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Spending reviews - Stefan Kiss, Slovak Republic

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This presentation was made by Stefan Kiss, Slovak Republic, at the 3rd Health Systems Joint Network meeting for Central, Eastern and South-eastern European Countries held in Vilnius, Lithuania, on 25-26 April 2019

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Spending reviews - Stefan Kiss, Slovak Republic

  1. 1. Value for Money Division Ministry of Finance Spending review in Slovakia April 2019
  2. 2. Healthcare spending review – achievements 2  121 mil. euro saved (2,4 % of the budget)  Budgeting shifted from “how much is available” to “how much is needed”  Spending measures are part of the budget  More public debate about results
  3. 3. We have to do more with less 3 James Whiting (The Wire, Season 5)
  4. 4. Broader goals – mindset, institutions, data 1. Philosophical change  Not only „comply with the law“ but look for "the best option" 2. Strengthen institutions  „four eyes“ principle  analytical capacities everywhere in public sector  Implementation unit  Transform National Audit Office to a performance auditor 3. Data and analytical tools  CBA, CEA, CUA, CMA  benchmarking 4
  5. 5. Slovak spending reviews go beyond savings  Comprehensive and regular review of effectiveness and efficiency of expenditures, by sector (transport, healthcare, etc.) or by a common topic (IT, wages, etc.)  Review most of the public expenditure during the election term  Proceed in rounds (3 sectors per year)  Allocative efficiency - cut „bad“, promote „good“ expenditure within each sector  Analysed by internal capacities – analytical units in ministries, MoF leads the process, methodology and analytical capacity  Specific attention on big (investment) decisions - CBA by MoF for every major investment 5
  6. 6. 6 Institutional setup - Slovak case  we have less formal structure, process driven by MoF  government makes strategic decisions, the rest is on us  consensual outputs – agreements between MoF and line min.  20 analysts at the MoF, more at the line ministries
  7. 7. Lessons learnt  Political ownership  Crucial for the exercise. It is never good enough  Internal analysts are good value for money  Rather than outsourcing the analysis, results are much better when an in-house analytical (and implementation) unit exists  Sectoral analysts are good cops, MoF are bad cops  Ambitious goals, optimistic reality  Budget is a key tool for MoF  Use budgetary process as much as you can (spending limits, measures, performance goals, annex the spending review reports  Ideally with clear spending baseline projections  Implementation is typically a weakness  And key to translate ideas into better services for citizens  Broader engagement is necessary  Set the implementation unit – in the center of government and elsewhere 7
  8. 8. What makes it a success 8 2016 2017 Health care Transport IT Labor and social Educatio n Environmen t Relevant savings       mil. eur (% of total expenditure) 363 (8,3 %) 0,5 (0,02 %) 22-40 (5 – 9 %) 49 (1,6 %) 88 (2,9 %) 130 (25,9 %) Implemented in the budget       Significant increase in value -  - - -  Cooperation on the review        Transparency       KPIs go beyond proposed savings measures – value, data, accountability, transparency
  9. 9. Health-care spending in line with peers  Similar to other Visegrad Group countries (V3)  Expenditure grows faster than GDP 9 Healthcare spending (% of GDP) Healthcare spending and GDP relation, 2017 Source: EC 2018 Source: OECD
  10. 10. 10  The case for Value for Money  Objective: amenable mortality rate at the V3 level by 2025 = 2 443 deaths prevented by healthcare annually Amenable death rate (per 100 000 population) Life expectancy - Females at birth (years) Source: Eurostat Source: OECD However, results lagging behind
  11. 11. Key saving measures from the first spending review (2016) 11 Million euro Potential saving Implemented % MEASURES REDUCING COSTS 363 40,4 11% Measures reducing costs of public health insurance (summary) 268 121,5 45% Overprescription of medications – introduction of prescription limits for outpatient service providers 59 29,7 50% Exceptions for medications – introduction of rules on refund of exceptions 10 -0,2 -2% Cost inefficient medications – central procurement of medications covered by health insurance 42 4,5 11% Special medical material – price reduction through reference pricing 55 33,0 60% Medical devices – reference pricing and inspection activities 15 22,4 149% Diagnostic exams – reduction of unit prices and limits to CT and MRI examinations 25 5,9 24% Diagnostic exams– introduction of limits for outpatient service providers 37 -6,5 -18% Improvement of inspection activities of VšZP 25 32,5 130% Measures reducing hospital costs (subordinate organisations of MoH) 95 -81,1 -85% Operational expenses optimisation 10 -20,9 -209% Medical processes optimisation 74 -59,4 -80% Medication and special medical material procurement optimisation 8 -17,3 -216% Medical equipment procurement 3 16,4 547% Source: MoF SR
  12. 12. Consumption of pharmaceuticals* (in daily doses, per 1,000 inhabitants, 2017) 12 Savings measures – pharmaceutical policy 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 SK CZ EU** OECD** *only includes selected ATC groups  System of reimbursement  Internal and external referencing  Utilization of generics and biosimilar products  Decisions based on pharmacoeconomics  Overconsumption  Overspending  Side effects (incl. negative interactions)  Antibiotic resistance (long-term fiscal effect)
  13. 13. 13 Savings measures – hospitals  Operational costs  Hospitals unreasonably vary in unit prices of electricity, heating, washing...  Central procurement  For example special medical material 20 25 30 35 40 45 50 55 60 65 70 január16 február16 marec16 apríl16 máj16 jún16 júl16 august16 september16 október16 november16 december16 január17 február17 marec17 apríl17 máj17 jún17 júl17 august17 september17 október17 november17 december17 január18 február18 marec18 apríl18 máj18 jún18 júl18 august18 september18 október18 november18 december18 UN KE FN NR UN BA FN NZ FN NZ DF BA FN TT FN TN, UN MT UN FN KE NR DF BB FN BB FN BB Unit prices for electricity, (by the beginning of the validity of agreements)
  14. 14. 1. Start from the largest expenditure areas 2. Benchmarking of costs, resources, outcomes, etc.  With foreign countries (EU28, EU15, V3)  Within the country (i.e. among hospitals) 3. International best practises  OECD, WHO, World Bank, academic papers 4. Focus on outliers, understand them in detail  If no good explanation is offered, aim for a policy change 5. Implementation  Ideally done by the delivery unit and line ministries, but sometimes we have to get involved, mostly through the budget process 14 Spending review methodology
  15. 15. Remaining challenges and organizational questions 15  Where improvement is needed:  Performance budgeting, focus on results  Budget prioritization  Management of hospitals  Public vs private debate, unfinished reforms  Organizational – how we work  Intersection of economic and medical questions  Quality of data  Contact with third parties (health insurance companies, pharma industry, hospitals…)
  16. 16. Topics for the next spending review 16  As our measures get implemented and the system improves, we must shift from simple cost cutting to more complex topics  Healthcare systems overview, implications for Slovakia (roles of health insurers, the ministry, regulators…)  HTA, budget prioritization  Mental Health  Out of pocket payments
  17. 17. Štefan Kišš Director Value for Money Division Ministry of Finance E-mail: stefan.kiss@mfsr.sk Tel.: +421 2 5958 2429 17

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