Health care reforms in Europe and their implications for Japan

Health care reforms in Europe and their implications for Japan Peter C. Smith Centre for Health Economics University of York Structure of presentation • Introduction • Promoting cost-effectiveness – Cost containment – Markets and competition – Quality improvement • Other aspects of reform • Implications for Japan An acknowledgement: the WHO European Health Observatory • Surveys of individual countries Healthcare Systems in Transition profiles • Books on important topics: – – – – Financing Hospitals Social insurance Purchasing • Web site: http://www.euro.who.int/observatory Common features of western European Health Systems • A broad package of insured health care, embracing most mainstream health interventions (not always long term care) • Universal coverage of all citizens, regardless of financial or health status; • Low reliance on direct user charges • Financial contributions according to ability to pay, independent of health status (tax or social insurance) • High levels of regulation of providers • A unifying principle of „solidarity‟ - the health risks of all citizens are pooled, with contributions to the risk pool unrelated to health status Four broad types of health system • Social insurance: unreformed – France, Austria • Social insurance: competitive – Netherlands, Germany • Public sector: devolved – Sweden, Spain • Public sector: centralized – United Kingdom, Italy Figure 1: Public and private health expenditure as a percent of GDP, 2001 (Source: OECD Health Data) JAPAN United Kingdom Sweden Spain Italy Ireland Germany France Finland Denmark Belgium Austria 0 2 4 6 8 10 12 Public Private Austria Belgium 78.1 77.7 Denmark Finland 76.9 77.6 79.0 78.0 Life expectancy 2000 (Source: OECD Health Data) France Germany Greece Ireland Italy Netherlands 78.1 76.5 79.6 78.0 Portugal Spain Sweden United Kingdom 76.6 79.1 79.7 77.9 JAPAN 81.2 Preoccupations of European health systems • 1980s: Cost containment • 1990s: Efficiency and markets • 2000s: Quality 1. Cost containment a) Gatekeeping b) Copayments c) Community care 1a) Gatekeeping • Traditional feature of public European systems (UK, Scandinavia, Italy) • In some respects, directed at enhancing quality of care • But main focus is on containing costs • Some evidence of success • Social insurance countries seeking to encourage gatekeeping through payment mechanism (France, Germany) Figure 2: Average number of doctor consultations per capita, 2000 (Source: OECD Health Data) JAPAN United Kingdom Sweden Netherlands Italy Germany France Finland Denmark Belgium Austria 0 5 10 15 General practice fundholding UK • • • • • • • • In force 1991 to 1998 Voluntary participation by general practices Average practice size 7,500 By 1997, 50% of patients had a fundholding general practitioner Fundholders received budgets from health authority to purchase routine non-emergency surgery and prescribing for patients Emergency and complex surgery paid by health authority Fundholding abolished April 1999 To be reintroduced April 2005? Difference between fundholder and non-fundholder hospital admission rates 0.5 Admissions per 1000 0 -0.5 -1 -1.5 -2 -2.5 -3 -3.5 -4 -4.5 Emergency Elective 97/98 98/99 99/00 00/01 Gatekeeping principles • • • • Limiting access to specialist care Persuading citizens to use preferred providers Potential lever to improve costs and quality Needs to be implemented alongside many other policies • Very different effectiveness in different systems. 1b) Copayments • Traditionally low levels of copayment in European systems • Widespread voluntary insurance against copayments in some systems, diluting incentive effect (France, Ireland) • Tentative experimentation with copayments in public systems (Sweden, Netherlands) • Reference pricing as a form of copayment for pharmaceuticals (Germany, Spain etc.) • Differential copayments according to lifestyle? Not yet tried. Figure 3: Percentage of total health care expenditure in the form of out-of pocket payments (Source: OECD Health Data) JAPAN Spain Netherlands Italy Ireland Germany France Finland Denmark Austria 0 5 10 15 20 25 Copayments for physician visits: German example 2004 • €10 fee for each first appointment with a doctor in a three month period • Some evidence of an effect on demand, but reform may distort the pattern of utilization • Concern that the poor and chronically sick will be disadvantaged • No market in voluntary copayment insurance yet. Reference pricing • Designed to encourage use of cheaper generic substitute drugs • Involves setting a fixed „reference price‟ for all drugs within a cluster • Patients must pay difference between drug price and reference price • Complex technical issues (choice of clusters, choice of referenceprice) • Widespread use in Europe (Sweden, Germany, Spain, Italy), but Norway abandoned because ineffective. Reference: Kanavos, P and Reinhardt, U (2003), “Reference Pricing For Drugs: Is It CompatibleWith U.S. Health Care?”, Health Affairs, 22(3), 16-30. 