Prof. Magdalene Rosenmöller
SANIT 2004
Management in the Health Sector
System Comparison
Magdalene Rosenmöller
University of Navarra
Basic Framework
Financing
Institution
Patients
Clients
Users
Citizens
University of Navarra
SANIT - System Comparison
Health Care
Providers
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Prof. Magdalene Rosenmöller
Basic Framework II
Collecting Authority
Purchasing Agency
Financing
Institution
Employer
Health Care
Providers
Patients
Clients
Users
Citizens
3
University of Navarra
OECD system representation
(The German system)
OECD system representation (The German system)
Cotizaciones obligatorias
ligadas a los ingresos
Cajas de
seguro
enfermedad
Médicos
Pago por
acto
Asociaciones
de médicos
Presupuesto
global
Población y
empresas
Orientación
Pacientes
Hospitales
Flujo de servicios
Presupuesto global
(función, en cierta
medida, del volumen
de actividad)
Flujo de información
Flujo de orientación
University of Navarra
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Prof. Magdalene Rosenmöller
Different Type of Health Systems
• Semashko Systems
• Beveridge Systems
• Semashko/Beveridge Systems
in low income countries
• Bismarck Health Systems
• Segmented Health Systems
• Private Health Systems
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University of Navarra
Challenges of Reform: Disintegration
from more integrated è more disintegrated
from more complex è more need for regulation
Socialized
Health system
State
MOF-MOH
Hospitals
Polyclinics
Outposts
National
Social Insurance
Health Service
Systems
State
MOH
Public
hospitals
specialized
outpatient
care
GPs
assigned
patients
State
MOH
Subscribed
patients
Social
insurance
Public and
private
hospitals
Outpatient
practices
Subscribed
patients or
free choice
Social and private
Insurance systems
State
MOH
Social
insurance
Public and
private
hospitals
Private
insurance
HMOs
Outpatient
practices
Subscribed patients
or free choice
Schneider, M. (1998). European Integration and Health Care Reforms in the CEEC.
University of NavarraRecent Reforms in Organisation, Financing and Delivery of Health Care in Central and Eastern Europe6
in the Light of Accession to the European Union. Brussels: EC Consensus, May 1998: Proceedings.
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Prof. Magdalene Rosenmöller
Semashko
Czech
Republic
(1989)
OECD, 2002
University of Navarra
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Semashko Systems
• In principle:
– All health staff salaried
– Services provided free of charge
– Private sector very small or non-existent
• In practice
– Substantial “under-the-table” payments
• Examples:
– Former Soviet Union and Central and Eastern
Union countries (all in transition now)
University of Navarra
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Prof. Magdalene Rosenmöller
Beveridge
Health
Systems
United
Kingdom
(1989)
Beveridge
report (1943)
National
Health
Service Act
(1946)
OECD, 2002
University of Navarra
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Beveridge Health Systems
(National Health Service - NHS)
• Largely publicly provided and financed
• May include some user charges
• Small private sector
• Examples:
– UK, Denmark, Sweden, Spain, New Zealand
University of Navarra
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Prof. Magdalene Rosenmöller
Ministry of
Health
Government
Semashko /
Beveridge
Health Systems
Public health
centers
in low income
countries
Public
hospitals
Private for profit
clinics
Private for profit
hospitals
Zambia
(pre-reform)
Population
/patients
NGO hospitals
and clinics
Informal and
traditional sector
OECD, 2002
University of Navarra
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Semashko / Beveridge Health Systems
in low income countries
• Designed to be dominated by public provision / finance
• Range of publicly owned health facilities
• Direct employment of staff in public facilities
• “Default privatization” with “under-the-table payments”
• Large private sector (for-profit and not-for-profit)
• Examples:
– India, Pakistan, Kenya, Zambia…
University of Navarra
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Prof. Magdalene Rosenmöller
Private
insurance
Bismarck
Mutual Funds
Health Systems
Statutory
Insurance Funds
(introduced in the
19th century)
Payment to
providers
Reimbursement
to patients
Ministry of
health
Public health
Pharmacists
Copayment
France
(1988)
Population
/patients
GP’s and
specialists
Municipal
medical centers
Public
hospitals
Private
hospitals
OECD, 2002
University of Navarra
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GERMANY
University of Navarra
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Prof. Magdalene Rosenmöller
Bismarck Health Systems
(Social Health Insurance)
• Social Insurance arrangements dominate the system
• Often some component of voluntary insurance
