a sustainable health system ii

A sustainable health system (II)

Madrid

17 July 2012

Círculo de Empresarios

Index

1. Executive summary 5

2. 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 24

3. 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 42

4. 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 59

5. Proposals by Círculo de Empresarios 63

Governance of the NHS 63

Supply 66

Demand 68

6. Appendices 71

7. Bibliography 73

8. Recent publications by Círculo de Empresarios 77

A sustainable health system ( II )

5

1. Executive summary

The provision of health coverage under universal conditions has been one of the great

achievements of the National Health System (NHS) and has been a determining factor in the

favorable evolution of Spain in recent decades. Círculo de Empresarios believes it is essential

to guarantee the existence of an NHS which has enabled access by the population to a wide

range 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 health

policies 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 universal

coverage models are not always in line with this integrated scheme. The NHS reaches a degree

of universality similar to that of other OECD countries with different models. The NHS is

perceived as a cornerstone of the welfare state and is positively valued, although the need for

change has become evident. The system is valued more for medical care than in terms of user

participation.

Círculo de Empresarios believes that one must emphasize that other public and

universal systems within the OECD include mechanisms of co-responsibility of demand

(users) and of supply (professionals and businesses), enable the user to choose (occasionally, at

a 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 is

directly assumed by the citizens, aside from insurance policies (public and private) and

copayment schemes.

Universal coverage is linked to a benefits portfolio. In Spain there are geographical

differences between the benefits resulting from the various interpretations of the items in the

common services portfolio and the creation of complementary portfolios. Criteria of necessity

or utility have not always prevailed in the introduction of treatments, nor has there been a

systematic and transparent policy of underfunding thereof based on cost-effectiveness.

Once the transfer of health services to the Autonomous Communities was completed in

2002, the coordination has been articulated by way of the Inter-territorial Council for the

National Health System, where decisions are taken by consensus, resulting in a governance of

the system with ample room for improvement and economic effects which, in the opinion of

Círculo de Empresarios, are undesirable.

Key structural factors

6

HNS services are free of charge at the point of provision, and are provided at two care

levels (primary and hospital & specialized). This is a model geared for the treatment of acute

cases, when a system geared for chronic cases is required as, very gradually, some

Autonomous Communities are beginning to consider.

Most of the NHS service suppliers belong to the public sector and the prevalent

governance model is that of direct management or similar. Indirect management forms are

also used by way of agreements. The Autonomous Communities have been gradually

introducing new health care formulae which, whilst maintaining the public nature of the

system, are seeking new levels of efficiency, funding or risk transfer to the private sector. But

the “new forms of management”, still a minority, are not articulated on the basis of a national

policy of analysis and comparison of results and encouragement of new formulae, over and

above 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, but

between 2000 and 2009 the real public health expenditure per inhabitant experience a

cumulative increase of 42%. Additionally, according to the IMF, in 2030 the health expenditure

in terms of percentage of GDP in Spain will be 1.6pp above that of 2010 (this would mean that

the net present value of the increase in health care expenditure would account for over 50% of

the current GDP). On its part, the Spanish government expects an increase between 2010 and

2050 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 important

budgetary challenge than that, for instance, presented by pension. All the foregoing, without

taking 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 all

system participants. Aging is not the only or the most important, determining factor in health

care 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 health

care expenditure goes towards personnel costs and 25.5% towards pharmaceutical products via

prescriptions (19%) or hospital dispensation (6.5%). Between 2002 and 2009 hospital and

specialized services have gone from 53.4% to 55.9% of total cost. Primary health services

accounted in 2009 for 14.9% of expenditure, having slightly reduced their share of the overall

cost. Prevention and public health activities merely account for 1.5% of the public health

expenditure and their weight has hardly changed in the last decade. This evolution is not, in

the opinion of Círculo de Empresarios consistent with the factors which determine health

care cost.


7

Additionally, there are substantial differences in expenditure by inhabitant among

Autonomous Communities due to disparities in public funding, different preferences among

users between public and private services, and various options of the governments in regard to

public, agreed or private provision of services. Attention must also be paid to the different

speeds at which this expenditure is adjusted among Autonomous Communities. The impact of

the budgetary adjustment on equal access to health services must be watched over from a

geographical perspective.

As for the health care key factors which have an impact on the sustainability of NHS

expenditure, available evidence suggests that measures design to introduce competition and

user choice (supply measures) are the ones which have the most impact on containment of

health care cost, ahead of budget ceilings and the improvement in public management and

coordination and demand rationalization measures. But, in particular, the evidence indicates

that 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 of

centralized accountability of a decentralized system, the improvement of availability of public

information on the NHS and the inter-operability of regional information systems. Moreover, it

advises the encouragement of assessment mechanisms and the integration into one single

independent body of the central government network of institutions and the Autonomous

Communities, currently devoted to the assessment of health care technologies.

As for supply, greater autonomy and accountability for the managers, the flexibilization

of the statutory condition of health care personnel and the encouragement of integration

between health care levels and hospitals are all advocated. The importance of the introduction

of competition and guaranteed user choice are also emphasized, so that patients are treated

more like customers than as users.

Lastly, in terms of demand, the use of the system must be rationalized by means of user

co-responsibility for health care costs. This can be achieved by implementing joint payment

systems (co-payment) or via the promotion of preventive health campaigns. Finally, Círculo de

Empresarios estimates that the generation of revenues not strictly associated with basic health

care should be encouraged.

Some of the foregoing considerations are shared by a large part of NHS experts and

analysts. The recent health care reform has made inroads, within the competency limits of the

government and financial conditioning, in some of these.

