Health Economic Systems: How Do They Influence Radiology?

In an ordinary market, the client uses their knowledge and the resources available in order to make purchases, which will cover their needs. Depending on their knowledge, their needs and the money that they possess, they compare prices and products in order to make informed decisions on what to buy. 

When it comes to their healthcare, the client does not have specific knowledge, so they seek a physician. The physician has asymmetrically more knowledge than the patient, and in that way they act as the patient’s agent when it comes to the purchase of health services. In cases where the patient is covered by a social security plan (that means broadly that somebody else will cover the bill), neither the patient nor the doctor are interested in the cost of the healthcare services. This may lead to over-utilisation of services or, in other words, to a moral hazard to the social security system (Allart et al. 2000). This creates healthcare market failure. 

Health economists are interested in how healthcare market failure can be confronted (Kenneth 1962). The issue becomes even more complicated, because the resources of the society are scarce at the same time as the needs are unlimited. Therefore societies have to allocate their scarce resources amongst health and the other goods that they provide (such as education, transportation etc.)

The question is not only how to allocate the resources amongst health and other goods, but most importantly how to allocate the scarce resources within the healthcare sector itself. Within this sector, the demand for health services is unlimited. Opportunity cost is a key concept in order to approach this issue. It has been described as expressing the basic relationship between scarcity and choice. For instance, the opportunity cost of buying a new scanner might be not to have a refurbishment of the reception area of your department. This cost of the lost opportunity of the refurbishment as a second alternative choice of the budget’s usage, represents the opportunity cost, and reassures the good or the bad use of the budget.  

The notion of opportunity cost plays a crucial part in ensuring that scarce resources are used efficiently. This is because societies express major concerns about the following issues: 

Radiology departments are units that transform inputs to outputs through the imaging process. Inputs are the medical referrals of the patients. The main aim of an imaging department is to produce the maximum possible output from a fixed resource, in other words to function efficiently. The question is what the department considers as an output and how they measure it. The key phrase here is the “maximum possible output” in relation to the “fixed cost”. It is the responsibility of everyone who is involved in the imaging services to protect the scarce resources of the system by making efficient use of them and by keeping cost to the minimum. In the health sector cost has a broad meaning beyond financial expenditures, that also includes time, education and training of personnel, availability of the imaging units around the clock, etc. (IAEA 2011). 

 The health service’s funding mechanisms are believed to influence the delivery and quality of patient care. Private imaging providers are looking for a considerable volume of examinations in a certain time frame, as their reward comes from the volume of examinations they provide. It is expected that fee-for-volume funding is associated with overutilisation of imaging services. The contribution of the referring physician under the possible existence of any financial incentives is unquestionable due to the asymmetric information that the physician has and the patient lacks. The existence of a health coverage system, which will later pay the bill, probably increases the volume of the prescribed examinations, as Roemer’s law states: “Under a Social Insurance payment plan, every offered imaging unit is a usable unit” (Shain and Roemer 1959). 

When hospital-based imaging departments are reimbursed through global budgets they are expected to have a gatekeeper’s role, by exercising the principles of justification and optimisation (Porter and Lee 2013). Those two pillars of radiation protection are also expected to increase the effectiveness of the department by allocating imaging resources and controlling the radiation risk to patients.

 A critical parameter for the effectiveness of radiological departments should be the number of accurate diagnoses in relation to the number of exams produced, booking waiting time, and the radiation dose burden delivered to patients (IAEA 2011). The number of exams performed by itself may not be an indicator of the department’s efficiency. If the reimbursement is on a fee-for-volume basis, it is expected that the interest of the department is in the volume of the exams produced in a certain time frame rather than the accurate diagnosis given to the patient’s problem. It is established empirically that money follows the patients, with the more patients treated the higher the reimbursement to the efficient, flexible providers. This should encourage departments to meet the needs of their customers, who are both patients and their referring physicians. Patients need quality services and referring physicians need an accurate report. Departments also have the task of minimising costs not only by switching to new efficient technologies, but by extending the working hours of the existing facilities, developing in this way economies of scale. Modern competitive departments must always ask themselves: Do we solve the clinical problem of the patient? How many accurate vs. inaccurate diagnoses do we produce weekly? 

Everyone must start to measure value, quality and performance as we transition from a fee-for-volume to a fee-for-value performance scenario. In that case the department creates realistic expectations of the revenue it can have, as more referrers trust it, and more patients (followed by money) are using its services.