• Both public and private providers
• Minor co-payments
• Examples:
– Germany, Belgium, France, Netherlands, Austria, …
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University of Navarra
Segmented
Health
Systems
Social
Insurance
Voluntary contributions
Taxes
Compulsory contributions
Ministry of
Health
Private
Insurance
Community
services
Ecuador
Population
Private facilities
Social Insurance
facilities
Patients
University of Navarra
SANIT - System Comparison
Public facilities
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Prof. Magdalene Rosenmöller
Segmented Health Systems
• Three important subsystems: public, social insurance, and
private (both private insurance and “out-of-pocket”)
• Different segments of the population are covered under
each – some are “double-covered”
• Each subsystem has its own providers which are public,
quasi-public, and private, respectively
• Examples:
– Mexico, Peru, Ecuador, Uruguay, Colombia (changing)
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University of Navarra
Private
Health
Systems
US
(1990)
OECD, 2002
University of Navarra
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Prof. Magdalene Rosenmöller
Private Health Systems
• Private voluntary insurance is the most important financing
mechanism
• Provider institutions mainly privately owned
• Public involvement in finance and regulation still
substantial
• Examples:
– USA, Switzerland (changing)
University of Navarra
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Main Characteristics
•
Federalism & Corporatism
– Länder and Federal Government
– Corporate bodies (professionals, providers, insurers)
•
Funded by Social Insurance contributions
•
Hospital care (mix public, private, budget) – ambulatory care
(private office based physicians, FFS)Federalism & Coporatism
(Länder and Federal Government / Länder / coporate bodies
(professionals, providers, insurers )
•
Hospital care (mix public, private, budget) – ambulatory care
(private office based physicians, FFS)
University of Navarra
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Prof. Magdalene Rosenmöller
The German system at a glance ...
Financing Institution
Third-party payer
ca. 300 sickness funds
with self-government
organised in associations
not (health) risk-,
but wage-related
contributions
Choice of fund
since 1996
Strong
delegation
Contracts,
mostly collective
& limited
governmental control
Free access
Population
Providers
Public-private mix,
SHI insures 88%
(75% mandatorily,
13% voluntarily)
University of Navarra
organised in associations
adapted from
Reinhard Busse, TU Berlin
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Germany: challenges
• Strict separation between ambulatory and hospital
(inpatient) care with different regulatory environment
and rules
• Financial incentives vary between sectors and are
changed frequently – solutions to old problems create
new ones
• Moving between funds, young and health è less
mixed risk adjustment fund
• Quality and Cost Effectiveness (WHR 2000 #27 in
terms of performance (efficiency)
University of Navarra
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Prof. Magdalene Rosenmöller
Problem 1: Strict separation between ambulatory and hospital
(inpatient) care with different regulatory environment and rules
Representation
Federal Parliament
Federal Assembly
(Bundestag)
Federal Council
(Bundesrat)
State Ministries
responsible for health
Supervision
Legislative frame
Enlistment in hospital plans
Proposals
for health
reform acts
Federal Ministry
of Health
Obligation to secure hospital care
Insuree/ Patient
Ob
liga
Fre
tion
edo
to tr
m to
eat
cho
ose
Federal Association of SHI
Physicians
Supervision of country-wide funds (via Federal
Insurance Office)
Sickness fund
Sickness funds in one region
Hospital
16 Regional Hospital
Organizations
Federal Hospital
Organization
Supervision of regional funds
Supervision
Supervision
Fed. Com. of Physicians and
Sickness Funds: Decisions on
ambulatory benefits
Supervision
Financial
negotiation
Financial
negotiation
Supervision
Freedom to choose
re
ecu
to s re
tion ry ca
to
liga
Ob bula
am
Physician
23 (Regional) Physicians’
Associations
Obligation to contract
eat
ose
to tr
cho
tion
m to
liga
edo
Ob
Fre
Federal associations
of sickness funds
Coordinating Committee
Valuation Committee:
Setting of relative point values
Fed. Com. for Hospital
Care: Decisions on
in-patient benefits
DRGs: Decision about
types and valuation
Statutory health insurance 2003
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University of Navarra
Problem 2:
Financial incentives vary between sectors/providers / frequent changes
„Solutions“ to old problems create new ones
Voluntary private insurance
premiums 8.3%
Private health and
long-term care insurers
Reimbursement of patients (pharmaceuticals, amb.