Key structural factors

8

In any event, Círculo de Empresarios believes that the problem is not just one of diagnosis

but of governance of the NHS. The aim is therefore not whether competencies pertain to one or

another agent, but that decisions affecting the whole can be taken by a majority. In order to

reform, indeed, a diagnosis is required. But in order to implement, an improvement in the rules

of governance becomes necessary. In this regard, Círculo de Empresarios believes that the

governance of the system should be examined closely, not in terms of centralization of

competencies but in terms of the enforceability of the decisions made by a majority of its

participants.


9

2. Structural key factors

2.1. The architecture of the national health systems

Health systems in the OECD exhibit different kinds of architecture, but in most cases

they have a common foundation: universal and equal access to health care benefits. This is

also 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 others

have different configurations. In Spain, there is an integrated public model where both the

funding for the provision of health care and the purchase and provision of health care services

are of an essentially public nature.

Public insurance and universal coverage models are always based on this integrated

scheme. There are models which, on the basis of public funding, rely more on competition and

the 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 which

determine the needs of the consumers. Despite the fact that the performance of the service is observable, users are not always able to establish the

need for the service, nor reliably assess performance and cost thereof. This circumstance can give rise to opportunist behaviors by the suppliers.

Key Financial Factors of the NHS

10

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.


11

insurance premium. In order to guarantee universality, all individuals are obliged to be insured by the

basic package. They pay a lump sum premium to their insurance company of choice and their employer

withholds social security contributions from the salary. Lower income insured parties receive government

subsidies.

The insurance companies are private and the insured party has freedom of choice (a change after

one year is allowed). These must accept all residents in their coverage area. In order to compensate

insurance companies for not being able to select the risk to be covered, compensations are established by

means of the Health Care Insurance Fund. The insurance companies send the premiums charged to this

Fund, which also receives salary contributions. Then the premiums (and contributions) are redistributed

among the insurance companies according to the original decisions made by the consumers, adjusted by

criteria 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 insured

party 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 funding

guarantees universality and a safety net for illegal immigrants. Complementary health care by means of

private insurance, is voluntary, with no public support and risk is freely covered or not by the insurance

company. 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 limiting

referrals to specialists. A medical referral must be obtained before consulting a specialist, except in acute

conditions 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 insurance

companies to negotiate the prices of hospital services.

The models which have been articulated on the basis of public control span from those

without access filters and broad user choice mechanisms (Sweden) to those which do use filters

to access health care services. Among the latter, some countries are subject to a lax budgetary

restriction and offer a limited choice of suppliers (Denmark or, to date, Spain) and others

maintain the ability to choose among suppliers, but with strict budgetary restriction (United

Kingdom).


12

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 Netherlands

Japan United Kingdom

Sweden

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).


13

Graph 1

Unit cost by type of funding in 2009

6.2 5.5 84.7 The Netherlands

10.5 1.1 84.1 United Kingdom

16.7 81.5 Sweden

15.8 2.4 80.8 Japan

7.3 13.3 77.8 France

19.7 1.0 77.9 Italy

13.1 9.3 76.9 Germany

12.3 11.0 75.0 Ireland

19.0 2.1 74.7 Finland

20.1 5.4 73.6 Spain

27.7 72.1 OECD

27.2 4.9 65.1 Portugal

30.5 8.8 59.7 Switzerland

47.8 4.0 48.3 Mexico

12.3 32.8 47.7 USA

34.0 18.6 47.4 Chile

Public Administrations Private Sector Private Insurance Private Other

Source: OECD

The percentage of expenditure pertaining to private insurance is on the increase and is

currently slightly above 5%. Expenses met directly by citizens aside from public or private schemes

account for one fifth of the total amount of health care expenditure, above that in other European

countries, despite co-payment being used to a lesser extent in Spain than in such countries (of the 20.1

points 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 by

direct payment aside from public or private insurance schemes, health care cost per inhabitant tends

to 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 if

they had to pay directly for them4.

4 This is the problem known as moral risk, common to other sectors of insurance.


14

Graph 2

Private health care expenses (payments from households in addit ion to insurance) and hea lth care per inhabitant in 2009 .

% of pr ivate hea lth care cost over private overall total health care cost

Health care cost 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 = F IN

NZL = NZL

SUE = SWE

BEL = BEL

SUI = SWI

RU = RU

ISL = ICE

IRL = IRE

FRA = FRA

CAN = CAN

LUX = LUX

ALE = GER

HOL = NET

DIN = DEN

NOR = NOR

EEUU = USA

AUT = AUT

Source: OECD


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In Spain, the perception of the NHS as a basic component of the welfare state is deep-rooted

among the citizens. The general view held by users on the health care system is that it works

although, as the Economic and Social Council points out, there is an awareness of the need to address

changes5 (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 problems in Primary Care center (women)

7.1 7.0 7.0 7.0 7.1 7.3

Satisfaction* with information received on health condition in specialist consultation

6.9 6.9 6.9 6.9 7.0 7.1

*(1-10) Source: Ministry of Health

The Swedish consulting group Health Consumer Powerhouse has prepared an Index of European

Health 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, 2012

On 34 countries

Position

Index 2012

Global 24

Subcategories:

1. Patient rights and participation 28

2. Accessibility 33

3. Results 11

4. Prevention 16

5. Access to medication and technology 13

Source: Health Consumer Powerhouse

In 2012, according to this source, the Spanish system ranked 24th among the 34 European countries

analyzed (22nd position in 2009). Spanish health care falls behind in terms of transparency and patient

participation. In terms of waiting lists, Spain is the second before last, only preceded by Norway and on a par

with Sweden. As for patient rights, the results are likewise not positive: Spain is the fifth from the last. Spain fares

better in the three more medical categories: 11th in results, 16th in prevention and 13th in access to medication and

technology.

