A sustainable health system II


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A sustainable health system II

  1. 1. A sustainable health system (II)Madrid17 July 2012 Círculo de Empresarios
  2. 2. Index1. Executive summary 52. Key structural factors 9 2.1 The architecture of national health care systems 9 2.2 The National Health System (NHS) 12 Coverage of the system 15 Architecture of the NHS 19 Provision of services 243. Key financial factors of the NHS 31 3.1 The level of health care expenditure 31 3.2 The evolution of health care expenditure 32 Outlook and determining factors for growth of health care spending 33 Growth in health care spending in Spain 38 3.3 Decentralization 424. Key impact factors 45 4.1 Restrictions on resources and services of the system 45 4.2 Reforms on supply side 51 Decentralization 51 Incentives 52 Market mechanisms 53 4.3 Reforms on demand side 56 Co-payment or ticket moderator 56 Other co-responsibility formulae 59 4.4 The impact of reforms on the growth of health care spending 595. Proposals by Círculo de Empresarios 63 Governance of the NHS 63 Supply 66 Demand 686. Appendices 717. Bibliography 738. Recent publications by Círculo de Empresarios 77
  3. 3. A sustainable health system (II) 1. Executive summary The provision of health coverage under universal conditions has been one of the greatachievements of the National Health System (NHS) and has been a determining factor in thefavorable evolution of Spain in recent decades. Círculo de Empresarios believes it is essentialto guarantee the existence of an NHS which has enabled access by the population to a widerange of health services under fair conditions. To do so, its sustainability must be ensured,which involves considering certain structural, financial and impact key factors of healthpolicies on the budget. In regard to structural key factors, Spain has an integrated public model: the funding,purchase and provision of health care are essentially public. The public insurance and universalcoverage models are not always in line with this integrated scheme. The NHS reaches a degreeof universality similar to that of other OECD countries with different models. The NHS isperceived as a cornerstone of the welfare state and is positively valued, although the need forchange has become evident. The system is valued more for medical care than in terms of userparticipation. Círculo de Empresarios believes that one must emphasize that other public anduniversal systems within the OECD include mechanisms of co-responsibility of demand(users) and of supply (professionals and businesses), enable the user to choose (occasionally, ata price) and resort to formulae of involving competition and risk transfer to the private sector.These formulae are perfectly compatible with a public and universal model. In addition,despite the existence of a universal NHS, about 20% of the total Spanish cost on health care isdirectly assumed by the citizens, aside from insurance policies (public and private) andcopayment schemes. Universal coverage is linked to a benefits portfolio. In Spain there are geographicaldifferences between the benefits resulting from the various interpretations of the items in thecommon services portfolio and the creation of complementary portfolios. Criteria of necessityor utility have not always prevailed in the introduction of treatments, nor has there been asystematic and transparent policy of underfunding thereof based on cost-effectiveness. Once the transfer of health services to the Autonomous Communities was completed in2002, the coordination has been articulated by way of the Inter-territorial Council for theNational Health System, where decisions are taken by consensus, resulting in a governance ofthe system with ample room for improvement and economic effects which, in the opinion ofCírculo de Empresarios, are undesirable. 5
  4. 4. Key structural factors HNS services are free of charge at the point of provision, and are provided at two carelevels (primary and hospital & specialized). This is a model geared for the treatment of acutecases, when a system geared for chronic cases is required as, very gradually, someAutonomous Communities are beginning to consider. Most of the NHS service suppliers belong to the public sector and the prevalentgovernance model is that of direct management or similar. Indirect management forms arealso used by way of agreements. The Autonomous Communities have been graduallyintroducing new health care formulae which, whilst maintaining the public nature of thesystem, are seeking new levels of efficiency, funding or risk transfer to the private sector. Butthe “new forms of management”, still a minority, are not articulated on the basis of a nationalpolicy of analysis and comparison of results and encouragement of new formulae, over andabove the legal framework allowing for their development. The sustainability of the NHS requires certain financial key factors to be considered.The NHS makes the financial effort which pertains to Spain in terms of GDP per inhabitant, butbetween 2000 and 2009 the real public health expenditure per inhabitant experience acumulative increase of 42%. Additionally, according to the IMF, in 2030 the health expenditurein terms of percentage of GDP in Spain will be 1.6pp above that of 2010 (this would mean thatthe net present value of the increase in health care expenditure would account for over 50% ofthe current GDP). On its part, the Spanish government expects an increase between 2010 and2050 of 1.2 points, taking into account the impact of the recent reform contained in RDL 6/2012.In light of such data, the health care system will present in the future a more importantbudgetary challenge than that, for instance, presented by pension. All the foregoing, withouttaking into account the budgetary restrictions to which Spain is currently subject. The determining factors on the growth in the cost of health care are associated with allsystem participants. Aging is not the only or the most important, determining factor in healthcare cost, so that the health care policy must ensure, in the opinion of Círculo de Empresarios,that every participant therein contributes towards its cost containment: 44% of public healthcare expenditure goes towards personnel costs and 25.5% towards pharmaceutical products viaprescriptions (19%) or hospital dispensation (6.5%). Between 2002 and 2009 hospital andspecialized services have gone from 53.4% to 55.9% of total cost. Primary health servicesaccounted in 2009 for 14.9% of expenditure, having slightly reduced their share of the overallcost. Prevention and public health activities merely account for 1.5% of the public healthexpenditure and their weight has hardly changed in the last decade. This evolution is not, inthe opinion of Círculo de Empresarios consistent with the factors which determine healthcare cost. 6
  5. 5. A sustainable health system (II) Additionally, there are substantial differences in expenditure by inhabitant amongAutonomous Communities due to disparities in public funding, different preferences amongusers between public and private services, and various options of the governments in regard topublic, agreed or private provision of services. Attention must also be paid to the differentspeeds at which this expenditure is adjusted among Autonomous Communities. The impact ofthe budgetary adjustment on equal access to health services must be watched over from ageographical perspective. As for the health care key factors which have an impact on the sustainability of NHSexpenditure, available evidence suggests that measures design to introduce competition anduser choice (supply measures) are the ones which have the most impact on containment ofhealth care cost, ahead of budget ceilings and the improvement in public management andcoordination and demand rationalization measures. But, in particular, the evidence indicatesthat the most effective reforms are those which combine all instruments (budgetary,coordination and management, and supply and demand). Círculo de Empresarios proposes a number of initiatives designed to improve the system.As for the public management, it suggests an improvement in NHS governance by means ofcentralized accountability of a decentralized system, the improvement of availability of publicinformation on the NHS and the inter-operability of regional information systems. Moreover, itadvises the encouragement of assessment mechanisms and the integration into one singleindependent body of the central government network of institutions and the AutonomousCommunities, currently devoted to the assessment of health care technologies. As for supply, greater autonomy and accountability for the managers, the flexibilizationof the statutory condition of health care personnel and the encouragement of integrationbetween health care levels and hospitals are all advocated. The importance of the introductionof competition and guaranteed user choice are also emphasized, so that patients are treatedmore like customers than as users. Lastly, in terms of demand, the use of the system must be rationalized by means of userco-responsibility for health care costs. This can be achieved by implementing joint paymentsystems (co-payment) or via the promotion of preventive health campaigns. Finally, Círculo deEmpresarios estimates that the generation of revenues not strictly associated with basic healthcare should be encouraged. Some of the foregoing considerations are shared by a large part of NHS experts andanalysts. The recent health care reform has made inroads, within the competency limits of thegovernment and financial conditioning, in some of these. 7
