing. You do not lose funding due to the fact of doing prevention. If you were paid by DRG, the prevention would go against your DRG, therefore, no; you favor the integration of care, because if the goal is population-based, surgeries that can be done on an outpatient basis do not do it as inpatient and you also favor coordination between primary and specialized care. Therefore, the literature moves towards population analysis and CRGs, which are new to the market. There are areas in which this is very developed, because this requires a follow-up of citizens as users of the longitudinal system. It is not how many are of this age group, but if this person when he was 14, when he became insulin-dependent and now that he has mobility problems. And this obviously makes more sense in population health than not activity of isolated providers Apart from this, you have as “parachutes” what you get from CAR-T, from new treatments for AIDS or hepatitis. So when you have a horizontal level, preventive care integration and you get these “parachutes”, which are bombs if you do not control them if you do not neutralize them, because the autonomous communities are very alert, very worried by this that falls and because it is disruptive of what they have And here obviously, a coordinated joint action by the state, and even at the European level of the EMEA would be more than advisable. Cristina: very well, and the concept of disinvestment, is it being applied in the national health system, or not. Guillem López-Casasnovas: very little, we have enough assesment agencies, almost every autonomous community has one, which is nonsense. And, but those who have more tradition, those who know more how to do a meta-analysis always give the do and the not to do. But the not to do is a recommendation that in reality, the footprint that leaves is a professional mark. If the agency says not to do and you continue doing is that you have not understand you are not up to date, there must be something perverse in your incentives to ignore it but it is not that for not doing so someone calls your attention. Cristina: so it is not applied in the day-to -day basis Guillem López-Casasnovas: no no, it is an aspiration of all assessment agencies, that as new things come in, we make room for these new things because if not; if you grow by cumulative causation, it is impossible to be sustainable Cristina Sure, perfect. Well, now the last question and we finish it would be what are the new planned changes in the financing of the health services? That is, new financing models Guillem López-Casasnovas: Yes, the discussion is how far… I mean, there is a clear conviction, I believe that after the experience of managing health at a decentralized scale, that in management we must learn to say no. There was an article in New England, paradigmatic from Lester Thurow, “Learning to say no”. That in health management we must say no, not to do. In politics, the easy thing is to say yes we open more beds, we open more risk capital, new adventures. Therefore, there is a conviction that we must put land between what is the algorithm, the leitmotiv of political action and the manager’s criteria in the day to day that he has to say no. putting land in between can mean contracting-out and we move forward along this line. How can we move forward in contracting-out, for example, that the hospitals that are now system-owned, would have a greater autonomy recognition, would become foundations, public, but still foundations or consortium, public, but separated from what is now a center of expenditure of the administration, which is what hospitals and health centers are now. Therefore, to put land in between through contracting-out endowing the system-own hospitals with more autonomy as the ones that have the concerted ones, where they are. Another type of putting land in between, which is much more land, is deeper the separation is with the concessions. Valencian concessions are the best known, and those of Madrid. The answer of the … goes by waves, there was a time when any concession appeared to be good, now they are strongly questioned. Therefore, we are now in the pendulum of considering them as the future public-private collaboration to demonize them. I will wait for the pendulum to be relocated, because I believe that in concessions there are possibilities it is not a form of privatization but if you choose to separate the provision, the responsibility of the service of production as in the case of the contracting.-out, and even more of the concession, the responsible one has to regulate in another way You cannot regulate with orders, guidelines, circulars, and regulations as they are doing now, as if they were theirs. Because if you put land in between, in the middle they are not yours anymore. Therefore, regulation has to be much smarter. Because no, you cannot act as “I order, and I command”. Then when the thing is rebalanced, of contracting-out, concessions, it will be more how we regulate better so that this is feasible without generating suspicion of corruption or generate antinomies regarding what are good objectives for a good public health system, but always within the public umbrella, without this implying privatization, because regulation, responsibility and financing both in concerts and in concessions continue in the hands of the health authority. Cristina: right, well, perfect with this we finish. Thank you very much for your time and that’s it.