System coverage

General Health Care Law 14/1986 establishes the right to health care for all Spanish citizens and

non-Spanish citizens residing in the national territory. It also sets forth that access and health care

5 See CES, 2010 or Health Care Barometer CIS-Ministry of Health


16

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 insurance in main OECD countr ies

% of populat ion covered

Denmark 100.0 Fin land 100.0 Greece 100 .0 Ireland 100.0 Israe l 100.0 Italy 100 .0 Japan 100.0 Norway 100.0 Portugal 100 .0 Sweden 100.0 Switzerland 100 .0 United Kingdom 100 .0 Germany 89.2 10.8 France 99.9 Belgium 99.5 Austria 99.0 The Netherlands 98.8 Poland 97 .6 USA 26.4 54 .9 Turkey 80.8 Mexi co 74.0 Chi le 73 .5

Public coverage

Primary coverage by pr ivate medical insuran ce

Source: OECD

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.


17

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 part

of human capital which, in turn, determines an economy’s capacity for growth. In this regard, health care

expenditure is, to a large extent, an investment which generates significant returns, as shown herebelow by the

estimates of the Milken Institute referring to the US. Health care cost is not the main cost arising from lack of

health.

Total cost of chronic diseases , US 2003 Total cost of treatments: 277,000 Total economic losses: 1,047,000 Heart attack 13,000 22,000 Diabetes 27,000 105,000 Lung diseases 45,000 94,000 Heart diseases 65,000 105,000 Mental conditions 46,000 171,000 High blood pressure 33,000 280,000 Cancer 48,000 271,000 Billions of dollars Source: Milken Institute

The conclusions reached in a study carried out by researchers at Oxford University8 indicate that

cardiovascular diseases accounted in 2003 for a cost in Spain of almost 7 billion, and 169 billion in the whole

of the EU, of which only 62% pertains to health care. Of the 7 billion of estimated cost in Spain, 4 billion pertain

to health care costs incurred in the treatment of diseases, whereas the remaining 3 billion are distributed between

productivity losses due to disease or early mortality and care provided to cardiovascular patients by relatives and

friends.

On the other hand, universal coverage is related to the definition of the services portfolio.

The regulation of the catalog of NHS services9, until the recent reform, has been based on the

establishment of a broad common portfolio of services, with equal access to all, irrespective of the

8 See “Economic burden of cardiovascular diseases in the enlarged European Union” José Leal, Ramon Luengo-Fernández, Alastair Gray, Sophie

Petersen, 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 care

services provided by the NHS with public funding, health care for which payment is to be claimed to third parties obliged to assume payment

and health care services which are not funded with public funds, and Royal Decree 1030/2006, of 15 September, which reviews the portfolio of

common services of the NHS and additionally considers a portfolio of complementary services established by the Autonomous Communities.


18

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


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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 system15. 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 performs

its 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 for

coordination, cooperation, communication and information on the health services, with each other and the State Administration, aiming to

promote 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, the

Court of Auditors made a highly critical reference to such problems in regard to the purchase of medications and pharmaceutical products in 15

NHS hospitals. A recent study analyzed 70 tenders sent out over 3 years for the purchase of “skin staplers” in public hospitals, where prices

ranged 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 unit

price. The same degree of variability was found in regard to the purchase of a particular medication (ribavirin). Given that chapter II (on current

costs of goods and services) accounts for 25% of the hospital budget, the authors of the report believe that by improving and coordinating

purchasing 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”. The

centralization 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 majorities

adapted to the type of decision made and others designed to prevent institutional paralysis.


20

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.


21

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 care

levels, as well as an absence of co-responsibility in the management of resources between primary

and 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 estimated

that for health care provided in cardiac units to be of quality, safe and efficient, cardiovascular surgery units must be available only in those

hospitals which carry out at least 400 annual percutaneous coronary interventions. In addition, at least 600 major cardiac surgery operations

should be carried out in each year each year. Report from the Spanish Cardiology Society (SEC), the Spanish Thoracic-Cardiovascular Surgery

Society (SECTCV) and the Spanish Association of Cardiology Nursing (AEEC).


22

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


23

from clinical professionals (encouraging innovative ideas from professionals in order to improve the quality of

primary health care, health care processes and daily practice).

Provision of services

Most of NHS service providers belong to the public sector and the predominant governance

model is that of direct management or similar. The main tool used in this model is that of the

program-contract. There are no penalties established for non-compliance of targets, and risk is not

usually transferred to suppliers.

There are other forms of health care provision management, which may also be considered to

be 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 autonomy19.

Other forms of indirect management or subcontracting are also used, such as the provision of

additional diagnostic tests and outpatient procedures, by third party agreement. The public system

subcontracts to private hospitals the provision of specialist health care services: for instance, high

resolution diagnosis or outpatient surgical procedures as part of managing waiting lists; home

provision of respiratory therapies, dialysis or rehabilitation; or one-off third party agreements to

provide health care to a population sector by means of private hospitals (Madrid – Fundación Jiménez

Díaz –, 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 adjustment

situation.

But the landscape in matters of health care management is not a static scenario. The

Autonomous Communities have gradually introduced new health care management formulae

which, while maintaining the public nature of the system, offer greater levels of efficiency, funding or

even transfer of risk from autonomous health care systems to the private sector. The risk transferred is

quite varied: it can be that inherent to health insurance activity, technological risk or that pertaining to

the design, construction or maintenance of hospitals, for example20.