1c) Community care • Objective is to keep patients out of unnecessary hospital care, and to minimize length of stay • Some crude attempts to limit very long lengths of stay (bed blocking) (Belgium) • Some discussion of introducing „no claims‟ insurance premium discount (Netherlands) • Incentives for local government to arrange for community care (England) Figure 4: Trends in average length of stay, all acute episodes (Source: OECD Health Data) 30 25 20 Austria Denmark Finland France Germany Ireland Netherlands Portugal Sweden 1960 1970 1980 1990 2000 United Kingdom Days 15 10 5 0 2. Markets and efficiency a) b) c) d) e) Provider markets Payment mechanisms Purchaser markets Information and markets Health technology assessment 2a) Provider markets • Major efforts to make provider markets more competitive and contestable • Clearly relevant to some aspects of acute care, but concerns at implications for chronic care • Little evidence on effectiveness of provider markets • Little evidence on relevance of ownership of providers 2b) Payment mechanisms • Almost all systems reimburse providers according to some sort of DRG payment • Most DRG fee schedules are set passively, according to expected average costs • DRG systems are augmented by numerous other payment mechanisms • Payment mechanisms less well developed in ambulatory care • Key issue is sharing risk within the health system. Adjustments to payment mechanisms • In Norway, funding of local governments is partly on the basis of DRGs (that is, actual activity) and partly on the basis of risk-adjusted capitation (that is, expected activity). • In the Netherlands, some cost-sharing between the payer and the provider occurs once provider costs on a particular patient exceed some threshold. • Many systems augment the pure DRG payment with other sources of finance, such as local government subsidies for capital resources (Austria) and tax subsidies (Belgium). • In Germany, patients in registered chronic disease programmes attract additional capitation payments for sickness funds [23]. 2c) Purchaser markets • Payers for health care (local governments or insurance funds) have tended to reimburse passively • Major efforts to make sickness funds competitive in social insurance systems (Netherlands, Germany, Belgium) • Early experience suggests the a concern with the risk adjustment process, needed to create a fair market and prevent cream skimming of rich, healthy patients • Little evidence of benefits in terms of quality or efficiency • Key issue: how to reconcile active purchasing with the patient‟s traditional freedom to use any provider and fixed fee schedule. Risk Adjustment 1: Age and sex: English Acute sector 600 500 Cost per person (£) 400 300 200 100 0 0 10 20 30 40 50 60 70 80 Age Male Female Risk Adjustment 2: Additional needs: English Acute Sector • • • • • Limiting long-standing illness (under 75) Mortality (under 75) Unemployment Older people living alone Single parent households. The outcome of the English redistributive system Percentage gain (loss) from equalization grant, 183 English health districts 183 157 131 105 79 53 27 1 -30 -20 -10 0 10 20 30 40 50 How much greater should the funding gap be? Under-75 Mortality rate Funding per capita (% national) Manchester 135.4 133.1 West Surrey ENGLAND 79.5 100.0 81.7 100.0 2d) Markets and information • Information is a key resource in the functioning of health care markets • Traditionally poor level of information on costs and quality • Great opportunity to enhance information base for patients and collective purchasers • Concern about distortions induced by public reporting. English performance ratings: acute hospitals *** ** * ! Hospitals with the highest levels of performance Hospitals that are performing well overall, but have not quite reached the same consistently high standards Hospitals where there is some cause for concern regarding particular key targets Hospitals that have shown the poorest levels of performance against key targets http://www.doh.gov.uk/performanceratings/2002/ Performance ratings – key targets 2002 no patients waiting more than 18 months for inpatient treatment fewer patients waiting more than 15 months for inpatient treatment 3. no patients waiting more than 26 weeks for outpatient treatment 4. fewer patients waiting on trolleys (gurneys) for more than 12 hours 5. less than 1% of operations cancelled on the day 6. no patients with suspected cancer waiting more than two weeks to be seen in hospital 7. improvement to the working lives of staff 8. hospital cleanliness 9. a satisfactory financial position Plus… … a satisfactory quality inspection. 1. 