  6. 6. Key structural factors In any event, Círculo de Empresarios believes that the problem is not just one of diagnosisbut of governance of the NHS. The aim is therefore not whether competencies pertain to one oranother agent, but that decisions affecting the whole can be taken by a majority. In order toreform, indeed, a diagnosis is required. But in order to implement, an improvement in the rulesof governance becomes necessary. In this regard, Círculo de Empresarios believes that thegovernance of the system should be examined closely, not in terms of centralization ofcompetencies but in terms of the enforceability of the decisions made by a majority of itsparticipants. 8
  7. 7. A sustainable health system (II) 2. Structural key factors2.1. The architecture of the national health systems Health systems in the OECD exhibit different kinds of architecture, but in most casesthey have a common foundation: universal and equal access to health care benefits. This isalso the model of the General Health Care Law of 1986. Indeed, health care systems fulfill, at least, three basic functions: • That of financier, assuming the costs of coverage of the health care benefits in exchange for tax revenue, social security contributions or premiums, depending on the model. • That of purchasing entities, which acquire medical and hospital services on behalf of their users1, to provide the agreed health care benefits. • That of the health care providers, with contracts with the purchasing entities that pay them for the services offered to the users. In OECD health care systems in general, the funding function is public, whereas othershave different configurations. In Spain, there is an integrated public model where both thefunding for the provision of health care and the purchase and provision of health care servicesare of an essentially public nature. Public insurance and universal coverage models are always based on this integratedscheme. There are models which, on the basis of public funding, rely more on competition andthe users’ choice and others which rely on public control and management (table 1).1 The nature of health care prevents the patient from evaluating the care received. Health care meets the characteristics of what are known as“credence goods” whose quality is difficult to determine with any accuracy. These are goods where the offerors are, in turn, experts whichdetermine the needs of the consumers. Despite the fact that the performance of the service is observable, users are not always able to establish theneed for the service, nor reliably assess performance and cost thereof. This circumstance can give rise to opportunist behaviors by the suppliers. 9
  8. 8. Key Financial Factors of the NHS Table 1 Health care models They rely on market mechanisms for service provision Private insurance for basic coverage Public insurance for basic coverage Private insurance beyond basic coverage and some restrictions Little private insurance beyond basic coverage with no restrictions Germany The Netherlands Slovakia Switzerland Australia Belgium Canada France Austria Czech Republic Greece Japan Korea Luxembourg Rely on mainly public services and insurance Broad range of suppliers and no access filters With access filters Limited choice of suppliers and relaxed budgetary restriction Broad range of choice of suppliers and strict budgetary restriction Iceland Sweden Turkey Denmark Finland Mexico Portugal Spain Hungry Ireland Italy New Zeeland Norway Poland United Kingdom Among the first, there are countries such as the Netherlands, where private insurers perform the purchase function (box 1). In other cases, private insurers are the ones who provide benefits above and beyond the basic package. Among those which resort to public insurance for purchase duties, and rely on market mechanisms for provision of services, some have access filters2 (France or Canada) and some have not (Austria or Japan). Box 1: The Dutch system and user choice Following the reforms of 2006, the Netherlands combine an obligatory insurance system with a patient-based insurance market. The government defines a minimum health care package and a standard 2 The role of the filter for access to health care benefits refers to the primary care physician having to refer the patient to the hospital or specialist. In other cases, this obligation does not exist but is carries financial preference. For example, if a specialist is consulted without having been referred by the primary care physician, the co-payment is higher. 10
  9. 9. A sustainable health system (II)insurance premium. In order to guarantee universality, all individuals are obliged to be insured by thebasic package. They pay a lump sum premium to their insurance company of choice and their employerwithholds social security contributions from the salary. Lower income insured parties receive governmentsubsidies. The insurance companies are private and the insured party has freedom of choice (a change afterone year is allowed). These must accept all residents in their coverage area. In order to compensateinsurance companies for not being able to select the risk to be covered, compensations are established bymeans of the Health Care Insurance Fund. The insurance companies send the premiums charged to thisFund, which also receives salary contributions. Then the premiums (and contributions) are redistributedamong the insurance companies according to the original decisions made by the consumers, adjusted bycriteria of joint and several liability, risk, etc. Insurance companies compete on nominal premiums for the basic package (this cannot be altered),volume discounts (10% maximum) for groups of insured individuals, or lower premiums if the insuredparty becomes co-responsible for the costs generated over and above a given amount. The basic health care package is covered by the private insurer. Additional public fundingguarantees universality and a safety net for illegal immigrants. Complementary health care by means ofprivate insurance, is voluntary, with no public support and risk is freely covered or not by the insurancecompany. Most of the population purchases complementary insurance policies from the insurers,providing the minimum legal coverage. Registration with a primary health care physician is obligatory, who controls the costs by limitingreferrals to specialists. A medical referral must be obtained before consulting a specialist, except in acuteconditions such as trauma or myocardial infarction. Over 90% of the hospitals are privately owned and managed, but not for profit. The Treatment-Diagnosis Combination payment system is used, which links prices to real costs and enables the insurancecompanies to negotiate the prices of hospital services. The models which have been articulated on the basis of public control span from thosewithout access filters and broad user choice mechanisms (Sweden) to those which do use filtersto access health care services. Among the latter, some countries are subject to a lax budgetaryrestriction and offer a limited choice of suppliers (Denmark or, to date, Spain) and othersmaintain the ability to choose among suppliers, but with strict budgetary restriction (UnitedKingdom). 11
  10. 10. Key Financial Factors of the NHS The OECD points out that there is no evidence of superiority of any of these systems in terms of cost and health care results, since there is remarkable diversity in each of the groups (see other models in Appendix). The National Health System compares satisfactorily with these systems as is shown in Table 2. It is important to underline that universality, equal access and public nature are only one part of the system configuration. The Co-responsibility of users (and their ability to choose), of the supply industry and health care professionals, or the introduction of competition, among other formulae, are perfectly compatible with a universal and public model, as can be seen in other countries. Table 2 Comparison of National Health Systems Spain France The Japan United Sweden Netherlands Kingdom Funding Total health care expenditure (% GDP) 9.5% 11.0% 12% 8.5% (2008) 9.80% 10% Total public health care expenditure (% total health care expenditure) 73.6% 77.9% 84.7% 80.8% (2008) 84.1% 81.50% Total private health care expenditure (% total health care expenditure) 20.1% 7.30% 6% (2007) 15.8% (2008) 10.50% 16.70% $ per person (US $ PPP) 3,067 3,978 4,914 2,878 (2008) 3,487 3,722 Process results Practicing physicians (per 1000 inhabitants) 3.5 3.3 2.9 (2008) 2.2 (2008) 2.7 (2010) 3.7 (2008) Nurses (per 1000 inhabitants) 4.9 8.2 8.4 (2008) 9.5 (2008) 9.5 (2010) 11 (2008) MRI scans (per million inhabitants) 10 7 (2010) 11 43.1 (2008) 5.9 (2010) --- CT scans (per million inhabitants) 15.1 11.8 (2010) 11.3 97.3 (2008) 8.3 (2010) --- Health results Life expectancy Men 78.6 78 (2010) 78.5 79.6 78.3 79.5 (2010) Women 84.9 85 (2010) 82.7 86.4 82.5 83.5 (2010) Child mortality rates (per 1,000 live newborns) 3.3 3.3 (2010) 3.8 2.4 4.6 2.5 Maternal mortality rates (per 100,000 live newborns) 3.4 10(2005- 8.5 (2005) 5 8 5.4 Note: Figures for 2009 unless otherwise indicated * MRI scans in hospitals only included and does not take into account those carried out in private clinics Source: CIVITAS, OMS and OCDE 2.2 The National Health System (SNS) The SNS3 offers universal coverage funded by taxes since 1999, with mostly public health care. Services are free of charge at the point of provision, although certain formulae of co-payment have been introduced in the pharmaceutical area. Of the 9.5 percentage points of the GDP which accounts for the Spanish health care spending in 2009, 7 (73.6%) pertain to public spending, almost entirely funded by taxes (graph 1). 3 Its basic legal framework is set forth in General Health Care Law 14/1986 of 25 April, and Law 16/2003 of 28 of May, on the coherence and quality of the NHS, and subsequent reforms, such as Royal Decree Law 6/2012, of 20 April, on urgent measures to guarantee the sustainability of the National Health System and improve the quality and safety of the benefits provided (RDL 6/2012). 12