Some Autonomous Communities have resorted to administrative concessions for the provision

of 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 fact

that the last strategic plan of the Insalud considered the transformation of hospitals into Public Health Care Foundations to provide them with

greater 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 of

medication (payment is subject to clinical results or cost effectiveness), there have been some recent initiatives in Autonomous Communities such

as Andalusia or Catalonia which have sought to transfer the risk to suppliers.


24

• 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.


25

3. Public Control: the concession holder is subject to the clauses set forth in the specifications. The

Administration has the power to control and inspect, as well as regulatory and disciplinary powers. The

Administration has permanent control over the concession holder via the commissioner of the Health Care

Department, 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 cannot

obtain a return over and above 7.5%. In the event this percentage is exceeded, the surplus is used towards

making investments in the Department. The concession holder assumes the cost of statutory personnel dependent

on the Administration, which is billed at total cost plus Social Security. The towns of Alzira and Sueca has a

medical specialty center which was taken over by the hospital, including its personnel. Most of the physicians

decided to form part of the company structure and entered into employment contracts. By contrast, a high

percentage of nursing professionals decided to keep their status as statutory, albeit forming part of the hospital

staff.

This public-private collaboration helps to boost choice and competition. For instance, under

the 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 the

Central Clinical Laboratory of Madrid23 or the project of the Radiotherapeutic Oncology of Gran

Canaria.

Table 3

With clinical management

Building+Equipment+Maintenance

+ Non-medical services

+ High technology

+ Specialist health care

+ Primary health care

+ Social and health care

23 This is located within the Hospital Infanta Sofía in San Sebastián de los Reyes and also provides service to five other Public hospitals and their

primary care catchment areas. It provides coverage (along with its six peripheral laboratories) to over 1,100,000 citizens in areas of clinical

analysis, biochemical analysis, hematology, genetics, microbiology, etc.


26

Table 3

Some Administrative concessions in Spain

No clinical mgmt.

Baix

LLobregat

Source: Ribera Salud

Majadahonda Burgos Valdemoro,

Torrejón,

Móstoles ,

Collado-Vi l lalba

Alzira, Torrev ie ja,

Denia, Manises,

Elche

Manises

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 funded via PFI. See Pablo

Vázquez, 2006.


27

Son Espases Hospital awarded in 2010 the respiratory care equipment (3.8 million) and image

diagnosis 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 out

in 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 and

encouragement of the best formulae, beyond the establishment of the legal framework25 to develop

them.

On their part, voluntary private insurance policies play a relatively lesser, albeit increasingly

relevant, part in the Spanish health care system. They are independent from the public system and

of an additional nature.

The non-profit private sector is present in the health care provision for occupational accidents

and 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 (Mutualidad

General de Funcionarios Civiles del Estado), MUGEJU (Mutualidad General Judicial) and ISFAS

(Instituto Social de las Fuerzas Armadas) exclusively provide insurance coverage to civil servants

and their beneficiaries (4.8% of the population). They are financed by a mixed system of salary

contributions and taxes. Civil servants are the only group which can waive coverage of the National

Health System, electing fully private health care services, which is an option chosen, for instance, by

85% of the MUFACE mutualists. MUFACE, with 1,083 million euros, accounts for 67% of these

mutual insurance premiums in 2011 and the amount of claims paid to the insurance companies was of

1,042 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 be

provided 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.


28

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 “,”


29

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 in

Spain 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 is

citizen income: health care consumption grows with user income. Therefore, Spain’s position

can be more clearly perceived if the GDP levels per inhabitant are considered (graph 5).

Graph 5

Health care expenditure and GDP per inhabitant

Health care expenditure per inhabitant ($ PPP)

EEUU = USA

NOR = NOR

LUX = LUX

SUI = SWI

HOL = NET

DIN = DEN

CAN = CAN

AUSTRI = AUS

ALEM = GER

BEL = BEL

IRL = IRE

AUSTRA = AUS

FRA = FRA

SUE = SWE

RU = UK

ISL = ICE

ESP = SPA

ITA = ITA

FIN = F IN

NZL = NZL

JPN = JAP

GRE =GRE

ESLN = SLO


30

POR = POR

ISR = ISR

ESLQ = SLOV

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).


31

Graph 6

Evolution of the real health care per inhabitant

Cumulative growth (Base 2000 PPP $)

170.0% 160.0% 150.0% 140.0% 130.0% 120.0% 110.0% 100.0%

France Japan The Netherlands

Spain Sweden United Kingdom

(Base 2000 PPP $)

Source: OECD and own preparation

Average annual growth 2000-2009 in %

Portugal 1.5 0.5

Italy 1.6 -0.2

Switzerland 2.0 0.7

Germany 2.0 0.6

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 inhabitant

Outlook and determining factors for growth in health care expenditure

There are various projections on the future of health care expenditure (table 4).

