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UEHP News OCTOBER 2013


EUPOPEAN ECONOMY
The Second Economic Adjustment Programme for Greece- Fourth Review – April 2014


EUPOPEAN ECONOMY
The Second Economic Adjustment Programme for Greece- Second Review – May 2013


Health Professional Mobility in a Changing Europe
New dynamics, mobile individuals and diverse responses



I. Efficiency in health systems

Efficiency means many different things and it means different things to different people and in different contexts. But for most it means doing things well, successfully and without waste – creating value for money. And – taking the concept a step further – efficiency can be expressed in simple mathematics as to demonstrate the extent to which a given input is used to produce a specific outcome. This again obviously means different things for different sectors, but in health we can give efficiency a more specific and refined meaning – which will be done below – as the concept of quality and value must be incorporated – and to a much higher degree than in many other sectors, for example in traditional industry.

Measuring efficiency in a simple, mechanical way will not work in the health sector. The issue is not (only) about the number of interventions per day, it is also about whether high numbers of interventions leads to many re-admissions and indeed – and increasingly – about the patient reported outcomes in addition to the clinical outcomes.

It should also be noted that efficiency is different from effectiveness, which normally is a much simpler concept of getting a desired result in quantitative rather than qualitative terms, for example by setting a quantitative goal for mechanical production. This may sound simple and obvious, but the distinction is not always made clear in discussions about health policies, including by policy makers, where arguments often are based on data that focuses on the quantitative rather than the qualitative, such as length of stay in hospitals, number of specific interventions, etc.

The same can also be seen in reimbursement systems where quantity often is rewarded with less consideration for quality and patient perceptions. Some uses of DRG systems come to mind, and this is rather central to the discussion about introducing value based health care methods – also in determining the form and shape of reimbursements. Quality already plays an increasing role in recent evolutions in reimbursement systems, but it should be expected that patient reported outcomes – and in general the concept of value[1] – will play an increasing role in the coming years. This again means firstly that the individual units in the health systems – including hospitals – must work to define the optimum point of efficiency (or value creation) considering quite a large number of indicators, and secondly that the health system as such will need to cooperate more closely if and when the so-called bundled payment systems are introduced.

It would be so nice and easy for all of us in our societies if we could avoid all this discussion about how to improve performance of health systems, and just concentrate on treating everybody to the highest standards existing. But the demands for higher efficiency in health come from the various pressures mentioned in the introduction, and presently three out of four Euro’s spent on health are funded from governments (whether the services are provided by public or private entities) and health spending accounts for around 15% of all government spending across the OECD. [2]

With all the other needs for public financing, and considering the changing balanced between retired people and younger tax payers, there is little room for additional reallocations of budgets to health spending, and there is a strong imperative for health systems to maximise value for money. [3]

The pressures for efficiency

All indications points to the need for health systems to become more efficient in creating higher value and reduce waste if the European model with equal access for all (in principle) is to me maintained. In the public debate this often leads to some easy conclusions. One is that the health systems must have more resources to perform better, which again means more money from public budgets. Another argument – mostly coming from health professionals – is that they cannot “run faster” , that they are already overburdened and cannot perform better, But in reality this is not (necessarily) about more money or running faster, it is much more about thinking out of the box(es) and thinking smart, on investing money on a clever way (guided by value creation for our societies), and indeed on breaking down silos and traditional perceptions about how health systems – and its components – should work – not onlyfrom a clinical perspective, but also from an organisational and management perspective.

And this is not only about the individual units in the system (for example a hospital), but also about the health system as a whole that can perform better, create more value and reduce waste if it is a well integrated system, if it is ready to break with traditions and if it is guided by optimising value rather than on reducing costs. Therefore this is also a question of allocating available resources in the best possible way when deciding on choices, including between prevention, prevention of disease progression, more precise diagnostic equipment to guide precise interventions, using the best possible equipment and medicines, using as much as at all possible the data crated in health systems as a way to provide guidance on the best possible patient pathways, ensure a robust communication between parts of the health systems, and be prepared to accept reorganisations as a tool for creating more value. How to improve the tools that form the basis for decisions about investments are discussed later in this book.

