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The new hospital funding system based on a diagnosis-related group (DRG) system and the economic competition involved require large-scale changes in hospital structures and processes. Clinical pathways are multidisciplinary plans of best clinical practice for specified groups of patients with a particular diagnosis that aid the coordination and delivery of high quality care. The clinical pathway originally used in the USA and Australia was aimed at shortening the hospital stay and reducing healthcare costs, which has become an increasingly important issue in medicine. Furthermore, it is an appropriate tool to standardize medical care and increase patient satisfaction. Clinical pathways are able to standardize care for patients with a similar diagnosis, procedure, or symptom. There are four essential components of a clinical pathway: a timeline, the categories of care or activities and their interventions, intermediate- and long-term outcome criteria, and the variance record. In contrast to practice guidelines, protocols, and algorithms, clinical pathways are utilized by a multidisciplinary team and focus on quality and coordination of care.

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Mongolia is a poor country that lost 30% of its GDP when the Soviet Bloc collapsed in 1990. Its health care system had the typical weaknesses of centrally planned economies--quantity rather than quality, excessive medical specialisation, dominance of the hospital sector, weak policy and management capabilities, little community participation in decision making, and so on. This paper describes Mongolia's attempts to resolve these problems through a radical program of reform that began in 1998. There have been significant successes in spite of almost overwhelming difficulties, and this may be a consequence of the strong sense of community that has been present for five hundred years and re-emerged intact at the end of 70 years of Soviet dominance. We argue, however, that good design and skillful implementation of the reform program may have made a contribution. Its notable features have included the use of a comprehensive and integrated model rather than piecemeal reform, the generation of political support for change through social marketing campaigns, a team approach using local and international experts, and co-ordination of international donor activities. Some of these features may be relevant to other transitional and developing countries.

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In 1995, the Philippines government legislated to create an income-rated and predominantly employment-based universal health insurance program over a 15-year period. The program was intended to provide more and better health care than was available through a combination of existing insurance schemes that covered less than half of the population, and partially subsidized services provided by government facilities and funded from general taxation. The legislation was well intentioned, and the program has some skillful and imaginative staff. However, there are significant barriers to success including low average and widely dispersed incomes, improving but still unsatisfactory health status, weak government health care services, and the sometimes negative impact of for-profit agencies. We review progress to date and conclude that, although membership numbers and benefit rates have increased, access is still inadequate and copayments are high. We argue that strong and innovative steps are needed if the Program's goals are to be realised. In particular, we suggest that the focus should be on more formal and explicit rationing that takes account of cost per quality-adjusted life-year; and radical adjustment of financial incentives for care providers including capitation and per case payment based on costed clinical pathways for high-volume case types. Finally, we comment briefly on lessons that might be learned by both The Philippines and Australia.

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Germany will begin a change to per case payment by DRG from January 2003. It has selected the Australian DRG classification as the basis for patient categorisation, in preference to the many other DRG variants around the world. The main aim is increase control over expenditure. We describe some of the reasons for high levels of spending on hospital inpatient care, including the fragmented insurance system and supplier-induced demand. We summarise the reasons why Australian DRGs were selected, and note some of the benefits that will accrue for Australia.

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The diagnosis related groups (DRG) classification was designed primarily to categorize patients of acute short-stay hospitals in urban areas. As one might expect, many studies have shown it is a less effective predictor of the needs--and consequently the costs of care--of remote and socio-economically disadvantaged communities. One way of improving the equity of funding involves separating the cases in each DRG into inlier and outlier episodes, and making different resource allocations for each category. This paper summarises the outlier payment model used by the Health Department of Western Australia, with emphasis on high length of stay outliers. The model provides additional funds for high length of stay outliers, but funding levels are deliberately set below the actual estimated costs of care, on the assumption that some of the additional costs are a consequence of poor care management. All high length of stay outlier episodes in the East Pilbara Health Service in 1997-98 were examined. It was found that the outliers were predominantly Aboriginal patients from remote communities with higher than average needs for care as indicated by their greater tendency to have multiple conditions requiring treatment. The age distribution of high length of stay outliers was quite different from that found in most Australian hospitals, in that there was a higher proportion of young children. It is concluded that, although the ideas on which the funding model is based are sound, revisions of detail need to be considered to reduce the risk that the burden of cost containment will fall to a disproportionate degree on the most disadvantaged groups of patients.