  11. 11. A sustainable health system (II)Graph 1Unit cost by type of funding in 20096.2 5.5 84.7 The Netherlands10.5 1.1 84.1 United Kingdom16.7 81.5 Sweden15.8 2.4 80.8 Japan7.3 13.3 77.8 France19.7 1.0 77.9 Italy13.1 9.3 76.9 Germany12.3 11.0 75.0 Ireland19.0 2.1 74.7 Finland20.1 5.4 73.6 Spain27.7 72.1 OECD27.2 4.9 65.1 Portugal30.5 8.8 59.7 Switzerland47.8 4.0 48.3 Mexico12.3 32.8 47.7 USA34.0 18.6 47.4 ChilePublic Administrations Private Sector Private Insurance Private OtherSource: OECD The percentage of expenditure pertaining to private insurance is on the increase and iscurrently slightly above 5%. Expenses met directly by citizens aside from public or private schemesaccount for one fifth of the total amount of health care expenditure, above that in other Europeancountries, despite co-payment being used to a lesser extent in Spain than in such countries (of the 20.1points of direct payments made by households in Spain, only 1pp pertains to co-payment in 2009). In those countries in which households pay for a larger share of overall health care costs bydirect payment aside from public or private insurance schemes, health care cost per inhabitant tendsto be lower (graph 2). Indeed, the users, once insured, are able to modify their behavior patterns.That is, they are able to consume more health care services than those which they would consume ifthey had to pay directly for them4.4 This is the problem known as moral risk, common to other sectors of insurance. 13
  12. 12. Key Financial Factors of the NHS Graph 2 Private health care ex penses (pay ments from households in addition to insurance) a nd hea lth care per inhabitant in 2009 . % of private hea lth care cost over private overall total health care cost Health care c ost per inhabitant (PPP USD) 60.0 50 .0 40 .0 30 .0 20 .0 10 .0 0 .0 MEX = MEX CHI = CHI GRE =GRE COR = KOR ISR = ISR POR = POR ELVQ = SLO POL = POL TUR = TUR HUN = HUN EST = EST CHE = CZC ELVN = SLO ITA = ITA ESP = SPA AUS = AUS JAP = JAP FIN = FIN NZL = NZL SUE = SWE BEL = BEL SUI = SWI RU = RU ISL = ICE IRL = IR E FRA = FRA CAN = CAN LUX = LUX ALE = GER HOL = N ET DIN = D EN NOR = NOR EEUU = USA AUT = AUT Source: O ECD 14
  13. 13. A sustainable health system (II) In Spain, the perception of the NHS as a basic component of the welfare state is deep-rootedamong the citizens. The general view held by users on the health care system is that it worksalthough, as the Economic and Social Council points out, there is an awareness of the need to addresschanges5 (box 2).Box 2: Perception of the National Health System The data from the Ministry of Health indicate that user perception of the NHS remains at high levels of satisfaction,especially in matters of medical care.User perception of health care system% of satisfied persons (unless otherwise indicated) 2005 2006 2007 2008 2009 2010 Health care received in medical practice: family practice 83.6 84.0 84.9 86.1 86.4 Health care received in medical practice: specialist physician 71.2 81.6 81.2 81.8 82.1 81.5 Health care received in medical practice: specialist physician (men) 73.3 83.8 81.5 81.7 83.4 79.9 Health care receiving in E.R. 77.8 77.0 79.4 75.2 77.7 77.8 Health care received in hospital admission 85.8 83.4 84.6 85.6 87.5 85.7 Satisfaction* with awareness of medical history and follow-up of health 7.1 7.0 7.0 7.0 7.1 7.3 problems in Primary Care center (women) Satisfaction* with information received on health condition in specialist 6.9 6.9 6.9 6.9 7.0 7.1 consultation*(1-10)Source: Ministry of Health The Swedish consulting group Health Consumer Powerhouse has prepared an Index of EuropeanHealth Care Consumers, which examines the rights, participation and access by users to the health care system.Spain’s position in the European Health Care Consumer Index, 2012On 34 countries Position Index 2012Global 24Subcategories:1. Patient rights and participation 282. Accessibility 333. Results 114. Prevention 165. Access to medication and technology 13Source: Health Consumer Powerhouse In 2012, according to this source, the Spanish system ranked 24th among the 34 European countriesanalyzed (22nd position in 2009). Spanish health care falls behind in terms of transparency and patientparticipation. In terms of waiting lists, Spain is the second before last, only preceded by Norway and on a parwith Sweden. As for patient rights, the results are likewise not positive: Spain is the fifth from the last. Spain faresbetter in the three more medical categories: 11th in results, 16th in prevention and 13th in access to medication andtechnology.System coverage General Health Care Law 14/1986 establishes the right to health care for all Spanish citizens andnon-Spanish citizens residing in the national territory. It also sets forth that access and health care5 See CES, 2010 or Health Care Barometer CIS-Ministry of Health 15
  14. 14. Key Financial Factors of the NHS services shall be provided under equal conditions. However, system coverage presented a few omissions6, which have been addressed in the recent reform. Universal coverage health care models aim to prevent the potential exclusion of high risk and low income groups, which might have problems when accessing health care. The insurer is unaware of the health risk of the insured party and, without public intervention, may elect to penalize or to exclude such groups by allocating a high risk to them and considering that their coverage is not profitable7. Almost all countries within the OECD offer universal coverage of the cost of a basic package of health care services (consultation to primary care physicians and specialists, tests and examinations, and therapeutic and surgical procedures). Generally, dental care and the supply of medications are covered in part, although these must be acquired separately in some countries. There are four countries which have no universal coverage: Chile, Mexico, Turkey and the US (graph 3). Graph 3 Degree of universa lity of medical insuranc e in main OECD countr ies % of populat ion covered Denmark 100.0 Finland 100.0 Greece 100 .0 Ireland 100.0 Israe l 100.0 Italy 100 .0 Japan 100.0 Norway 100.0 Portu gal 100 .0 Swe den 100.0 Sw itzerland 100 .0 United Kingdom 100 .0 Ge rmany 89.2 10.8 Fra nce 9 9.9 Belgium 99.5 Austria 99.0 The Netherla nds 98.8 Pola nd 97 .6 U SA 26.4 54 .9 Turkey 80.8 Mex i co 74.0 Chile 73 .5 Public coverage Primary c overage by private medical insura n ce Source: O ECD The trend towards universality of most OECD countries, which determines its largely public funding, is based on reasons of equality, but also of efficiency: that is to say, the recognition that the cost for a society of a lack of health care go well beyond the cost of health care (box 3). 6 According to the General Provisions of RDL 16/2012, the flawed transposition of Directive 2004/38/EC on the right of European citizens to freely circulate and reside within the EU, which in section 7 sets forth the conditions which must be met for a citizen to reside in a country other than his own for more than three months, has prevented the billing to the source country for health care provided for some 700,000 foreigners per year. 7 This is the problem known as adverse selection, common to other areas of insurance. 16
  15. 15. A sustainable health system (II)Box 3: The cost of a lack of health care The lack of health care carries both an individual and a social cost. Health care, as education, forms partof human capital which, in turn, determines an economy’s capacity for growth. In this regard, health careexpenditure is, to a large extent, an investment which generates significant returns, as shown herebelow by theestimates of the Milken Institute referring to the US. Health care cost is not the main cost arising from lack ofhealth.Total c ost of chronic diseases , US 2003Total cost of treatments: 277,000 Total economic losses: 1,047,000Heart attack 13,000 22,000Diabetes 27,000 105,000Lung diseases 45,000 94,000Heart diseases 65,000 105,000Mental conditions 46,000 171,000High blood pressure 33,000 280,000Cancer 48,000 271,000Billions of dollarsSource: Milken Institute The conclusions reached in a study carried out by researchers at Oxford University 8 indicate thatcardiovascular diseases accounted in 2003 for a cost in Spain of almost 7 billion, and 169 billion in the wholeof the EU, of which only 62% pertains to health care. Of the 7 billion of estimated cost in Spain, 4 billion pertainto health care costs incurred in the treatment of diseases, whereas the remaining 3 billion are distributed betweenproductivity losses due to disease or early mortality and care provided to cardiovascular patients by relatives andfriends. On the other hand, universal coverage is related to the definition of the services portfolio.The regulation of the catalog of NHS services 9, until the recent reform, has been based on theestablishment of a broad common portfolio of services, with equal access to all, irrespective of the8 See “Economic burden of cardiovascular diseases in the enlarged European Union” José Leal, Ramon Luengo-Fernández, Alastair Gray, SophiePetersen, and Mike Rayner. European Heart Journal (2006) 27, 1610-1619.9 Royal Decree 63/1995, of 20 January, on Regulation of Health Care Benefits in the National Health System, which establishes the health careservices provided by the NHS with public funding, health care for which payment is to be claimed to third parties obliged to assume paymentand health care services which are not funded with public funds, and Royal Decree 1030/2006, of 15 September, which reviews the portfolio ofcommon services of the NHS and additionally considers a portfolio of complementary services established by the Autonomous Communities. 17
