For a health care system to be considered equitable in its financing, the financial burden of contributions has to be progressive or at least proportional. Out-of-pocket financing takes a larger proportion of poor than of non-poor households' income. To remedy this regressive burden, among other goals, Colombia launched a health care reform based on social insurance as a means to reduce health care financing through out-of-pocket payments, and to reduce financial barriers to access. This paper analyzes the evolution of regressivity in out-of-pocket financing from 1984 to 1997, in order to detect if the 1993 health care reform had an impact on such regressivity. The Kakwani index of progressivity was estimated using three national household surveys. Kakwani indices showed a constant trend towards more regressivity (-0.126 in 1984, to -0.3498 in 1997) when using income to build the index, but a trend towards progressivity (-0.0092 in 1984, to 0.0026 in 1997) when using expenses. Our findings suggest that there was a progressive impact of the reform on out-of-pocket financing when household expenses are used to build the Kakwani index; however, due to issues of comparability between surveys, the findings are not conclusive.

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BackgroundUncertainty and information asymmetries in health care are the basis for a supply-sided mindset in the health care industry and for a business model for hospitals and doctor’s practices; these two models have to be challenged with business model innovation. The three elements which ensure this are standardizability, separability, and patient-centeredness. As scientific evidence advances and outcomes are more predictable, standardization is more feasible. If a standardized process can also be separated from the hospital and doctor’s practice, it is more likely that innovative business models emerge. Regarding patient centeredness, it has to go beyond the oversimplifying approach to patient satisfaction with amenities and interpersonal skills of staff, to include the design of structure and processes starting from patients’ needs, expectations, and preferences. Six business models are proposed in this article, including those of hospitals and doctor’s practices.DiscussionUnravelling standardized and separable processes from the traditional hospital setting will increase hospital expenditure, however, the new business models would reduce expenses. The net effect on efficiency could be argued to be positive. Regarding equity in access to high-quality care, most of the innovations described along these business models have emerged in developing countries; it is therefore reasonable to be optimistic regarding their impact on access by the poor. These models provide a promising route to achieve sustainable universal access to high quality care by the poor.SummaryBusiness model innovation is a necessary step to guarantee sustainability of health care systems; standardizability, separability, and patient-centeredness are key elements underlying the six business model innovations proposed in this article.

Granting autonomy to public hospitals in developing countries has been common over recent decades, and implies a shift from hierarchical to contract-based relationships with health authorities. Theory on transactions costs in contractual relationships suggests they stem from relationship-specific investments and contract incompleteness. Transaction cost economics argues that the parties involved in exchanges seek to reduce transaction costs. The objective of this research was to analyse the relationships observed between purchasers and the 22 public hospitals of the city of Bogota, Colombia, in order to understand the role of relationship-specific investments and contract incompleteness as sources of transaction costs, through a largely qualitative study. We found that contract-based relationships showed relevant transaction costs associated mainly with contract incompleteness, not with relationship-specific investments. Regarding relationships between insurers and local hospitals for primary care services, compulsory contracting regulations locked-in the parties to the contracts. For high-complexity services (e.g. inpatient care), no restrictions applied and relationships suggested transaction-cost minimizing behaviour. Contract incompleteness was found to be a source of transaction costs on its own. We conclude that transaction costs seemed to play a key role in contract-based relationships, and contract incompleteness by itself appeared to be a source of transaction costs. The same findings are likely in other contexts because of difficulties in defining, observing and verifying the contracted products and the underlying information asymmetries. The role of compulsory contracting might be context-specific, although it is likely to emerge in other settings due to the safety-net role of public hospitals.

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