Table 4 Projections on the increase of health care expenditure as % of GDP Body EC OECD IMF Scenario Period 2007-2060 2005-2050 2010-2050 Stabi lity Program Countries European Union OECD Advanced 2012 Central scenar io 1.5pp - 3.0pp - Confidence interva l 0.7-2.4pp 2.0-3.9pp 2.1-4.1pp - Central scenar io (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 than

on pension systems in the coming decades (table 5). In 2030 the cost health care as a percentage

of GDP in Spain will be 1.6pp higher than in 2010. The growth is much lower than that expected

in the United Kingdom, Portugal and, above all, the US (5.1pp, which is three times the growth

of 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 current

GDP 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 5

Structural f isca l indicators

% GDP, unless otherwise indicated

Variat ion in cost of

pensions 2010-2030

Net present value of the

variat ion in cost of

pensions 2010-2050

Variat ion in the cost

of health care

2010-2030*

Net present value of the

variat ion in the cost of

health care

2010-2050*

Gross funding

needs

2012

France 0.1 -0.7 1.5 43.8 18.2 Germany 1.1 30.4 0.9 28.1 8.9 Greece 0.3 21.0 3.2 106.9 Italy -1.6 -33.7 0.6 18.8 28.7 The Netherlands 2.4 58.5 2.6 79.3 14.9 Portuga l 0.7 21.4 3.5 116.5 26.7 Spain 0.5 33.6 1.6 51.5 20.9 United Kingdom 0.4 12.7 3.3 113.3 14.8 United States 1.7 37.9 5.1 164.5 25.8


32

* 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 annual basis in mi ll ions of euros Estimated

savings Measures Reform of NHS insurance, cit izens from other countr ies 917 Organization of NHS serv ice portfol io 700 Improvement in the eff ic iency of the heal th care offer ing 1,500 Rational izat ion of the demand for pharmaceutical products: Prescript ion of generic drugs , modif icat ion of reference pr ices 3,550 Organization of Health Care human resources 500 Rest of measures 100 Total 7,267 Source: Hea lth Ministry


33

In addition, the Health Care Guarantee Fund is created as a compensation fund for the

Autonomous Communities spending more than the amount estimated in provision of health care for

foreigners in the country entitled to health care in their countries of origin, patients referred between

Autonomous Communities and care provided to patients when moving within the NHS territory. Other

measures include the rationalization of the pharmaceutical supplies (the application of reference prices to

equivalent therapeutic groups, the additional encouragement of use of generic drugs, or the withdrawal of

funding from drugs with low therapeutic value or very low market prices, except for those in the lowest

income brackets; and the organization of human resources in the health care area, improving mobility and

establishing a catalog of conversion levels in professional categories.

According to available literature, the factors which determine the growth in health care

expenditure 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 6 Main applications of the Technological Innovations in health care

Personalized medicine Enables the personalized and individualized tracking of each patient according to genetic

profile, identifying conditions prior to onset, and providing early treatment

Imaging Diagnostics Improves diagnosis of diseases. Main development: integration of PET and CT systems to

provide more accurate methods of identifying and classifying tumors

Nanomedicine

Enables development of more effective materials to prevent, predict, diagnose and treat

prevalent and very costly diseases: cancer, myocardial infarction, diabetes, Parkinson or

Alzheimer

Biomaterials

Priority area in the European Union, Japan and the US.

Main lines of research:

• “Third generation” b iomaterials: the body’s own genes control tissue repair

• Implants which can cope with mechanical functions immediately after having been implanted

• Intelligent materials for controlled release of drugs, 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 loss

Program for Overall

Chronic Disease

Management

New models of care based on a system of continued and coordinated services,

encouraging patient involvement in disease management

Telemedicine

Enables interconnection with professionals with different centers, provision of better

diagnoses and treatments and patient follow-up without requiring such frequent physical

presence in health care centers

Minimally invasive

surgery (MIS)

Shortens post-surgical period and hospital stay, reducing health care costs and waiting

lists

• USA: 10% of 15 million surgical procedures each year are performed using these


34

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.

Information systems

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

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 health28; “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.


35

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 is

important to underline that, to a certain extent, these are not exogenous. In other words, the

factors determining the growth in health care cost are associated with all participants in the

system (citizens, industry, health care professionals and managers), and therefore health care

policy 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 the

economic 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% to

pharmaceutical products via medical prescriptions (19%) or hospital dispensation (6.5%). Both

expenditure 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”.


36

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


37

Total employed EPA (Active Population Poll)

Source: INE

ES NECESARIO MODIFICAR LAS COMAS “,” DE LAS CIFRAS POR PUNTOS “.” EN LOS NÚMEROS DE ESTA

TABLA.

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).


38

Graph 9

Annual average growth in pharmaceut ical cost per inhabitant 2000-2009

Ireland OECD Japan Spain Portugal Switzer land Italy

-0.5 0.0 5 .0 10 .0 15 .0

Year on year variat ion rate in pharmaceutical cost in NHS

Source: Ministry of Health

The application of measures since 2010 to reduce pharmaceutical

expenditure has led to a drop in prescription cost of 10.9% in 2011 over that

of 2009. In spite of the increase in the number of prescriptions, the reduction

in the average cost per prescription has led to an overall drop in the cost

(table 6).

Table 6

Evolut ion of public pharmaceutica l cost (pharmacy outlets)

Cumulat ive December 2011

Cumulat ive December 2009

% var iat ion 2011/09

Expenditure (mi l l ions of euros)

11,136.4 12,505.7 -10.9

Prescript ions (mil l ions) 973.2 934.0 4.2 Average cost per prescript ion

11.4 13.4 -14.6

Source: Ministry of Health, Social Services and Equality

Spain is approximately 50% below the Eurozone average in terms of co-

payment per inhabitant and percentage of pharmaceutical public

expenditure. The average co-payment per prescription billed (57.7 million)

was of 83 cents of a euro in 2010, the lowest amount in the last decade.

In 2010, the total revenue collection of Spain by way of beneficiary

contributions through purchase of medications in pharmacy outlets

amounted to 790.9 million euros, which is 6.48% of the public

pharmaceutical cost of that year.


