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Payment Methods for Integration: Typology, Evidence and Pre-conditions of Implementation

Igor Sheiman

Many countries have recently started the search for new payments methods with the specific objective to encourage the integration in service delivery. This paper suggests their typology. A brief overview of these methods in the USA and Europe, including Russia, indicates that there is still no strong evidence of their effects on integration and other dimensions of service delivery performance. It is argued that relative to other integrated methods global payment is the most promising method, since it provides incentives for comprehensive organizational changes. But this method is hard to implement – mostly due to a high probability of excessive financial risks placed on providers in integrated networks. The activities to mitigate these risks are discussed based on the approaches used in the Alternative Quality Contract in Massachusetts and fundholding scheme in Russia. The major pre-conditions for global payment implementation are specified: involvement of hospitals in global payment schemes, shared savings arrangements, special set of activities to mitigate financial risks, performance transparency system. It is also argued that there is a dilemma of strong economic incentives with serious implementation problems and lower economic incentives with less substantial implementation problems.