  16. 16. Key Financial Factors of the NHS place of residence, including public health. In Spain there has been no active and systematic underfunding policy for treatments or technologies based on cost-effectiveness thereof10. Autonomous Communities may establish their portfolios of additional services, which have led to a proliferation of rules to extend the common NHS portfolio. After a few years, differences between benefits provided by the Autonomous Communities have become evident, resulting from: • The interpretations made of the items contained in the common services portfolio which are often not precisely defined. Therefore, significant differences are arising between diagnosis/treatment procedures of conditions and use of new technologies, both between Autonomous Communities and between the various health areas within one same Community. • The creation of additional portfolios by the Autonomous Communities: as the CES points out11, “the absence of basic and clear rules established from the start in regard to approval and funding of services, added to their high political value, has encouraged emulation between autonomous health care services when defining their offering. As a result thereof, not always have criteria of need or therapeutic utility prevailed when introducing some treatments which, subsequently, have been assumed by other autonomous communities”. The recent reform establishes a common portfolio which includes the free basic services of the NHS throughout the national territory, the additional portfolio subject to co-payment, the additional portfolio of the Autonomous Communities to be covered by their own budgets (for which they must prove financial coverage capacity), and the complementary set of services which includes those which are not NHS services and must be paid directly by the users. Likewise, it establishes general guidelines for listing and delisting of services and benefits, and the criteria to be applied, as well as the institutions taking part in the procedure, all outstanding subsequent regulatory development. Architecture of the NHS The transfer of health care competencies to the Autonomous Communities was completed in 2002. The Autonomous Communities administer 91% of the public consolidated 10 The recent announcement of discontinued funding of 456 pharmaceutical products as of 1 August which will mean, according to the Ministry of Health, a savings of 456 million euros, was preceded by two other underfunding initiatives between 1993 and 1995. According to the Ministry, these medications belong to therapeutic groups which at least three Autonomous Communities, in the working groups created for this purpose, considered eligible for “discontinued funding”. Physicians may continue to prescribe such medications, but the patient must assume the full cost thereof. Likewise, it was pointed out that the PDR has not been updated for years. 11 See CES 2010 18
  17. 17. A sustainable health system (II) health care cost which, on average, accounts for one third of the total budget. Health Care abroad, the general bases and coordination of health care and legislation of pharmaceutical products12 remain the exclusive competencies of the State. Thus, the Ministry of Health has competencies in the regulation of pharmaceutical products and the guarantee of equal access to health care se4rvices throughout the national territory. The NHS coordination is articulated by the Inter-territorial Council for the National Health System (CISNS)13, chaired by the Health Minister and made up of 17 health secretaries of the Autonomous Communities. The decisions of the CISNS are arrived at by consensus and summarized in series of recommendations, as they affect competencies transferred to the Autonomous Communities. One of the most common criticisms made to the system is, precisely, its improbable governance and the economic cost14 involved. Thus, the distribution of competencies between central and autonomous administration and the use of consensus as a decision-making procedure, hinder the evolution of the system 15. The difficulty in reaching agreements by consensus generates three problems: slowness, lack of specificity of measures agreed and, very often, lack of compliance follow-up. The difficulties in reaching agreements in the methods of calculating waiting lists, vaccination schedules, co-payment or many other areas, are well known, as is their lack of efficacy in preventing the deficit in the health care system. As the Social and Economic Council pointed out in 2010; ”The organization of the public health system on the basis of the so-called National Health System did not, however, imply the creation of an institutional architecture in accordance with the governance needs of the new model (…) It lacks a proprietary legal personality on which to base the system, beyond a series of initiatives undertaken by the different health services and agreements reached in the Inter-12 The General Health Care Law also created, as a technical-scientific body to support to System, the “Carlos III” Health Institute, which performsits duties along with the CISNS, and in collaboration with other Public Administrations.13 The CISNS, according to the definition contained in section 69 of the Law on NHS coherence and quality is the "permanent body forcoordination, cooperation, communication and information on the health services, with each other and the State Administration, aiming topromote the coherence of the National Health System via the effective guarantee of the rights of the citizens throughout the entire State Territory”.14 Freire & Repullo state: "An example of the cost of non-coordination is the cost of purchase of goods and services. Back in the 2003 report, theCourt of Auditors made a highly critical reference to such problems in regard to the purchase of medications and pharmaceutical products in 15NHS hospitals. A recent study analyzed 70 tenders sent out over 3 years for the purchase of “skin staplers” in public hospitals, where pricesranged between 4 and 10 euros, and what is most surprising is the lack of a relationship between the sales volume for each tender and the unitprice. The same degree of variability was found in regard to the purchase of a particular medication (ribavirin). Given that chapter II (on currentcosts of goods and services) accounts for 25% of the hospital budget, the authors of the report believe that by improving and coordinatingpurchasing systems, savings of 5% (400 million euros) could be achieved. Other works have also commented on this variability in prices(pacemakers between 1,682 and 3,209 euros), and propose efficiency gains by improving public information and purchasing mechanisms”. Thecentralization of hospital purchase is established in Royal Decree Law 6/2012.15 This issue, for instance, has been one of the keys in the process of construction of the European Union, applying formulae such as majoritiesadapted to the type of decision made and others designed to prevent institutional paralysis. 19
  18. 18. Key Financial Factors of the NHS territorial Council of the NHS. The latter is, in essence, its only visible body, although it lacks its own organization which is permanent and separate from the Ministry of Health"16. In general, the Autonomous Communities have elected to create a health authority (the regional department/office of health, which regulates and plans) and a regional health service which provides health care and is responsible for the operational management of the network of services and the coordination of health benefits, in accordance with the structure defined by the Department. The Department of each Community defines the territorial organization of its health care services: the basic areas of health care and the competencies of each. • Health Care Areas. The most commonly found configuration is one management for primary health care and another for specialist care (outpatient and hospital), in each health care area, although Autonomous Communities are increasingly resorting to single area management units for both primary and specialist health care. Each health care catchment area includes a population of between 200,000 and 250,000 inhabitants. • The basic health care units are the smallest units within the organizational structure of health care. They are usually organized around a single Primary Health Care team which is the entry level into the system. The system offers two health care levels: • Primary health care, geared towards a generalist or global view of health, acting as a filter for user access, other than the emergency departments, to other health care levels. Spain is one of the few countries in the zone where primary health care professionals, with some exceptions, are salaried employees of the Administration. The primary health care network is entirely public. Most of the private health care17 in Spain is of an outpatient nature. In the public sector, hospital expenditure is 2.5 times more than that of outpatient care providers, according to the Annual Report of the SNS 2010, whereas in the private sector hospital expenditure is only one fifth of that spent on outpatient services. 16 As for the dynamics of the Inter-territorial Council of the NHS, Repullo & Freire (2008) state that, following the attempt of the Law of Coherence and Quality to improve the governance of the system, “serious dysfunctions began to become evident: thus, on 3 December 2003 the first resistance took place within the inter-territorial Council (socialist members against PP minister), followed by other stands of resistance in 2004 (on 16 June and 22 September by PP members against minister from PSOE), which mark a period of structural conflict of this NHS governance body; in the 20 meetings held from January 2002 to March 2007,and following the repercussion thereof in the media, 7 of these took place normally, 3 were blocked and the 10 remaining exhibited evident political differences, with separate press conferences and a tendency to exhibit party confrontation, which led to an exaggerated public display of divergences which were not as marked in the meeting itself. 17 See “Do we spend too much … or do we spend poorly?” by Juan Simó Miñana or “Primary health care expense in Spain: insufficient to offer attractive services for patients and professionals”. Report SESPAS 2012, Juan Simó & Juan Gérvas. 20