But the enormous pressure on the government budgets also means that private capital must be added – in addition to public funding – to make certain that the systems are sustainable and that the necessary investments can be made. Even if public finances are in different levels across Europe, the pressure exists in even the best performing countries – not least because the effect of demographics – longer living and fewer new tax payers – are present everywhere, and the effects on the pressure on public finances are seen everywhere, even in the best performing countries.

But there is no law of nature that says that private entities are more efficient than public one, so the same rules apply for achieving the highest degrees of efficiency. There is, on the other side, no doubt that private capital will be a necessary element in sustainable health systems for the future, mainly to create a bigger supply of services that can cope with the increased needs without creating very long queues of patients waiting to be treated and to avoid the inequality that follows from more well of pats of the population buying private insurance solutions that can allow them to jump the queues!

As mentioned in the introduction, it is often said that private hospitals increase inequality in the access to health services. The situation in Europe is now the opposite. If the private hospitals operate on equal footing with the public hospitals, it creases more supply and lower waiting times for all. In systems, where the public sector handles all (or nearly all) health services, the wealthy are increasing skipping the longer and longer queues of access by buying private services outside the normal health system!

Fighting waste

OECD estimates that more than 20% of all spending in health systems (public and private) can be considered as waste because of wrong treatment, because many hospitalisations are unnecessary as the situations could have been addressed (cheaper) outside hospitals, because of wrong medications, because of low quality of diagnosis (for example poorly performed screenings) and many more reasons.

In the analysis from OECD[4] it is estimated that 1 EUR out of every 5 Euros spent on health is ineffective or wasteful. This is an average of the OECD countries, but it is a true scandal if around 20% of health costs are wasted – not least considering the pressure on the health systems finances, but also that fraud and waste are taking away care to patients who really need medical attention.

There are many different things hat can be done to address the waste issue, and it is very important to underline that best practises should be analysed and described, and that national health systems – and individual hospitals – have an obligation to look after best practices even if they take place across borders and implement them if they can improve the national or local situation!


Information about identification of low-value care, low-value interventions, drugs and equipment should be published as should reports on adverse events. This could also be coupled to widespread dissemination of clinical guidelines. Exactly the same goes for best practices in digital solutions (for example on electronic prescriptions, on connecting the dots in the health system, etc) and then of course reimbursement systems should work on providing value based incentives. An emerging trend of using more value based procurement may also be a way to improve value for money when purchasing for example medicines. An again: Look at the best performers and implement the good ideas that work in stead of refusing them, because “they were not invented here”!

The waste is not always an issue just for the individual parts of the health system, but also for the whole system and how it works and links its components. In summary the waste can be grouped under these headings:[5]

Wasteful clinical care covers instances when patients do not receive the right care. This includes preventable clinical adverse events, driven by errors, suboptimal decisions and organisational factors, notably poor co-ordination across providers. In addition, wasteful clinical care includes ineffective and inappropriate care – sometimes known as low-value care, mostly driven by suboptimal decisions and poor incentives. Last, wasteful clinical care includes the unnecessary duplication of services.

Operational waste occurs when care could be produced using fewer resources within the system while maintaining the benefits. Examples include situations where lower prices could be obtained for the inputs purchased, where costly inputs are used instead of less expensive ones with no benefit to the patient, or where inputs are discarded without being used. This type of waste mostly involves managers and reflects poor organisation and co-ordination.

Governance-related waste pertains to use of resources that do not directly contribute to patient care, either because they are meant to support the administration and management of the health care system and its various components, or because they are diverted from their intended purpose through fraud, abuse and corruption. It thus comprises two distinct types of waste. The first is administrative waste, which can take place from the micro (manager) to the macro (regulator) level. Again, poor organisation and coordination are the main drivers. Second, fraud, abuse and corruption, which divert resources from the pursuit of health care systems’ goals, are also wasteful. Any of the actors can be involved, and in fact, a comprehensive analysis of the topic requires the inclusion of businesses/industries operating in the health sector. In any case, the intention to deceive is what primarily distinguishes this last type of waste

Finally it is very worrying that OECD also has found that more than 1/3 of citizens in OECD countries consider the health sector to be either corrupt or extremely corrupt. There are big differences across the countries, and that should lead to working on how to identify the best ways to operate health systems without corruption. The high number of waste in health systems was called a scandal above. If the citizens’ expectations on fraud are correct, we are talking about a terrible scandal!


