Cooperatives in Healthcare: Unimed do Brasil and P4P

June 25, 2012 § Leave a comment

Cooperatives in HealthcareCooperatives in Healthcare: Unimed do Brasil and P4P

At the height of the debate on American health care reforms, the primary issue revolves around how to lower the cost of healthcare services.  Yet, from a cost-and-benefit viewpoint, lowering the cost and price of healthcare may prove problematic as it may inadvertently decrease the quality of service delivery.  When hospitals, doctors or insurers receive less remuneration than what they previously received, they may, as rational agents, exercise lesser effort and commitment in return.

In the ensuing debate, cooperatives emerged as a key strategy for keeping healthcare costs and insurance premiums affordable.  Cooperatives are able to control the high cost of prescription medicines, help community-owned hospitals remain independent, and improve the quality of healthcare and assisted living.[1]  While there were doubts on the extent on the capabilities of cooperatives, there are already successful cases of healthcare cooperatives that deliver affordable prices and maintain quality delivery in other parts of the world.

Cooperatives have long been at the forefront of the Brazilian health care system.  Serving since 1967, Unimed do Brasil is the biggest private healthcare operator in Braziland has the largest network of medical cooperatives in the world.  The entire system consists of 370 medical cooperatives, 109,000 doctors and 3,029 accredited hospitals, providing care to more than 18 million customers.  It currently covers more than a third of the Brazilian market for health plans.[2]

True to the cooperative values, Unimed launched its National Policy on Social Responsibility in 2001, with the aim of practicing social responsibility in managing business.  In line with this mission, cooperatives in the Unimed network have undertaken initiatives to improve health care delivery; one of which, is the pay-for-performance (P4P) scheme which has been piloted by cooperatives like Unimed-Franca and Unimed-Belo Horizonte.

The P4P scheme rewards healthcare providers with financial incentives in meeting certain quality or efficiency targets.  The scheme may also include disincentives for poor performance where hospitals, for instance, are fined for failing to meet reduction targets or physicians are not reimbursed for the cost of treating medical errors.  The OECD acknowledges the potential of P4P scheme to go beyond mere encouragement and actually improve the quality of health care.[3]  While there is yet no clear evidence of the effectiveness of the scheme, pay-for-performance has steadily becoming popular in both private healthcare providers and cooperatives in countries including the United States, United Kingdom, New Zealand, Australia and Korea.

Unimed-Franca implemented its FFS+P4P (fee-for-service + payment-for-performance) in 2009.  Its aim is to control costs and improve doctor’s remuneration while still ensuring the quality of healthcare delivery.  The scheme rewards doctors depending on how they compare to their colleagues, looking into performance domain such as utilization, cost, effectiveness, healthcare and patient satisfaction.[4]  While there are no set absolute targets, there is a benchmark interval scoring, based on the average performance of all doctors.  Meeting the scores result in a percentage increases in consultation fees, which are shouldered by Unimed Franca.

On the other hand, Unimed-Belo Horizonte’s (UBH) program catered to both hospitals and doctors.  A hospital accreditation program, known as the Service Network Qualification Project, was instituted in 2004, aiming to standardize the provision of quality care among hospitals in the city of Belo Horizonte.  Together with the Diagnosis-Related Group (DRG) method, these allow comparison of performance across hospitals.  Hospitals receive an increase in per diem rate in joining and meeting targets in the accreditation process.  Accredited hospitals accounted for 65 percent of all UBH hospital admissions in 2008.[5]  Among doctors, UBH rolled out the pay-for-chronic disease management that tries to improve compliance with clinical guidelines and reduce avoidable hospitalization for cases such as diabetes, asthma, gyncaecology, etc.  Similarly, financial incentives are rewarded for good performance.

Rewarding incentives for good performance sounds like common sense.  Yet, the evidences of success with P4P schemes are inconclusive.  While the experience of Unimed-Franca has been promising, with patient satisfaction and preventive care increasing and average per consultation cost decreasing, Neves de Faria points out that many other health measures have little improved and that a time trend might be influencing the decrease in average cost.  Consequently, she concluded that it is unclear whether the program has a meaningful impact on performance.

As for UBH, Borem, et. al. highlight many positive impacts such as the improved health status of clients enrolled in the P4P program, citing that hospital admission among asthma patients dropped significantly.  Moreover, because of lower number of hospitalizations, the total cost to treat patients enrolled in P4P program dropped from US$ 90,000 to US$ 75,000.  Yet, they also find that the amount of incentives generates different results for different programs and they had to advise early on, that it is necessary to clearly distinguish P4P from other initiatives that increase provider remuneration.  Lastly, it should be considered that there are significant costs associated with both the collection of data and the increased financial incentives.

P4P schemes are attractive because at the core of the program is the attempt to put people first through the quality of health service delivery.  This nature suits well the very values for which cooperatives thrive.  Yet, like any program, there is a need for sufficient and reliable evaluation to measure its impact and sustainability for cooperatives must be mindful that for then to be successful, they still have to make profits.  In time, newer evaluation designs may arise to understand the true impact of P4P.


[1] NCBA website.  Available [Online]: < http://www.ncba.coop/ncba/about-co-ops/co-op-sectors/146-healthcare> May 21, 2012.

[2] Unimed do Brasil Website.  Available [Online]: < http://www.unimed.com.br/pct/index.jsp?cd_canal=49146&cd_secao=49094> May 16, 2012.

[3] OECD, “Improving Value in Health Care: Measuring Quality” OECD Health Ministerial Meeting Forum on Quality of Care, October 2010, p. 5.

[4] Rita Isabel Neves de Faria, “Pay-for-Performance inBrazil”University ofYork, September 2010, p. 25.

[5] Paulo Borem, et al., “Pay-for-Performance inBrazil: Unimed-Belo Horizonte Physician Cooperative,” Health System 20/20 P4P Case Studies, USAID, 2010.

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