  19. 19. A sustainable health system (II) In this regard, as the report points out, it must be considered that whilst primary health care in the public system is mainly provided in the health centers of the National Health System, in the private sector it is the dentists and specialized medicine clinics the ones that generate 80.3% of the overall expenditure of providers of outpatient services. • Specialist and hospital health care absorb 55.9% of public health care expenditure, and is focused on health recovery. The patient receives care during the acute phases of a disease, and exhibits a tendency towards technification by means of using increasingly complex and sophisticated therapies. Approximately 40% of hospitals belong to the NHS. The rest are privately owned, although several of them make up a network of hospitals for public use and hospitals with replacement agreements and receive public funding for this activity, so that around 40% of Spanish private hospital admissions are charged to the NHS. 70% of beds functionally depend on the public sector. 40% of total beds available are concentrated in high technology hospitals with more than 500 beds. All Autonomous Communities have at least one of these centers. The growing technological sophistication of hospital health care requires the benefit of economies of scale to achieve high levels of efficiency (as well as quality and safety). According to various experts18, the establishment of reference centers for more complex specialties which provide service to other hospitals that do not have such specialties, should be the norm, but is not always the case. In addition, the management of Centers overall is highly centralized in the health Departments and Autonomous health services, with a significant restriction on the powers of the managers who are unable to decide on matters such as human resources management. Health care management jobs are not always separate from the political cycle. This structure has led to a lack of coordination and to a distance between the two health carelevels, as well as an absence of co-responsibility in the management of resources between primaryand hospital care.18 The volume of activity, both by unit and by professional, increases the efficacy and safety of results in certain units. For example, it is estimatedthat for health care provided in cardiac units to be of quality, safe and efficient, cardiovascular surgery units must be available only in thosehospitals which carry out at least 400 annual percutaneous coronary interventions. In addition, at least 600 major cardiac surgery operationsshould be carried out in each year each year. Report from the Spanish Cardiology Society (SEC), the Spanish Thoracic-Cardiovascular SurgerySociety (SECTCV) and the Spanish Association of Cardiology Nursing (AEEC). 21
  20. 20. Key Financial Factors of the NHS Finally, the model of health care management, focused on acute patients, is not developing in line with a population with increasingly chronic conditions. The aging population (16.5% are over 65 in Spain, INE Base 2010) means greater dependency and an increase in chronic pathologies, also affected by the addition of new diagnostic and therapeutic techniques which render chronic hitherto mortal conditions. Box 4: The strategy of chronic patients in the Basque Country The number of chronic patients over the age of 65 will grow from 344,000 in 2011 to 602,000 in 2040 in the Basque Country. As chronic conditions increase, so does the cost thereof increase for the health care system. Average estimated cost of chronic patients for the Basque health care system Average yearly cost 25,000 20,000 15,000 10,000 5,000 1,426 2,538 4,181 6,586 9,485 12,621 15,261 17,496 22,605 ■ No. Chronic conditions Source: Osakeditza Chronic patients account for 70% of Basque health care expenditure. Specifically, they account for 84% of total revenues recorded in Osakidetza, 75% of primary care prescriptions, 63% of specialist consultations and 58% of primary health care consultations. The chronic patient strategy (EC) of the Basque Health Service addresses 14 strategic projects: stratification of the population (according to health care required in the coming year); prevention and promotion actions; patient self-care and education; the creation of a Network of Activated and Connected Patients via new Web 2.0 technologies and Associations of Chronic Patients; unified medical histories; integrated clinical care; development of hospitals for sub-acute patients; development of advanced nursing competencies, for chronic patient care; overall patient assessment (health and social issues); renewal of the health care service purchasing process, based on population logic, to share responsibility on results and identify efficiencies; distance service provision (e.g., encouragement of telephone health care provision, with some 6000 consultations per month and a 90% rate of resolution, among other initiatives); development of the electronic pharmacy and prescription; creation of the Research Center for Chronic Conditions and, finally, innovation 22
  21. 21. A sustainable health system (II)from clinical professionals (encouraging innovative ideas from professionals in order to improve the quality ofprimary health care, health care processes and daily practice).Provision of services Most of NHS service providers belong to the public sector and the predominant governancemodel is that of direct management or similar. The main tool used in this model is that of theprogram-contract. There are no penalties established for non-compliance of targets, and risk is notusually transferred to suppliers. There are other forms of health care provision management, which may also be considered tobe direct management, using independent legal entities separate from the regional health department:the foundations in Galicia or, to a lesser extent, in Madrid; or the public corporations in Andalusia or,to a lesser extent, in Catalonia. Such formulae operate under private law and have their own equity(and possibility of acquiring debt) and greater management autonomy 19. Other forms of indirect management or subcontracting are also used, such as the provision ofadditional diagnostic tests and outpatient procedures, by third party agreement. The public systemsubcontracts to private hospitals the provision of specialist health care services: for instance, highresolution diagnosis or outpatient surgical procedures as part of managing waiting lists; homeprovision of respiratory therapies, dialysis or rehabilitation; or one-off third party agreements toprovide health care to a population sector by means of private hospitals (Madrid – Fundación JiménezDíaz –, Vigo – Povisa – or several hospitals in Catalonia). Third party agreements account for 10.5%of public health care expenditure and are being affected by the current budgetary adjustmentsituation. But the landscape in matters of health care management is not a static scenario. TheAutonomous Communities have gradually introduced new health care management formulaewhich, while maintaining the public nature of the system, offer greater levels of efficiency, funding oreven transfer of risk from autonomous health care systems to the private sector. The risk transferred isquite varied: it can be that inherent to health insurance activity, technological risk or that pertaining tothe design, construction or maintenance of hospitals, for example20. Some Autonomous Communities have resorted to administrative concessions for the provisionof health care to an entire basic health area (Catalonia, Valencia or Madrid).19 This is an issue addressed prior to the completion of the health care transfers to the Autonomous Communities in 2002, as proven by the factthat the last strategic plan of the Insalud considered the transformation of hospitals into Public Health Care Foundations to provide them withgreater autonomy.20 In addition, in line with the precedents applied in European countries such as Italy or the United Kingdom on shared risk in the acquisition ofmedication (payment is subject to clinical results or cost effectiveness), there have been some recent initiatives in Autonomous Communities suchas Andalusia or Catalonia which have sought to transfer the risk to suppliers. 23
