Quality Based Financing in Norway

A pay for performance (P4P) scheme termed Quality Based Financing (QBF) was introduced in Norway in January 2014. QBF was designed as a pilot project for three years and covers all the public hospitals and public funded private hospitals. The main objective is to test the use of financial incentives to motivate the hospitals to increase overall quality and patient safety. QBF is based on how well hospitals perform on a set of quality indicators and a set of performance criteria. Norway has established a National Quality Indicator System comprising 100 indicators. Out of these, 33 are also in use in the QBF. Three different types of quality indicators are included; indicators for outcome, process and patient satisfaction. In order to motivate the providers broadly, four different criteria are used to measure and reward performance; reporting quality, minimum performance level, best performance and best relative improvement. Norway is divided into four health regions which organize, provide and purchase all the secondary care services. The government allocates resources to the health regions based on a mix of activity based schemes and block grants. Similarly, the funds through QBF are initially distributed to the health regions despite the fact that they are determined by the individual hospital’s performance on the selected indicators and the rewarding criteria. At present, QBF represents NOK 500 million or around 0.5 percent of the health-regions total block grant budgets. Compared to a block-grant distribution of these NOK 500 million, the redistribution effect of QBF represents a 10 percent decrease for one health region and the corresponding increase for three other regions.