ARE PRIVATE HOPSITALS BETTER – ARE THEY WORKING ON ANTI WASTE? LESS CORRUPT?

Length of stay

So measuring efficiency in health can be a quite complicated thing, and amongst the many things that influence efficiency is the systemic context. We do not have available all the data that is needed to cast a robust light on all these aspects, but from the emerging sets of data that are comparable from country to country (in Europe and/or in OECD countries) some patterns emerge that cannot easily be explained.


If we look at the average stay in hospitals patients in France spends in average more than double the time than patients in the Netherlands. This is two countries that are similar in many respects, and which has not that big a difference in the overall spending on health. But the difference is striking, and it no doubt covers over differences within the two country systems as well. But what is the most efficient policy – the French or the Dutch? Does Netherlands see many more re-admissions for the same disease? Or is it just waste to keep people for as long as is the case in France? Not both systems can provide the best practice. The answer may give a very strong guidance for performance that can have really big consequences for costs in the health system and thereby also for the value created for the society in question.


The table below gives examples from a sample of EU countries, but there does not seem to be any obvious correlations that can explain the huge differences. There is no distinction between public and private hospitals, but again there is no correlation between the mix of public and private hospitals (or between Bismarck and Beverage systems) and the length of stay. But all countries can not have the best practice in hospital efficiency, so it must be somewhere between France and Netherlands, but where exactly is a lot more difficult to determine.


DO WE HAVE ANY STATISCS HERE PUBLIC/PRIVATE?


Average length of stay in hospitals (acute cases only)


Country

Average length of stay in days

France

10.1

Hungary

9.5

Portugal

9.0

Germany

8.9

Finland

8.8

EU-28

7.9

Italy

7.8

Belgium

7.5

Spain

7.3

UK

7.1

Sweden

5.8

Denmark

5.4

Netherlands

5.0

Source: OECD Health Statistics 2018


Another striking example is the spending on hospitals in European countries. However, even in the figures are made comparable as they are measure on the same currency – Euro – and adapted to purchasing power (PPP), the differences are more linked to differences in cost levels – mostly for the health professionals and equipment – and the general wealth level, there are big differences, but again there is absolutely no correlation to the mix of private and public hospitals or the fundamentals of the health system – Bismarck versus Beveridge.

The big difference are as mentioned above linked partly to the general cost level in the different countries, but if the hospital spending is linked to the share of the total health costs, the differences are smaller.


Country

Hospital spending per capita in EUR (PPP) 2016

Denmark

1,663

Sweden

1,516

Austria

1,491

Ireland

1,407

France

1,349

Netherlands

1,331

UK

1,277

Germany

1,168

Belgium

1,166

Italy

1,149

Finland

1,087

EU-28

1,059

Spain

1,006

Portugal

885

Greece

722

Croatia

537

Hungary

530

Poland

459

Health at a Glance Europe, 2018, page 139

A third example is the spending on pharma in the different societies. In average Germans pay much more that double what is paid in Denmark, and here is no link between the general cost and wealth level, as Denmark in general has substantial higher costs of almost everything that Germany. Why is it that we see so big differences between European countries that may be different, but on the other side also are a rather homogenous group? The answer will not be given here, but the question is also more, why these considerable differences are not discussed more – why is that easily available data that shows differences that makes it very clear that a best practices can be found somewhere, and why is it not applied in order to save large amounts of money in systems that really need to become more efficient in order to cope with the pressures on it that in reality severely threatens the sustainability of the European health model.


Country

Expenditures on retail phrama per capital in EUR (PPP) 2016

Germany

572

Ireland

498

Belgium

491

France

464

Austria

456

Italy

447

Spain

440

Greece

438

EU-28

447

Finland

368

Sweden

357

UK

350

Croatia

326

Portugal

308

Netherlands

299

Poland

267

Denmark

203

Health at a Glance, Europe, 2018. p 141.