39

Graph 10

Co-payment / Public pharmaceut ical cost in Eurozone countr ies, 2009

%

Estonia 54.2

Fin land 42.1

Slovenia 39.3

Slovak ia 38 .9

France 25 .0

Belgium 17 .3

Austria 14.7

Eurozone 12.0

Ireland 9 .6

Italy 7 .0

Spain 6 .3

Germany 5.1

The Netherlands 0 .8

Source: Farmaindustria

The savings in public pharmaceutical expense can be obtained directly via co-

payment, as well as indirectly, by encouraging co-responsibility in the use of

medications. In fact, at MUFACE pensioners pay 30% of medications and the

pharmaceutical expense is 25% lower.

The use of policies of containment of pharmaceutical cost, mainly by means of price

intervention and the promotion of generic drugs, is immediately reflected in the CPI

(graph 11).


40

Graph 11

CPI. Genera l index and hea lth care indexes Base 2011

General Index Medic ine (Group) Medica l serv ices and s imi lar (Heading)

Medications, other pharmaceutical products and therapeutic material (Heading)

Yearly average

Source: INE

• Expenditure in primary & hospital care and prevention: Hospital and specialist

services appear to be the most dynamic in terms of evolution of their share of public

health care expenditure, having experienced an increase of 2.5pp, going from 53.4% to

55.9% of overall cost. Primary health care services accounted in 2009 for 14.9% of the

expenditure, having slightly reduced its share of the total cost. Prevention and public

health activities merely account for 1.5% of public health care expenditure and the

share thereof has hardly varied over the last decade.

This evolution is not in line with the factors determining health care expenditure and

the fact that the effect of such factors can be restricted. The impact of the cost of the

aging of the population can be limited by promoting certain habits, the increasing

prevalence of chronic patients can be dealt with in a more cost effective way, via

primary health care to reduce hospital care, for example. In this regard, initiatives such

the aforementioned chronic patient strategy of Osakidetza becomes relevant.

3.3 Decentralization

There are much greater differences in health care expenditure per inhabitant among

Autonomous Communities than those based on any reasonable index of need or cost per inhabitant,

according to FBBVA-IVIE31 (graph 12). It is likely that such health care services are not provided to the

same levels among Autonomous Communities.

31 “Territorial differences in the Spanish public sector” Fundación BBVA-IVIE, 2011.


41

Graph 12

Public health care expenditure (average 2000-2008 in euros as of 2008)

Total Autonomous Communities.

Source: FBBVA -iViE

ES NECESARIO MODIFICAR LOS PUNTOS “.” DE LAS CIFRAS POR COMAS “,” EN LOS NÚMEROS DE ESTA

TABLA.


42

However, as this same study points out, funding is not the only factor affecting diversity in

health care expenditure, as there are different citizen demand orientations in each region in regard to

public and private service, as well as different options from the government in regard to the public,

public-private or private provision of services. Thus, in Extremadura and Navarre, which have the

highest rate of public health care expenditure per inhabitant, public coverage is almost total. On the

other hand, in the Balearic Islands, Catalonia, the Community of Madrid and the Basque Country, the

mixed public-private coverage accounts for a greater share (graph 13).

Graph 13

Health care coverage model by Autonomous Community, 2006

Public Mixed Private

Source: FBBVA – IVIE

ES NECESARIO MODIFICAR LAS COMAS “,” DE LAS CIFRAS POR PUNTOS “.” EN LOS NÚMEROS DE ESTA TABLA.

In addition to the variation in public health care expenditure per inhabitant, it is worth

highlighting the varying speed at which this expenditure is adjusted. For example, the Canary Islands

and La Rioja are the Autonomous Communities which respectively most reduced and increased their

health care costs per inhabitant in 2011. They are, however, far from enjoying the largest health care

budget per inhabitant as is the case of the Canary Islands (the Autonomous Community which

reduces the most) and the lowest in La Rioja (the one which increases the most) (Graph 14). The

development of public health care expenditure per inhabitant cannot be independent from non-health

care issues.

Un sistema sanitario sostenible (i l)

43

Graph 14

Budgets per protected indiv idua l and increases * Estimate made on the basis of population in the short term, 2010-2020, INE Source: own preparation based on Resource Statistics of the NHS from the Ministry of Health

ES NECESARIO MODIFICAR LAS COMAS “,” DE LAS CIFRAS POR PUNTOS “.” EN LOS NÚMEROS DE ESTA TABLA. ES NECESARIO MODIFICAR LOS PUNTOS “.” DE LAS CIFRAS POR COMAS “,” EN LOS NÚMEROS DE ESTA TABLA.

Key impact factors

44

4. Key impact factors

When determining the list of reforms to be made to the NHS it is useful to refer to the whole of

health care policies available and the impact thereof based on existing studies on the matter. In this

area we have the studies carried out by the OECD32 (2006 & 2009) and, more recently, those published

by the IMF33 in 2012 on the impact of health care policies on the control of the rising health care

expenditure.

4.1 Restriction on system resources and services

These are policies designed to limit supplies and services of the system and control the price

(supplies) or cost (output). For example, the budgetary ceilings and supervision of budgetary

execution by central government, human resources policies, the listing (or delisting) of funded drugs

and services and price setting. Among such policies are the following:

• Budgetary ceilings and supervision of compliance therewith by central government

Recent NHS records, with a cumulative mismatch which the official records estimate to be

of 16,000 million euros, and protracted delays (in terms of time and amount) in supplier

payments, highlight the laxity of the budgetary restriction in the system over the last few

years.

Transfers made to the Autonomous Communities are not final, so that the autonomous

governments are free to allocate costs but accountability has not been in place from a fiscal

discipline perspective.