care) or payment to providers
Contributions 57.0%
Statutory sickness funds
Payment to providers, sick pay to patients
Contributions 7.0%
Statutory long-term care funds
Payment to providers,
cash benefits to patients
General taxation 7.8%
Federal and state governments
Public health services 0.8%
Ambulatory nursing care providers 2.7%
Investment & salaries
Fee for service
Co-payments and nonreimbursed health
expenditure 12.3%
Per diems
Population and
employers
Patients
(and private organisations)
Nursing homes 7.0%
Public, private non-profit and private
for-profit hospitals
27.4%
SANIT - System Comparison
Per diems, case and procedure fees
plus fee for service
Prices
Pharmacies 13.7%
Dentists 6.5%
Ambulatory care physicians
13.6%
University of Navarra
Investment
Investment
Per diems, case and procedure fees
Fee for service
Fee for service (via Dentists’ associations)
Fee
for
service
Physicians’ associations
Mainly capitation
Fee for service
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Prof. Magdalene Rosenmöller
Problem 3 (actually No. 1):
Increase of contribution rate
Background: no tax subsidies;
sickness funds are
not allowed to incur deficits
Sub-problem:
sickness funds did go into debt –
estimated to be up to €10 billion
(< 1 monthly expenditure)
Expenditure
= contribution rate
Contributory income
(wages up to threshold; pensions;
50% of wages for unemployed ...)
Sharp increases (1991-93; 2001-03)
have always triggered major reforms!
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University of Navarra
Responses: ongoing Reforms
Reform act
Year
Health Care Reform Act 1989 ("First step")
1988
Unification Treaty (extension of SHI to eastern part) 1991
Health Care Structure Act 1993 ("Second step")
Introduction of Long-term Care Insurance
1992
1995
Health Insurance Contribution Rate Exoneration Act
1996
1st & 2nd Statutory Health Insurance
Restructuring Act (“third step")
1997
Act to Strengthen Solidarity in Statutory
Health Insurance
1998
Reform Act of Statutory Health Insurance 2000
University of Navarra
SANIT - System Comparison
1999
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Prof. Magdalene Rosenmöller
Solutions: latest developments
• Restructuring financial incentives
• Disease Management Programmes
• The SHI Modernisation Act 2003
– Funding basis – to entire population?
– from income based to per-capita?
University of Navarra
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United
Kingdom
University of Navarra
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Prof. Magdalene Rosenmöller
Spain
University of Navarra
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UK Health System: Main
Characteristics
• Devolution responsibility to countries, then to
local bodies.
• Tax based funding
• Primary care by GPs, multiprofessional teams
in health centres (capitation)
• Public hospitals, independent trust status
• Little private care to private insured and direct
pay
University of Navarra
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Prof. Magdalene Rosenmöller
UK: Last Developments
•
Health policy = high profile
•
Recognised that health care has been under funded
– è 9% of GPD (??),
– increase NHS workforce numbers
•
Long waiting lists for hospital appointments, poor quality of
hospital buildings è contracting services in France / Belgium
•
NICE - National Institute for Clinical Excellence
•
Development of DRG – health related groups
•
Responsibility for purchasing to be passed from health
authorities to primary care trusts / local health groups, = main
purchaser of health services
•
Modernisation Board, Commission for Health Improvement
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University of Navarra
Exercise
• Decide in which system would you prefer to become
sick? Why?
• Draw a scheme describing the Chinese system and its
characteristics – and what is desirable?:
– Who benefits and what are the benefits?
– Who pays and how much?
– Who collects the money and where does it go?
– How much is it spent and on what?
– How do patients access services?
– Describe a typical patient journey through the system
– What are the major challenges?
• Definition of the Hospital
– what are the basic elements?
University of Navarra
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Prof. Magdalene Rosenmöller
Bismarck vs. Beveridge
• Contributions
• Wages
• Defined (explicit
rationing)
• Occupational insurer
• Independent
management
• AWP contracts/
reimbursement
• Citizenship/ resident
• All income
• Comprehensive
(implicit rationing)
• State Insurer
• State control
• Integrated providers
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University of Navarra
Poor relief/charity
Mutuality
Voluntarism
Destitute
Roman / Greek
Guilds
Middle ages
Blue collar workers Early industrialization
Corporatism
Employees
Late industrialization
Universalism
Citizens
Post WW-II
University of Navarra
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Prof. Magdalene Rosenmöller
Comparison: Collection of Funds
Source: WHO HITs– Health Care in Transition Profiles
University of Navarra
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Comparison: Reimbursement Systems
University of Navarra
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Prof. Magdalene Rosenmöller
Coverage (percentage of population
with public/social insurance/ type)
Private insurance (percentage of
population with private insurance/
type)
Benefits defined? By whom?
