Too little block funding, and GPs are disincentivised to conduct long consults; too much block funding, and GPs are disincentivised to see more patients, says the Grattan Institute.
Policy wonks at the Grattan Institute say it is possible for GPs to get the best of both fee-for-service and capitation-style funding models – but it requires the government to walk a delicate line and commit to a specific policy goal.
A new policy briefing published by the independent think tank on Thursday builds on work it released earlier this year looking at the pressures currently affecting general practice delivery.
If the earlier paper laid the groundwork for the idea that fee-for-service was no longer viable, the newest brief zeroes in on what investment is needed to move toward blended funding.
Most readers will be familiar with the argument against fee-for-service; namely, that it rewards short, one-off consultations and limits team-based care.
The Grattan makes a similar argument against capitation, which it defines as the “opposite funding model” to fee-for-service.
“[The allocated] budget [for each patient] doesn’t change if they get a lot of care, a little, or none at all,” the report reads.
“This means that under capitation, practices have a financial incentive to provide too little care, since each additional service is a cost and not a source of revenue.”
Striking the correct balance between the two starts with working out the minimum investment required from the government to make it an attractive – or at the very least, cost-neutral – exercise for general practices.
From this, Grattan health program director Peter Breadon and policy briefing co-author Carlos Jimenez derived a central principle: that the share of flexible (i.e. blended) funding must be equal to or greater than the ratio of multidisciplinary team cost to GP cost.
“When a clinic shifts care to a lower-cost team member, it earns the flexible payment but gives up the fee-for-service payment the GP would have billed,” Mr Breadon and Mr Jimenez wrote.
“As a general guide, if the flexible funding is high enough to cover the new cost of care, switching pays. Otherwise, the clinic loses money.
“That is what the break-even ratio captures: flexible funding must exceed the team’s cost relative to the GP’s.”
Whether or not a GP clinic ends up profitable with a higher level of flexible funding also depends on whether an individual doctor refills the time that they gain by having other members of the treating team involved in patient care by seeing more patients or if they spend that time simply working less.
The policy brief also contains formulae to calculate the cost of the team doing the delegated work (for those curious: this is the ratio of multidisciplinary wage to GP wage added to coordination time and on-costs multiplied by patient throughput relative to GP), the time lost by the GP coordinating care and lost fee-for-service.
Combined, Mr Breadon told The Medical Republic, one can calculate the base level of government block funding needed to make switching from mostly-fee-for-service economically viable for GPs.
Working out the maximum amount of block funding is another story.
“The floor is this empirical thing we can see and say, okay, for a given clinic, will [a certain level of funding] work or not at this minimum,” Mr Breadon said.
“The maximum is about the different trade-offs of risks and benefits.
“The general conclusion I draw is that you still want to have a share of fee-for-service, depending on your policy goals, but my view is you want to have a share of fee-for-service in the system that’s not completely trivial, because it does bring some benefits.
“Us policy people are so used to seeing fee-for-service as the enemy, and so are GPs that are trying to do multi-disciplinary care … but at the right dose it actually does have some benefits, so we don’t want to give all of those up.”
Pushing the government’s share of block funding too high, for instance, could create situations where an underestimation of how sick or costly a clinic’s patients are forces the clinic to pay for care that wasn’t predicted.
The government also shares in clinic savings earlier where fee-for-service is higher.
“Close to full capitation, the incentive for GPs to provide direct care weakens, which could result in too little GP care,” the Grattan policy brief reads.
“Immediate shared savings shrink, leaving government waiting for later budget adjustments. And clinics are more exposed to the inevitable errors in the funding formula.
“None of that argues against a high flexible share, just against pushing it to the extreme.
“The ceiling is a matter of judgment, not data.”
Mr Breadon urged GPs not to equate the failings of the UK’s National Health Service to capitation as a funding model and stressed that the Grattan’s proposal was predicated on GPs having a choice on whether they would move toward more mixed funding.
“I think general practice has been held back by a one-size-fits-all funding model, and if you look around the world, a lot of leading systems give GPs and clinics options to be funded in different ways,” he said.
“I talk to GPs and to different kinds of providers, and I know there are plenty of clinics and GPs that want to work in this way, so I don’t think anyone should come out and say ‘this is terrible for everyone, no one will want it, it’s all bad’.
“It’s more about saying that there are people who actually want to go this way.”
The health economist acknowledged that there was uncertainty and a degree of mistrust among GPs.
“There is a lot of understandable lingering resentments about frozen funding, healthcare homes, failed trials – and I think it’s really time to try and get past broad and general policy prescriptions,” Mr Breadon said.
“[It is time to] see what could it look like, to get into that more detailed debate.
“I hope that [this brief] can create a positive dynamic where people are really starting to talk about how should it work and what should it look like, instead of talking about the general direction and abstract terms.”