The reinforcement of budgetary discipline mechanisms34, within the framework of

European fiscal governance reform, helps oversee the budget targets of the Autonomous

Communities by the central government, by establishing a set of fiscal rules and tracking

mechanisms of a coercive nature. However, the way in which the various Autonomous

32 Organization for Economic Cooperation and Development (OECD), 2006, “Projecting OECD Health and Long-Term Care Expenditures: What

Are the Main Drivers?” Economics Department Working Paper No. 477 (Paris) y 2009 “Achieving Better Value for Money in Health Care”. 33 “Containing Public Health Spending: Lessons from Experiences of Advanced Economies”, by Tyson, Kashiwase, Soto, and Clements, in “The

Economics of Public Health Care Reform in Advanced and Emerging Economies”, edited by Benedict Clements, David Coady, and Sanjeev Gupta

and published by IMF on the 25th of April of 2012

34 Reform of section 165 of the Constitution (2011) and Organic Law on Budgetary Stability and Financial Sustainability (2012).


45

Communities manage to achieve such targets may lead to greater regional disparities in the

access of public health care services.

The evidence 35 in OECD countries suggests that fiscal regulations are a useful tool when

seeking to moderate growth in health care spending. The impact of fiscal regulations on

moderation of health care spending is significant, especially when combined with central

government supervision.

However, the effect of spending ceilings in matters of equality is not innocuous and, in

and of themselves, budgetary cuts do not necessarily generate greater efficiency. In order to

do so, they must go hand in hand with other measures. Thus, for instance, budgetary ceilings

led to longer waiting lists in Sweden, Canada or the United Kingdom in past episodes of tight

fiscal adjustment. This obviously poses problems of equality, as it is the lower income

households who cannot access private health care to reduce waiting times.

Therefore, the adjustment of health care spending must go hand in hand with greater

central budgetary supervision, as well as with policies which encourage system efficiency

and mitigate the impact thereof on equal access.

• Establishment of health care priorities: the management of the catalog of health care

services

The active management (with regular, systematic and transparent exclusions and

inclusions) of the catalog of health care services and drugs, by adding and removing items

selectively and based on evidence, improves efficiency without affecting system performance.

For this reason, several countries are moving towards selective funding of medical services,

medication and technologies.

However, Health Technology Assessment (HTS) is more useful as a long term strategy to

improve efficiency, than as a tool for fiscal consolidation in the short term. Therefore,

countries with HTS programs are better equipped to make informed decisions in times of

crisis.

Specifically, active management of the service portfolio requires the application of clinical

effectiveness criteria (in preventive, diagnostic and therapeutic interventions, and in

pharmaceutical products, apparatuses and other medical technology); cost effectiveness

35 “Containing Public Health Spending: Lessons from Experiences of Advanced Economies”, by Tylor, Kashwase, Soto and Clements .

Key impact factors

46

criteria; and divestment criteria. It is paramount that the procedure is transparent and

regular.

One of the examples frequently cited in this matter is that of the United Kingdom. Since

1999 the UK has had an independent body, the National Institute of Clinical Excellence

(NICE) in charge of financially evaluating both the services, technologies and drugs, and

system performance.

The NICE, comprised of health care professionals, patients and researchers, draws up

recommendations for the health care areas in regard to including or excluding therapies in

their publicly funded portfolio of services. The process of drawing up such recommendations

is transparent. Assessments are based Quality-Adjusted Life Year (QALY) criteria. The

approval barrier ranges between 20,000 and 30,000 pounds per QALY.

Royal Decree Law 6/2012 establishes that the Spanish Network of Health Care

Technology and Services Assessment of the NHS will participate in the assessment of the

contents of the common portfolio of health care services. The common portfolio shall be

agreed by the Inter-territorial Council of the NHS and shall be approved by Royal Decree. The

modifications made thereon shall be carried out by order of the Ministry of Health, previously

agreed by the Inter-territorial council of the NHS, by means of a procedure which shall be

governed by regulations and which will consider clinical effectiveness, cost-effectiveness and

the budgetary and organizational impact, among others.

Likewise, chronic patient management measures must be included health care priorities,

by integrating health care levels or classifying the patients in order to allocate them to the

most cost effective health care. In this case, it is worth mentioning “the strategy of dealing

with the challenge of chronicity” developed in the Basque Country, where 70% of health care

spending pertains to chronic patients.

• Price and supply controls

Price controls, of their own accord, seem not to lead to great moderation in the increase of

health care spending in the long term in OECD countries.

- In the pharmaceutical area, prices are negotiated on the market, where the

purchase power of the Public Administrations prevails. The benefits are offset by

the increase in prescriptions (very significant in Spain) or by the introduction of


47

new drugs. Therefore, these measures go hand in hand with others36 designed to

encourage rational prescription by professionals, or the encouragement of the

use of generic drugs.

In matters of pharmaceutical spending, between 2001 and 2012 many rules

have been issued designed to contain pharmaceutical spending, via price control37.

In the recent reform, the system of reference prices for setting maximum prices of

medications to be funded is maintained, and the system of selected prices is added.

- In salary matters, several countries, Spain among them, have resorted to salary cuts

(5% in 2010), wage-freezing for health care professionals (2010), or of the staff (staff

turnover rate of 10% in NHS).

However, these policies may lead to wage imbalances between countries,

emigration of health care personnel, and scarcity of human resources particularly if,

as is the case in Spain, the cost of health care staff is relatively low.

• Supplier and user rationing

Health care systems also resort to more heterodox measures: payments due to

suppliers or user waiting lists for access to health care services.