Main taxes/ contributions
Other contributions/ taxes
Germany
United Kingdom
88%
100%
9% (substitutive); approx.10% of
SHI members (supplementary
and/or complementary)
Yes. Generic terms in Social Code
Book V. More detailed benefits in
ambulatory care are defined by
Federal Committee of Physicians
and Sickness Funds. Hospital
benefits to be defined by Federal
Committee of Hospitals and
Sickness Funds in future.
Varying by fund: Employer 6.75%
mean, Employee 6.75% mean 10%
rate for people earning below EUR
322. employer only.
No
11.5% (complementary and
supplementary)
Ceiling on contributory income
Yes. DEM 6525 monthlyincome in
2001
Determines contributions/ taxes
Individual funds subject to approval
by Länder (regional) government or
Federal Insurance Office
Individual funds
No. Sectoral budgets
Risk-structure compensation
mechanism at the federal level (for
>90% of income)
Collection of contributions/ taxes
Global budget (frequency)
Mechanism for national pooling or
financial risk sharing among funds
No for medical services. Except
where the decisions of NICE make
explicit the inclusion/ exclusion of
certain drugs or services. Negative
list of drugs (Section 8a Drug Tariff)
Income tax bands (10%, 22%, 40%)
VAT (17.5%)
National Insurance contributions
Employer 11.9% Employee 10%
Yes for national insurance
contributions Employee Lower GBP
87, upper GBP 575 Employer Lower
GBP 87, no upper
Treasury
Inland Revenue
Yes. 3-year cycle
Risk adjusted allocations to health
authorities/ health boards and in
future direct to loca l purchasers
(e.g. PCTs)
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University of Navarra
Payment - Incentives
Payment method
Advantages
Disadvantages
Budget
Allows strong control
Predictable expenses
No direct financial incentive for
efficiency
Provider may under-provide
services
Capitation
Predictable expenses
Provider has incentive to operate
efficiently
Eliminates supplier-induced
demand
Low administrative costs
Financial risk may “bankrupt
“provider
Provider may under-provide
services
Fee-for-service
Increase health productivity
Cost-escalating: strong
incentives for induced demand
High administrative costs
Case Based
Strong incentive to operate
efficiently
Provider has incentives to select
low-risk within case categories
Less suitable for outpatient care
University of Navarra
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Prof. Magdalene Rosenmöller
Responsiveness – Internal Incentives
WHO 2000
University of Navarra
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Pooling to redistribute risk, cross-subsidy for greater equity
University of Navarra
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Prof. Magdalene Rosenmöller
Health System Financing and Provision
University of Navarra
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Health System Financing and Provision
University of Navarra
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Prof. Magdalene Rosenmöller
Financing
STEWARDSHIP
Revenue Collection
Fund Pooling
Purchasing
Provision
Personal
Health Services
Non-Personal
Health Services
RESOURCE GENERATION
Functions of a health system
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University of Navarra
Provider Payment mechanism and
provider behavior
Source: WHO Health Report 2000
University of Navarra
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Prof. Magdalene Rosenmöller
Exposure of different organisational
forms to internal incentives
University of Navarra
Source: WHO Health Report 2000
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Exposure of different organisational
forms to external incentives
University of Navarra
SANIT - System Comparison
Source: WHO Health Report 2000
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Prof. Magdalene Rosenmöller
Objectives
• Efficiency
– Allocative efficiency
– Technical efficiency
• Equity
– Progressivity
– Equity of access
• Responsiveness
– Accessibility
– Choice
• Sustainability
University of Navarra
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University of Navarra
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Prof. Magdalene Rosenmöller
University of Navarra
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University of Navarra
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Prof. Magdalene Rosenmöller
Data Exercise
OECD Health Data Base
http://www.oecd.org/EN/document/0,,EN-document-12-nodirectorate-no-1-29046-12,00.html
WHO – Europe HFA
Health for All Database
http://hfadb.who.dk/hfa/
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University of Navarra
Thanks!!
University of Navarra
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