  22. 22. Key Financial Factors of the NHS • In Catalonia, the new formulae of health care management, for instance, include associative based entities (or EBAS, as of the Spanish). These are comprised of health care professionals hired by the Catalan Health Care Service to provide health care services in Exchange for capitated financing. They purchase the Specialist Health Care services and can share in a part of the savings obtained in accordance with agreed standards. • In Valencia21 or Madrid22 the health care within a catchment area was decided to be entrusted to a Temporary Union of Companies. Similar to the EBAS, this entails the private management of health care in exchange for capitated payment, but is attached to an investment made in infrastructures by the concession holder. Box 5: the Alzira Model The Valencian government opened the Hospital de La Ribera in 1999. This is the first Spanish public hospital built and managed under the administrative concession modality. In 2003 the concession went on to include, in addition to provision of specialist care in the hospital, the primary health care services for the municipality of La Ribera. This is the first time that the concession of the entire management of the public health care service has been done in Europe. The four main characteristics of the Alzira model are: 1. Public funding via capitated payment. The Administration pays the concession holding company a fixed and predefined annual amount per inhabitant. The concession holder assumes the specialist health care of the health care department for a yearly amount, but the citizens have the change to choose the health center: the concession holder must pay for health care services provided to the citizens assigned to its catchment area at other centers at 100% of the average cost in the Valencian Community, but if a citizen from another catchment area should decide to go to the hospital built and managed by the concession holder, the hospital shall only be paid 80% of the average cost. In this way, the citizen has the freedom of choice of hospital, and the money follows the patient. 2. Public Ownership: the center subject to concession is a public hospital, belonging to the network of public hospitals. The initial investment for construction and equipment pertains to the concession holder. The hospital shall be owned by the Generalitat (Valencian Autonomous Community Government) at the end of the concession. The concession holder undertakes to deliver, at the end of the concession period, all assets in perfect condition. Throughout the concession, the concession holder undertakes to make certain investments, by presenting five year plans. 21 The model began with the concession of the construction and specialist health care in the Hospital de la Ribera in 1999 which, as of 2003 began to also offer primary health care to a population of some 260,000 inhabitants. In 2006 the model spread to Torrevieja, in 2008 to Denia, in 2009 to Manises and in 2010 to Vinalopó. 22 In Madrid the concessional model for health care services has been applied to the Hospital Infanta Elena (2007), Hospital de Torrejón (2011) and to the Hospitals underway in Móstoles and Collado Villalba. 24
  23. 23. A sustainable health system (II) 3. Public Control: the concession holder is subject to the clauses set forth in the specifications. TheAdministration has the power to control and inspect, as well as regulatory and disciplinary powers. TheAdministration has permanent control over the concession holder via the commissioner of the Health CareDepartment, with a statutory or civil servant status, appointed by the Department he represents. 4. Private Service Provision: The awardee of the concession is a Temporary Union of Companies (UTE)of which Adeslas (Grupo Agbar) is the majority shareholder, with 51% of shares. The concession holder cannotobtain a return over and above 7.5%. In the event this percentage is exceeded, the surplus is used towardsmaking investments in the Department. The concession holder assumes the cost of statutory personnel dependenton the Administration, which is billed at total cost plus Social Security. The towns of Alzira and Sueca has amedical specialty center which was taken over by the hospital, including its personnel. Most of the physiciansdecided to form part of the company structure and entered into employment contracts. By contrast, a highpercentage of nursing professionals decided to keep their status as statutory, albeit forming part of the hospitalstaff. This public-private collaboration helps to boost choice and competition. For instance, underthe abovementioned Alzira model, over 2000 beds are currently managed. Furthermore, this is not limited to hospital centers, but can be applied to other areas such as theCentral Clinical Laboratory of Madrid23 or the project of the Radiotherapeutic Oncology of GranCanaria.Table 3With clinical managementBuilding+Equipment+Maintenance+ Non-medical services+ High technology+ Specialist health care+ Primary health care+ Social and health care23 This is located within the Hospital Infanta Sofía in San Sebastián de los Reyes and also provides service to five other Public hospitals and theirprimary care catchment areas. It provides coverage (along with its six peripheral laboratories) to over 1,100,000 citizens in areas of clinicalanalysis, biochemical analysis, hematology, genetics, microbiology, etc. 25
  24. 24. Key Financial Factors of the NHS Table 3 Some Administrative concessions in Spain No clinical mgmt. Baix Valde moro, Alzira, Torrev ie ja, Majadahonda Burgos Manises LLobregat Torrejón, Denia, Manises, Móstoles , Elche Source: Ribera Salud Collado-Villalba In Autonomous Communities such as Madrid, 7 hospitals have also elected to resort to private funding of public infrastructures (PFI)24, frequently used in transport infrastructures, with no provision of health care by the concession holder. The concession holder designs, builds, funds and operates the hospital in all aspects other than the health care services provided therein. The autonomous region health care department leases the hospital from the concession holding company for a prolonged period, after which the hospital can become owned by the regional health care system. The provision of health care continues to be the responsibility of the public health service personnel, and the concession holder, in addition to building and maintaining the hospital, is the holder of the concessions of the non-health care activities carried out therein: car park management, security services, cleaning, food and beverage or waste disposal, among others. In Murcia or the Canary Islands? (Balearic Islands?? Según la table debería ser las islas Baleares no Canarias), the public-private collaboration takes place in the technological field. Siemens was awarded in 2010 the concession for the provision, renovation and maintenance of clinical equipment of the hospitals of Cartagena and Mar Menor for a 15 year period for 132 million. In the Balearics, the 24 This model, frequently used in the United Kingdom, enables politicians to implement new infrastructures without incurring in direct expenditure and without acquiring debt, at least at the start, as is also the case with other transport infrastructures funde d via PFI. See Pablo Vázquez, 2006. 26
  25. 25. A sustainable health system (II)Son Espases Hospital awarded in 2010 the respiratory care equipment (3.8 million) and imagediagnosis and treatment equipment (26 million) to General Electric Healthcare España for 7 years. In summary, the “new management methods”, although still a minority, are being tried outin many Autonomous Communities, but are mostly due to autonomous community initiatives,which are not articulated by a national policy of analysis and comparison of results andencouragement of the best formulae, beyond the establishment of the legal framework 25 to developthem. On their part, voluntary private insurance policies play a relatively lesser, albeit increasinglyrelevant, part in the Spanish health care system. They are independent from the public system andof an additional nature. The non-profit private sector is present in the health care provision for occupational accidentsand professional diseases. Such contingencies are covered by a series of mutual insurance companies,funded by the National Social Security Treasury, mostly by means of company contributions. There is one notable exception: the three mutual insurance companies MUFACE (MutualidadGeneral de Funcionarios Civiles del Estado), MUGEJU (Mutualidad General Judicial) and ISFAS(Instituto Social de las Fuerzas Armadas) exclusively provide insurance coverage to civil servantsand their beneficiaries (4.8% of the population). They are financed by a mixed system of salarycontributions and taxes. Civil servants are the only group which can waive coverage of the NationalHealth System, electing fully private health care services, which is an option chosen, for instance, by85% of the MUFACE mutualists. MUFACE, with 1,083 million euros, accounts for 67% of thesemutual insurance premiums in 2011 and the amount of claims paid to the insurance companies was of1,042 million26.25 Law 15/1997 of 25 April, on establishment of new forms of management of the National Health Care System, allowing health care services to beprovided by legal entities other than the State.26 The MUFACE premium in 2008 was of 657 euros per annum compared to an expenditure of 1,189 euros of the SNS, excluding medications. 27
