VOICES OF LOS ALAMOS NEWS

Senator Ortiz y Piño will discuss a new healthcare approach called global budgeting of hospitals and how it works. If adopted, New Mexico could become the third state (after Maryland and Pennsylvania) to start paying each hospital a fixed yearly budgeted sum – an approach that controls costs, revamps the incentives for how hospitals work, and greatly reduces patients’ financial worries.

“A global budget provides a fixed amount of funding for a fixed period of time (typically one year) for a specified population, rather than fixed rates for individual services or cases. The main objective is to constrain the amount a hospital can spend in order to limit the total amount of money spent on health care within the system.This approach contrasts with ‘line-item budgeting,’ which breaks down the amount into specific line items, such as salaries, drugs, equipment, and maintenance. Hospital managers often cannot change line-item allocations without approval from funders (usually a government agency). Essentially, a global budget represents a one-line budget and provides the hospital more management flexibility to allocate resources. Over time, global budgeting has replaced line-item budgeting in developed countries that rely on regulation more than on market forces to control health care spending.” — the Urban Institute, https://www.urban.org/sites/default/files/05_global_budgets_for_hospitals.pdf

Senator Ortiz y Piño has represented the 12th District since 2005. He is the Legislature’s leading authority on the global budgeting of hospitals and a sponsor of a 2020 Memorial to move this concept forward. The Senator will also be the lead sponsor in the NM Senate for the 2021 Health Security Act, and he’ll explain at the Voices meeting how global hospital budgeting fits into that Act’s larger plan to reform — in a systematic way — the financing of New Mexico’s health system. The fiscal analysis of the Health Security Plan is now underway, and will also be discussed.