It is better to prevent that to cure

The way our health systems have evolved, hospitals – and the bigger, the better – are the crown jewels of the health systems. This is where careers are made, and this is where young health professionals want to be. And health professionals are trained to cure illnesses and many of them are very, very good at that. They also have their well established ways of sharing experiences and learning from the progress of other health professionals and in that respect share a robust and widespread professional community.

All citizens should be happy to have very good health professionals that can treat them when need arises. But much less focus has been on working for preventing the need for treatment. Obviously there are diseases that are difficult to prevent, and where the prevention will involve other areas of society than the health related issues. Traffic accidents can be prevented, but not via the health systems. The same goes for work related illnesses. Or for illnesses caused by environmental problems. But many of the chronical diseases that with an ageing population are becoming a bigger and bigger burden on our societies are preventable, and especially those that are life style related.


Illustration: Life style related chronical diseases and their effect on health systems

What has this got to do with health efficiency? It has a lot to do with clever spending of the funds available for health systems – seen from the societal economic perspective of health systems. It is obvious that it is cheaper for society and much better for the patients if Diabetes 2 is prevented from requiring serious treatment via life style changes that it is to deal with the consequences of a fully developed diabetes 2 disease, and that includes not only the cost of treatment, but also the costs of the patient being unable to perform socially and economically and at the same time will be requiring care.

According to OECD only 3 % of health spending across the OECD member countries is dedicated to health promotion and disease prevention. Seen from an economic value perspective this does not seem to be the most rational way of spending scarce funds, but there are many obstacles to changing this, including the in the established system and in the preferences of health professionals.


It sees, however, that more integrated systems where the primary health care is working closely with hospitals and care centres is producing good results, and this could possibly be improved by applying outcome based reimbursements – bundled and shared between the institutions involved with the individual patients. Such systems can also encourage health institutions to deliver the best service for the patients rather than the best service for themselves! This again should lead to more efficient performance of health systems.


Can and will the private health care sector lead the way on this?

EXAMPLES

The Value of Diagnostic Information

he methods of diagnosing diseases has improved tremendously over the least years and seems to go on with almost explosive speed – inspired to a large extend of the rapid developments in all things digital.

The importance of diagnostics goes all the way from early detection of illnesses, which makes it possible to deal with diseases at an early stage to more precise information on what has caused more advanced diseases and how to deal with them. Obviously this is good for patients, and clearly also for the societal economy in the sense of the ability to treat diseases as efficiently as possible. It is clearly also an advantage for health professionals and health institutions from a prevention and curing point of view, but unfortunately not always from an economic or financial points of view. This is another good reason to change reimbursement systems in order to reward most efficient solutions.

But the value of diagnostic information should also be rewarded in itself to go beyond the reimbursement of the costs of the diagnosis itself, because the diagnostic information provides so much value to patients, health professionals and the whole health system and thereby to the societal economy. Thus rewarding the true value of diagnostic information – in stead of “just” the price of the tests, will stimulate further development of diagnostic equipment which in itself can make our health systems work much more efficient and also save live and improve quality of life.


The more the health systems becomes knowledge based and move towards new innovative ways of using modern, digital equipment, the better use can also come from diagnostic information. If coupled with big data processes and algorithms, the diagnostic information suddenly can become even more important and useful, for example by illustrating optimal patient pathways for treatment.


EXAMPLES FROM PRIVATE HOPSOITALS LEADING THESE PROCESSES including the broader issue of digitalisation



Conclusions on efficiency


Many studies have been trying to find an answer to the question on whether private hospitals are more or less efficient than public or not-for-profit hospitals. Although one should imagine intuitively that private hospitals would be the most efficient because they have to make profits to survive, nobody seems to have found an answer to the question.


This is partly of three main reasons:


  1. It depends on what is meant by efficiency – and for whom
  2. It depends on the whole health system in which hospitals operate. How are they structured, which role is given to individual components, how integrated is the system and how does it reimburse for health services.
  3. Finally there will always be differences between organisations depending on they are managed and structured.


DO WE HAVE ANY DATA THAT SHOWS THAT PATIENTS PREFER PRIAVTE HOPSITALS IF GIVEN THE CHOICE?