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China has been very successful in achieving good health at a low cost, mostly through national programs for health promotion and illness prevention. However, increased prosperity in recent years has led to higher expectations for therapeutic care, and the change to a socialist market economy has created new risks and opportunities for both financing and care provision. After several years of experimentation, China committed itself in 1996 to a major reform program which includes implementation of a new method of financing of care for the urban employed population. It comprises a mix of government-operated compulsory basic insurance, individual health savings accounts, and optional private health insurance. This paper outlines the new Scheme, and notes some tactical and strategic issues. I conclude that the Chinese government is correctly choosing to balance new and old ideas, but that there are many challenges to be faced including integration of the new Scheme with the rest of the health care system.

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The author discusses 'L'Enfant et les sortilèges', an opera by Ravel based on a short story by Colette, which traces the trials and tribulations of a young boy whose bad behaviour leads to his being sent to his room, left alone and given only tea and bread until dinner. His progression from anger to persecution and fear, the various defences he employs to protect himself from feeling overwhelmed and his despair are graphically illustrated through words and music. The author considers the opera in relation to Klein's theory of the paranoidschizoid position and the struggle involved in maintaining contact with good objects, externally and internally. Revisiting the opera in light of Meltzer's contribution to psychoanalytic thinking provides a wider perspective in which to explore what he has termed the aesthetic conflict and its place in relation to the depressive position and developmental processes.

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Lifetime community rating has some potential benefits to private insurers, but they can only be realised if there is much greater control over private care providers than is currently the case. There is reason to fear that insurers' initial gains will disappear through increased provision of marginal care. Some members will gain through reduced premiums, and the main benefits will be derived by people who continue to maintain insurance. Most members will benefit hardly at all, and some (and particularly those who were unwilling or unable to take out insurance when they were young) will be significant losers. The public health care sector will remain under pressure at best, and it is more likely that the pressures will increase. The majority of Australians who do not have insurance will tend to lose. The obvious winners are the private care providers. The overall revenues of private health insurers will be relatively higher than if lifetime community rating were not introduced, and most of that revenue ultimately finds its way into the private care providers' pockets. Assuming they are able to increase the level of marginally useful care, there could be an increase in profitability to the extent that marginally useful care is actually less expensive to deliver. Finally, the government will derive another Pyrrhic victory. It will reduce its own outlays, but cause a decline in overall cost-effectiveness of the health system. We have been here before, most recently in the period leading up to passage of the 30% rebate. There is good reason, therefore, to expect that lifetime community rating will be implemented. At least, the government will be able to claim it is defending Medicare from the more extreme privatisation ideas of Premier Kennett. This kind of argument will probably be sufficient. If so, the government will no doubt be stimulated to move to the next stage of dismantling of Medicare (which will presumably be something like means-testing of public hospital services). Many people believe that this is not an achievable goal in the near future. However, there was a popular view that the GST was not implementable after it lost the Coalition one election and led to Prime Minister Howard stating that he would 'never ever' raise the possibility again. The electorate is a sleeping giant, as is the public health care sector. It would be useful to know what could possibly serve as a wake-up call. Lifetime community rating is a small matter in the general trend towards killing off Medicare. But it is never too soon to send a message.

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Boston University Medical Center created the Office of Residency Planning and Practice Management as part of The Robert Wood Johnson Foundation's Generalist Physician Initiative. Since 1995, the office has improved the medical center's ability to promote and support the generalist career decisions of its students and residents by removing indebtedness as a disincentive. After a brief review of the relationship between indebtedness and specialty selection, the authors delineate the nature and volume of debt-management assistance provided by the office to students and residents through individual counseling sessions, workshops, and other means between April 1995 and March 1998. A case study shows the progression of these services throughout residency training. The medical center also coordinates its debt-management assistance with counseling from physician-oriented financial planning groups. In conclusion, the authors discuss several characteristics of a successful debt-management program for residents.

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The Australian National Diagnosis Related Groups (AN-DRGs) classification is intended to assign acute admitted patient episodes to classes which are iso-resource and clinically homogeneous. It has been widely used to good effect, but its performance has been questioned with respect to the classification of patients with chronic conditions. The primary aim of this study was to investigate the extent to which AN-DRGs classify episodes of care for a chronic disorder (in this case diabetes) into classes which are relatively homogeneous in terms of clinical attributes and the resources used in the provision of care. The records of 2094 patients admitted during 1994-95 to four hospitals in the Illawarra Area Health Service with at least one diabetes diagnosis recorded in the discharge summary were reviewed. We found that the source data used for assignment contained errors of medical documentation, abstraction and sequencing, and coding. The sampled patients were distributed among many AN-DRGs in a way which was neither clinically coherent nor obviously descriptive of resource-use differences. The AN-DRG logic appears to ignore or otherwise under-estimate the effects of diabetes as a secondary diagnosis.

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