2. York Hospital Performance Rating 2002 www.doh.gov.uk/performanceratings York Hospital Performance Rating 2002 continued Effect of performance ratings • Positive impact on „key targets‟ • Some concern that gaming or fraud has distorted the information provided by organizations • Also concern about unintended side-effects on unmeasured aspects of health care 2e) Health technology assessment • Universal move towards defining an „essential‟ package of care • Principal criterion for inclusion in package is costeffectiveness of interventions • Experience at a very early stage • An enormous task, with numerous methodological and practical complexities • Many countries setting up health technology assessment institutes (England, Finland, Germany, Sweden) 3. Quality improvement a) Professional improvement b) Patient empowerment c) Incentives for quality 3a) Professional improvement • Two distinct perspectives: – Supporting professional best practice (e.g. Netherlands, Sweden) – Identifying unsafe practitioners (e.g. England) SWEDEN Some active quality registries • Cancer • • • • • Rectal Cancer Surgery Prostate Cancer Bladder Cancer Sarcoma Group Esophageal and Gastric Cardia Cancer • Cervical Cancer Screening • Stomach Cancer • Malignant Melanoma of Skin • Musculoskeletal • • • • • • • Hip-Fracture Total Hip Replacement Knee Replacement Rheumatoid Arthritis Lumbar Spine Surgery Spinal Cord Injury Pain Rehabilitation …. about 50 in total. Source: Rehnqvist, N. (2002), "Improving accountability in a decentralised system", in P. Smith, Measuring up: improving health systems performance in OECD countries, Paris: OECD. Identifying unsafe practitioners: could surveillance have detected Bristol early? 15 HES CSR alpha = beta = 0.0001 alpha = beta = 0.001 alpha = beta = 0.01 alpha = beta = 0.1 Zero alpha = beta = 0.1 alpha = beta = 0.01 alpha = beta = 0.001 alpha = beta = 0.0001 Cumulative LLR: as expected <- > increased risk 10 5 0 -5 -10 -15 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 Year DJ Spiegelhalter, R Kinsman, O Grigg and T Treasure. (2003) „Risk-adjusted sequential probability ratio tests: applications to Bristol, Shipman, and adult cardiac surgery‟, International Journal for Quality in Health Care 15:7–13. 3b) Patient empowerment • Contradictory pressures within Europe • Some public systems seeking to enhance patient choice (Denmark, England) – Purpose is to enhance quality (principally waiting times) • Some social insurance systems seeking to circumscribe patient choice (France, Germany) – Purpose is to encourage use of „preferred providers‟ (quality and cost) • Information for patients is a key resource in promoting choice • Notion of giving a voucher (or cash payment) to chronic patients – some tentative experiments. http://www.drfoster.co.uk 3c) Incentives for quality • Increased evidence of wide variations in clinical quality • New ability to measure quality • Publication of quality data not enough to secure improvement in clinical performance • Direct incentives needed to secure improvement. New General Practitioner contract • Each practice can earn „quality points‟ according to reported performance • 146 performance indicators • 1,050 points distributed across indicators according to perceived importance • Points based on absolute level of attainment (not adjusted for local difficulty) • About €110 per point for an average practice, but increasing if a difficult environment • Minimum income guarantee (no loss of earnings) GP Contract: Indicators and points at risk Area of practice Clinical Organizational Additional services Patient experience PIs Points 76 550 56 10 4 184 36 100 Holistic care (balanced clinical care) Quality payments (balanced quality) Access bonus Maximum 146 100 30 50 1050 GP Contract: Clinical indicators Domain CHD including LVD etc PIs Points 15 121 Stroke or transient ischaemic attack Cancer Hypothyroidism Diabetes Hypertension Mental health Asthma COPD Epilepsy Clinical maximum 10 2 2 18 5 5 7 8 4 76 31 12 8 99 105 41 72 45 16 550 Hypertension: indicators, scale and points at risk Records BP 1. The practice can produce a register of patients with established hypertension Min Max Points 9 Diagnosis and initial management BP 2.The percentage of patients with hypertension whose notes record smoking status at least once BP 3.The % of patients with hypertension who smoke, whose notes contain a record that smoking cessation advice has been offered at least once 25 25 90 90 10 10 Ongoing Management BP 4.The % of patients with hypertension in which there is a record of the blood pressure in the past 9 months BP 5. The % of patients with hypertension in whom the last blood pressure (in last 9 months) is 150/90 or less 25 25 90 70 20 56 Some other European concerns • • • • Sustainability of finance sources Manpower Pharmaceutical regulation Aging population Implications for Japan • General themes from Europe • Lessons from reform • Relevance to Japan Four weaknesses of social insurance systems • • • • The narrow finance base; Sickness funds securing quality or cost control over providers; Lack of control over expenditure growth; Lack of accountability of providers to insurers and patients. Some reforms that can address weaknesses • • • • • • • Cross subsidy from general taxation or other sources of finance More active purchasing of health services by insurers Incentives for patients to use preferred providers Increased application of health technology assessment Gatekeeping Reform of copayment policy Enhanced information, particularly on the quality and costs of providers Three „headline‟ issues for Japanese policy? • Improvement of comparative information on the quality and efficiency of providers and insurers. Experimentation with financial incentives for patients. Encouragement of more active and flexible purchasing by sickness funds. • •