Most European countries use both private and public suppliers, also apart from the primary health sector and into for example the hospitals sector. But there are very big differences in the role they play. In most of the so-called Bismarck type systems private hospitals plays a big role – in many cases at par with the public hospitals - whereas in Beveridge type systems the private hospitals are not integrated in the system at par with the public hospitals, but operates in parallel with the public hospitals and provides services either as a reserve capacity for the public hospitals or as hospitals for those that can afford to pay for the services themselves, either out of their won pocket or via a private health insurance.


Therefore discussions about the role of private hospitals between people living in the different systems usually have a very different perspective on the role of private hospitals. This has created a certain stigmatisation against private hospitals in mostly Beveridge type systems about inequality, which, as mentioned above, is based on a misunderstanding, because in reality the Beveridge type systems with nearly 100% public hospitals are increasingly becoming the reasons for inequality as the pressure on the public finances leads to long and for many unacceptable waiting times – not least for cancer operations – so that those that can afford it jumps the queues to be treated at the “parallel” private hospitals. In contrast systems that has a system where public and private hospitals are integrated experiences much less waiting time problems because of the larger supply, and thus does not give incentives for people to jump the queues.


The role given by the health authorities of course also plays a role for how efficiently the services can be provided, and that does not least point to reimbursement systems.


In Italy, for profit hospitals were found to be less efficient because they use resources less efficiently. This might be due to the fact that private for profit hospitals are confronted with specific regulations that set a limit to the number of funded admissions; since such limits fluctuate over time and are quite volatile, for profit hospitals might face problems to adjust fixed input resources accordingly

Another indication of the importance of funding schemes might be the fact that after a DRG‐based payment system had been introduced in Italy, not for profit hospitals converged to the same levels of technical efficiency as public hospitals. In Germany, Herr et al also found no statistically significant differences in technical efficiency between for profit and public hospitals after a DRG‐based payment system had been introduced in 2004. Earlier, Herr showed that private hospitals were on average less cost and technical efficient, maybe because of the fact that in that timeframe, there existed an incentive to increase LOS to raise revenues. Nonetheless, for profit hospitals were found to be more profit efficient than public hospitals, meaning that hospitals have certain output prices and input prices, and for profit hospitals choose the best combination of both input and output factors. However, another study discovered that under the DRG payment system, efficiency gains among for profit‐privatized hospitals were significantly lower compared with before the DRG payment system. The Austrian DRG system only covers up to 50% of hospital costs, and additional funds come from states and operational‐deficit coverage, determined ex post by the local authorities. Such funds disproportionally accrue to public providers placing the private sector at bay, but possibly also increasing their incentives to operate more cost conscious. [6]


The conclusion can not be that pure private or pure public can be the answer to the pressure against our European way of doing health services, but also that none of the solutions can survive this crisis. The relief that private involvement in the health system can give is clearly increasing the potential for value creation in the society as a whole. It would probably be a very good idea if the stigmatisations about particular types of services providers were given up and replaced by a non-dogmatic discussion about what would serve our societies best now and in the future. Therefore systems should e geared to produce value across the board – from the patients via the health systems to societies, and regulations and incentives should build on identifying best practices and provide stimuli to the systems to become as efficient as possible – to fight against waste in focus on improving the quality of life for the citizens on Europe.



[1] Value understood as outcomes divided by the costs involved in achieving the results (outcomes)

[2] Xxxxx. % of GDP……

[3] Francesca Colombo: Waste and inefficiency in healthcare need to be tackled across OECD countries in the report: Smart (Dis) Investment Choices in Healthcare, Friends of Europe, November 2018.

[4] See for example https://www.oecd.org/els/health-systems/Tackling-Wasteful-Spending-on-Health-Highlights-revised.pdf

[5] Quoted from https://ec.europa.eu/health/sites/health/files/systems_performance_assessment/docs/2019_efficiency_en.pdf

[6] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6033142/. Do private hospitals outperform public hospitals regarding efficiency, accessibility, and quality of care in the European Union? A literature review. The International Journal of helath planning and management, April-June 2018.


 

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