Context
Over the past few decades, the number of hospital beds per population in Israel has reduced from 3.79 beds per 1,000 population in 2000 to 2.99 beds per 1,000 in 2022 (OECD, 2023). This decrease was a result of population growth, rather than deliberate policy action. It has raised concerns about the quality of care on internal medicine (IM) wards, demonstrated by the high percentage of readmissions (27% in 2015 (Tur Kaspa, 2019)). IM bed occupancy rates are also high, reaching a yearly average of 88.6% in 2022 (Information Division of the Ministry of Health, 2023). High occupancy rates are especially common during the winter season and can cause patient flow issues. Patients are also increasingly complex, with multiple chronic conditions that need to be managed.
In Israel, hospitals sell services to health plans (HPs), payments methods and prices are regulated by the MoH through a legally binding (maximum) price list (the Health Services Payment Law). This reform changes the legislative framework for provider payments.
Impetus for the reform
In response to the high occupancy rate of IM wards, the Ministry of Health (MoH) initiated a healthcare reform, aimed at shifting care from inpatient to other settings and to enable quicker discharge to geriatric institutions or nursing homes (Tur Kaspa, 2019).
In 2019, the MoH established a committee to propose solutions for improving the quality of inpatient care in general hospitals. This reform was formulated based on the recommendations put forth by the committee.
Main purpose of the reform
This reform is expected to create incentives for hospitals to reduce the volume of patients in internal medicine wards, while maintaining high-quality care standards. It incentivizes HPs to shift care to outpatient and home-based settings, particularly for patients waiting to be discharged.
Content/characteristics
The legislative reform consists of four main changes:
- Promoting home care: Hospitals are required to enter into agreements with HPs to provide hospital-at-home services. Payment for hospital-at-home is included in the global budget, with hospitals facing a 1% reduction in the global budget if they do not expand this service. This is expected to reduce the number of patients arriving to IM wards, as they will be treated at home.
- Shift in payment method: Payment for IM wards was shifted from a per-diem base to global budgets. HPs now pay predetermined budgets to hospitals based on the IM’s previous years’ activity volume and cost. This is expected to create incentives for hospitals to reduce the number of “unnecessary” inpatients and reduce lengths of stay.
- Pay for performance model: Payment beyond the global budget is contingent on adherence to “quality of care” indicators measured through various tools, including patient-reported satisfaction collected through a survey, staffing levels per bed and readmissions rates. This measure aims to avoid hampering quality of care and counteract the financial incentive to contain costs created by the introduction of global budgets.
- Penalty for delayed patients: Once a patient is discharged, the HP are responsible for their care. Hospitals can charge extra payments from HPs for each day of hospitalization once a patient is categorized as “medically fit for discharge”. This change creates financial incentives for HPs to find alternative settings of care for patients that can leave IM wards, but are not suitable for home discharge.