  26. 26. Key Financial Factors of the NHS 3. Key financial factors of the NHS The forecast increases in health care expenditure pose a significant challenge to economies like the Spanish one, subject to tight budgetary restrictions and highly leveraged. For this reason, health care reforms are a very significant part of the fiscal consolidation process, and that UE regulations require Stability Programs – to be presented by countries subject to excessive deficit procedures – to explicitly spell out the health care expenditure expected in the long term. 3.1 The level of health care expenditure The overall health care expenditure, public and private, in percentage of GDP in Spain is similar to that of Italy (9.5%), the United Kingdom (9.6%), and the OECD (9.6%). On its part, Spanish public health care expenditure in 2009 was of 7% of GDP, compared to the average of 6.9% of the OECD (graph 4). Graph 4 Public and health care expenditure % of GDP per inhabitant Public health care expenditure per inhab. Private health care expenditure % of GDP per inhabitant Private health care expenditure per inhab. EN ESTA TABLA, EN LOS NÚMEROS, HAY QUE CAMBIAR LAS “,” POR PUNTOS “.” Y LOS PUNTOS “.” POR COMAS “,” 28
  27. 27. A sustainable health system (II) Overall health care expenditure per inhabitant in Spain in 2009 ((3,067 US dollars in PPP)is lower than the OECD average (3,233). Public health care expenditure per inhabitant inSpain is of 2,260 US$/PPP compared to 2,354 of the OECD average. Nevertheless, one of the main determining factors of the health care expenditure iscitizen income: health care consumption grows with user income. Therefore, Spain’s positioncan be more clearly perceived if the GDP levels per inhabitant are considered (graph 5).Graph 5Health care ex penditure and GD P per inhabitantHealth care expenditure per inhabitant ($ PPP)EEUU = USANOR = NORLUX = LUXSUI = SWIHOL = N ETDIN = D ENCAN = CANAUSTRI = AUSALEM = G ERBEL = BELIRL = IR EAUSTRA = AUSFRA = FRASUE = SWERU = UKISL = ICEESP = SPAITA = ITAFIN = FINNZL = NZLJPN = JAPGRE =GREESLN = SLO 29
  28. 28. Key Financial Factors of the NHS POR = POR ISR = ISR ESLQ = SLO V COR = KOR CHE = CZC POL = POL HUN = HUN CHL = CHI EST = EST RU = RU MEX = MEX TUR = TUR SA = SA BRA = BRA CHIN = CHI INDI = IND INDO = INDO 15,000 30,000 45,000 60,000 75,000 90,000 GDP per inhabitant ($ PPP) Source: OECD Consequently, it cannot be concluded that the NHS is making a substantially different effort to that pertaining to Spain in terms of GDP per inhabitant, irrespective of the fact that public health consumes many more resources. 3.2 Evolution of health care expenditure In Spain, between 2000 and 2009, the cumulative growth of real public health care per inhabitant was of 42%. In terms of average annual growth, Spain has experienced a trend in its health care expenditure per inhabitant similar to that of the OECD average. However, its GDP per inhabitant grew by considerably less that the OECD average (graph 6). 30
  29. 29. A sustainable health system (II)Graph 6Evolution of the real health care per inhabitantCumulative growth (Base 2000 PPP $) Average annual growth 2000-2009 in %170.0% 160.0% 150.0% 140.0% 130.0% 120.0% 110.0% 100.0% Portugal 1.5 0.5France Japan The Netherlands Italy 1.6 -0.2Spain Sweden United Kingdom Switzerland 2.0 0.7(Base 2000 PPP $) Germany 2.0 0.6Source: OECD and own preparation France 2.2 0.5 Japan 1.1 2.8 Hungary 2.8 2.2 USA 3.3 0.6 Denmark 3.3 0.1 Sweden 3.4 1.1 OECD 4.0 1.6 Spain 4.0 0.8 Belgium 4.0 0.7 The Netherlands 4.4 1.6 United Kingdom 4.8 1.0 Ireland 6.1 1.1 Greece 6.9 3.9 Poland 7.3 3.9 Average rate of real growth in health care expenditure per inhabitant Average real growth rate of GDP per inhabitantOutlook and determining factors for growth in health care expenditure There are various projections on the future of health care expenditure (table 4).Table 4Projections on the increase of health care expenditure as % of GDP Body EC OECD IMF Scenario Period 2007-2060 2005-2050 2010-2050 Stability Program Countries European Union OECD Advanced 2012 Central scenario 1.5pp - 3.0pp - Confidence interva l 0.7-2.4pp 2.0-3.9pp 2.1-4.1pp - Central scenario (Spa in) 1.6 pp - 1.6pp 1.2pp Confidence interva l(Spa in) 1.0-2.6pp 2.3-4.1pp 0.8-2.4pp -Source: Hernández de Cos & Moral-Benito and update of the Stability Program 2012 IMF forecasts, for instance, show more budgetary impact on national health systems thanon pension systems in the coming decades (table 5). In 2030 the cost health care as a percentageof GDP in Spain will be 1.6pp higher than in 2010. The growth is much lower than that expectedin the United Kingdom, Portugal and, above all, the US (5.1pp, which is three times the growthof the share of the GDP in Spain represented by health care cost). The net present value of this variation in the period 2010-2050 is equal to half the currentGDP in Spain, a significant amount which in the US accounts for no less than 164% of the GDP,or 113% of GDP in the United Kingdom.Table 5Structural fisca l indicators% GD P, unless othe rwise indicated Variat ion in cost of Net present value of the Variat ion in the c ost Net present value of the Gross funding pensions 2010-2030 variation in c ost of of health care variation in the cost of needs pensions 2010-2050 2010-2030* health care 2012 2010-2050*France 0.1 -0.7 1.5 43.8 18.2Germany 1.1 30.4 0.9 28.1 8.9Greece 0.3 21.0 3.2 106.9Italy -1.6 -33.7 0.6 18.8 28.7The Netherla nds 2.4 58.5 2.6 79.3 14.9Portuga l 0.7 21.4 3.5 116.5 26.7Spain 0.5 33.6 1.6 51.5 20.9United Kingdom 0.4 12.7 3.3 113.3 14.8United States 1.7 37.9 5.1 164.5 25.8 31
  30. 30. Key Financial Factors of the NHS * The forecast health care expenditure does not include the recent reforms (or reform plans) Source: IMF On its part, in the update of 2012 National Stability Program, the Spanish government’s forecast growth in public health care cost expressed as a percentage of GDP between 2010 and 2050 is of 1.2 points, below that of 1.6pp of the IMF. The forecasts made by the Spanish Government take into account the impact of the recent reform contained in RDL 6/2012 (box 6). Box 6: The Health Care reform (RDL 6/2012) in the Update of the Stability Program 2012 The Central Government has taken a number of steps affecting the sustainability of public health care managed by the Autonomous Communities, with savings which could amount to 7,267 million euros per annum. Among these are the rationalization in the demand for medications, with an overall increase in the percentage of co-payment in the purchase of pharmaceutical products according to income level, the control of the number of prescriptions per patient, and the introduction of co-payment for the first time among pensioners, likewise according to income levels and with a fixed monthly limit, excluding the long term unemployed and those receiving non-contributory pensions. In addition, a centralized purchase platform is created (the State will purchase directly from Autonomous Communities suppliers), with the ensuing savings for prompt payment. Of note are also the energy efficiency plans and application of new information technology and communications applications; the restrictions on the access to certain services by non-residents and the prevention of the fraudulent obtention of the health card to prevent “health care tourism”; and the implementation of a new single health card for the whole of the country. Finally, the portfolio of services will be organized, establishing one which is basic, common and free of charge, and one of additional services where users will pay for a share of the cost, and another portfolio of additional services to be decided by the Communities, which will assume the cost of the latter. Estimate hea lth care savings on an annua l basis in mill ions of euros Estimated savings Measures Reform of NHS insura nce, cit izens from other countries 917 Organization of NHS serv ice portfolio 700 Improvement in the effic iency of the heal th care offering 1,500 Rationalization of the de mand for pharmaceutical products: Prescript ion of generic drugs , modification of reference prices 3,550 Organization of Health Care human resourc es 500 Rest of measures 100 Total 7,267 Source: Hea lth Ministry 32
  31. 31. A sustainable health system (II) In addition, the Health Care Guarantee Fund is created as a compensation fund for theAutonomous Communities spending more than the amount estimated in provision of health care forforeigners in the country entitled to health care in their countries of origin, patients referred betweenAutonomous Communities and care provided to patients when moving within the NHS territory. Othermeasures include the rationalization of the pharmaceutical supplies (the application of reference prices toequivalent therapeutic groups, the additional encouragement of use of generic drugs, or the withdrawal offunding from drugs with low therapeutic value or very low market prices, except for those in the lowestincome brackets; and the organization of human resources in the health care area, improving mobility andestablishing a catalog of conversion levels in professional categories. According to available literature, the factors which determine the growth in health careexpenditure have to do with new health care technologies, new health care usage habits,population aging, level of income and growing expectations regarding health care. • Technological innovation is the most important factor determining health care cost. It accounts for between half and three quarters of all the growth in health care expenditure, although its effect is not always the same: it can also contribute to the reduction in cost by introducing efficiency gains in the system or the improvement in the state of health of patients which avoids the need for a longer and more costly health care process.Table 6Main applications of the Technological Innovations in health care Enables the personalized and individualized tracking of each patient according to geneticPersonalized medicine profile, identifying conditions prior to onset, and providing early treatment Improves diagnosis of diseases . Main development: integration of PET and CT systems toImaging Diagnostics provide more accurate methods of identifying and classifying tumors Enables development of more effective materials to prevent, predict, diagnose and treatNanomedicine prevalent and very costly diseases: cancer, myocardial infarction, diabetes, Parkinson or Alzheimer Priority area in the European Union, Japan and the US. Main lines of research: • “Third generation” biomaterials: the body’s own genes control tissue repair • Implants which can cope with mechanical functions immediately after having been implantedBiomaterials • Intelligent materials for controlled release of dr ugs, able to react to metabolic changes and adapt dosage in real time to condition of patient • Heart prostheses manufactured from stem cells • Biocompatible microelectrical systems enabling the application of implantable sensors/activators (diabetes, Parkinson or epilepsy) • Biocompatible artificial blood of a transgenic or chemical origin as a temporary resource in the event of large blood lossProgram for Overall New models of care based on a system of continued and coordinated services,Chronic Disease encouraging patient involvement in disease managementManagement Enables interconnection with professionals with different centers, provision of betterTelemedicine diagnoses and treatments and patient follow -up without requiring such frequent physical presence in health care centers Shortens post-surgical period and hospital stay, reducing health care costs and waitingMinimally invasive listssurgery (MIS) • USA: 10% of 15 million surgical procedures each year are performed using these 33
  32. 32. Key Financial Factors of the NHS techniques and the use thereof is widespread in general surgery, gynecology, plastic surgery, chest surgery and vascular surgery • Europe: less widespread, but it is estimated than in 5 years’ time 25% of procedures will be performed with MIS. Important inroads are being made in brain, heart and abdominal surgery. These allow the proper use of information within the health care environment. They help information exchange among professionals. They speed up medical practice. They help to Information systems improve the quality of diagnoses and enable better treatment of diseases, which provides equal treatment of patients and improved efficiency in the use of resources. Source: PwC, 2010 • The contribution of the aging of the population to the growth in health care costs, according to the various analyses and projections27, is relatively small in comparison with the costs derived from technological progress: between 10 and 30% of the expected increase in such costs. Estimates made in this area are being adjusted in light of new evidence such as that of “compression of morbidity”, that is, greater life expectancy but shorter life periods with poor health 28; “health care usage rate”, which are lower among the very elderly, and the possibility of healthier aging as certain lifestyles change. That is to say, an increase in the cost used to promote interventions in the health care system such as the control of chronic diseases or early prevention may have a significant effect on the reduction of future health care costs, thus contributing towards the sustainability of the system. Investments made in these health care means are financially necessary in order to achieve the viability of the system in the long term. The fact that health care costs increase with age does not mean that, inevitable, aging populations should generate unfeasible costs. • Citizen expectations are based to a large extent on better access to information. Their expectations exert a pressure on health care managers and professionals to open up the access to the latest technologies even if, on occasions, these do not provide benefits which justify the incremental cost. • Income in absolute terms or by inhabitant is associated to growth in health care expenditure. As such, the OECD estimated that 2.3pp of the growth of 3.6% of the public health care expenditure per inhabitant in OECD countries between 1984 and 2001 was due to the income factor. There is currently no unanimity with 27 Health systems, health and wealth: Assessing the case for investing in health systems (Josep Figueras, Martin McKee, Suszy Lessof, Antonio Duran, Nata Menabde, 2008). 28 The evidence suggests that the health care cost depends to a larger extent on proximity to death that on age. The evidence from several countries is that there may be a process of compression of morbidity as a result of healthier lifestyles and more accessible and effective medical treatments. 34
  33. 33. A sustainable health system (II) regard to the consideration of health care as “normal goods” (its demand grows at the same rate as income) o as “luxury goods” (its demand grows proportionally more than income). In any event, in Spain the cost of health care per inhabitant has been increasingly proportionally more than the GDP per inhabitant. • Finally, the prices of health care supplies also tend to be associated with the upward trend in expenditure in this area: pharmaceutical products, capital investments or, specifically, employee remuneration. Salaries are particularly important is a sector which largely continues to rely on human resources. Productivity growth in the health care sector is lower than in other sectors and salaries tend to increase more than productivity, leading to an increase in its weight in the GDP29. In summary, irrespective of the greater or lesser relative impact of such factors, it isimportant to underline that, to a certain extent, these are not exogenous. In other words, thefactors determining the growth in health care cost are associated with all participants in thesystem (citizens, industry, health care professionals and managers), and therefore health carepolicy must ensure that every one of them contributes to its containment.The growth of health care expenditure in Spain The items which explain the development in health care cost are, according to theeconomic breakdown of cost, personnel costs and, according to functional classification,hospital and specialist care and pharmaceutical care. 44% of public health care expenditure is used to meet personnel costs and 25.5% topharmaceutical products via medical prescriptions (19%) or hospital dispensation (6.5%). Bothexpenditure items accounted in 2009 for 69.5% of health care cost (graph 7).29 This circumstance is usually explained by resorting to models such as that of the “imbalanced growth” of Baumol, thus known as the“Baumol disease”. 35
  34. 34. Key Financial Factors of the NHS Graph 7 Components of Spanish health care expenditure as % of total Personnel remuneration Hospital and specialist services Primary health services Prevention and public health Pharmacy The dotted line represents an expenditure item in economic breakdown and the continuous lines the breakdown by function This is why the sum of both percentages exceeds 100% Source: Public Health Care Statistics of Ministry of Health and own preparation ES NECESARIO MODIFICAR LAS COMAS “,” DE LAS CIFRAS POR PUNTOS “.” EN LOS NÚMEROS DE ESTA TABLA. • Personnel costs: in 2010 583,000 employees worked in the NHS (graph 8): 58% as health care personnel in hospitals and 11% as health care workers in primary health care centers. The remaining 30% was non- health care personnel. Graph 8 Number of NHS employees and % variation rates in NHS employment and personnel cost Year on year variation in total wages bill Year on year variation in NHS employment 36
  35. 35. A sustainable health system (II)Total employed EPA (Active Population Poll)Source: INEES NECESARIO MODIFICAR LAS COMAS “,” DE LAS CIFRAS POR PUNTOS “.” EN LOS NÚMEROS DE ESTATABLA.TAMBIÉN HAY QUE MODIFICAR LOS “.” POR “,” Between 2000 and 2010 the total wages bill of the NHS has grown by an average of 8.9% compared to the average staff growth of 3.3%. This increase in personnel has not gone hand in hand with a more flexible public employee legislation, which impairs effective management of human resources. This impairment is due to the allocation of permanent positions, the rigidity of working schedules and the lack of alignment between incentives for health care personnel and the health care objectives of the system, as well as the vulnerability of health care managers to the political cycle. Thus, for example, PWC30 quotes the case of Catalonia where, since 1981, the construction of hospitals under the traditional system had not been encouraged in order to promote independent management and labor personnel in the new institutions. • Pharmaceutical expense: During the period 2005-2009 the pharmaceutical expense has dropped by two points, reaching 19.2% of overall cost. In 2011 the public expenditure on prescriptions amounted to 11,136.4 million euros, of which 80% pertains to pensioners. The pharmaceutical expenditure control policies, directed specifically to the drugs provided via medical prescription, have meant a significant reduction in the growth rates of pharmacy costs (graph 9). 30 Ten hot topics in Spanish Health Care for 2012. Two simultaneous agendas: cuts and reforms (PwC, 2012). 37