The estimated percentage of the debt owed to health suppliers over the

overall health care budget is of approximately 20% for all Autonomous

Communities. The average payment period for the NHS was of 525 days in

December 2011, 135 days more than in 2010. In the prices offered, suppliers take

into account the estimated cost of having to finance such extended periods, thus

increasing the bill for the NHS. In cases in which this is unfeasible, they either carry

the cost or cease supplying the system. This situation has only eventually been

stopped by the intervention of the central government via the Supplier Payment

Plan.

In the EU, several measures to manage waiting lists have been put into

practice: guaranteed or maximum periods in which care is received (Sweden,

Denmark, Finland, United Kingdom, the Netherlands), improvement of waiting list

36 RDL 6/2012 also establishes as a general rules the prescription by active principle. Price control is complemented by a new drug catalog

updating system, which seeks to remove obsolete or therapeutical ineffective drugs and to add innovative products and other measures related to

the information systems on the use of drugs and on the presentation thereof. 37 Reductions in the prices of generic drugs included in the Pricing System of 30%, obligatory discounts of 7.5% to the NHS in sales of

medications excluded from the pricing system, discount in the prices of health care products of 7.5% in general (of 20% on absorbents), a

deduction of 15% on the price of medications with no generic version, but not added to the price reference system, generalization of prescriptions

by active principle in the recent reform of the Spanish health care system.

Key impact factors

48

information systems (Ireland, Netherlands, Sweden Finland, United Kingdom),

results measurement systems (Ireland, United Kingdom) or establishment of

priorities according to type of patient (Ireland, United Kingdom, Italy, the

Netherlands).

For reducing waiting times there are also public sector and private sector

collaborations, so that the first subcontracts services from the second (used

practically in all Spanish Autonomous Communities) or the use of the health care

system of other countries (as is the case in the Netherlands).

In Spain, maximum waiting times are regulated, albeit with significant

disparities between Autonomous Communities. Thus, for instance, maximum

waiting times for a consultation range from 15 days in Castilla la Mancha to 60 days

in Andalusia, Cantabria, Extremadura and the Balearics. In the case of surgical

procedures, this variation ranges between 60 days in Valencia and 180 in Cantabria,

Extremadura and Galicia (graph 15).

Graph 15

Maximum waiting times

In days

Surgical procedure

Consultations

Diagnostic procedures

Source: Fundación Alternativas

The data on waiting lists for surgical procedures of the NHS, at December

2911, indicate that the average waiting time has increased by 8 days over that of

December 2010 and that the total number of patients on the waiting list has

increased by 17%. Patients who must wait for more than six months, which did not

exceed 5% in July 2011, accounted for 9.97% at the end of the year. The data do not

include the Community of Madrid, excluded from the national count in 2005 for

not using the counting methods agreed between all Communities (table 7).


49

Table 7

Situation of the surgical procedure waiting list at the NHS

Data at 31 December 2011 Distribution by Specialty

Total patients on

structural waiting

list (*)

Difference over

December 2010

N° patients per

1000 inhab.

Percentage

over 6 months

Average

waiting time

(days)

Difference

over

December

2010

General and Digestive Surgery 87,152 14,095 2.22 7.83 71 7 Gynecology 22,566 1,045 0.57 3.27 56 -0 Ophthalmology 92,541 12,266 2.36 12.34 64 6 ENT 32,921 3,377 0.84 7.02 68 3 Orthopedic surgery 126,688 26,367 3.22 13.46 83 11 Urology 31,789 3,784 0.81 4.95 63 4 Heart surgery 2,886 294 0.07 2.08 67 3 Angiology / Vascular surgery 11,085 10 0.28 17.22 82 15 Maxillofacial surgery 6,664 608 0.17 7.85 82 4 Pediatric surgery 11,623 1,389 0.30 7.51 84 9 Plastic surgery 13,786 1,275 0.35 11.97 98 10 Chest surgery 1,208 99 0.03 14.32 95 18 Neurosurgery 7,719 1,478 0.20 9.56 90 12 Dermatology 9,581 60 0.24 0.13 42 -4 Total 459,885 67,813 11.71 9.97 73 8

(*) Data missing from one health care service/in another health care service the number of patients by specialty has been estimated.

Source: Waiting List Information System of the NHS

Both forms of rationing lead to imbalances which are not accumulated indefinitely.

They must necessarily be adjusted in the medium term and thus are not worth

considering for prospective analysis.

In any event, a lesson is indeed learned: health care systems, if their financial

imbalances are not corrected, are implicitly self-regulating via loss of quality (for

instance, the increase in waiting times) or via non-payments to suppliers.

4.2 Reforms on the supply side

Decentralization

The evidence indicates that the decentralization of health care systems helps to contain

spending growth, if government supervision of budgetary matters is maintained. Otherwise, the

contribution of decentralization to cost containment is much lower.

In Canada and Sweden the decentralization of health care competencies went hand in hand

with measures designed to reinforce accountability in order to ensure compliance with budgetary

ceilings. As a result, these countries tend to show a lower growth in health care spending than those

which have not had central supervision, such as Spain.

Incentives

Key impact factors

50

The means of remuneration of health care suppliers is one of the major determining factors of

microeconomic efficiency of health care spending. There are different ways to remunerate physicians,

hospitals and other suppliers: salaries, budgets and case-based payment, by capitation, by diagnostic

groups or by service.

One of the most recurring formulae is the establishment of incentives systems which

distinguish between centers and professionals. These incentives plans consist of:

• To link remuneration to results obtained. Target linked variable remuneration

increases over fixed remuneration.

• To grant more management independence to the professionals in order to encourage

more responsibility for results and involvement of the professionals in center

management.

There are many examples of reforms implemented along these lines, covering different levels of

health care:

• In the United Kingdom, hospitals have become foundations with their own legal

personality and management autonomy, at their own risk: they must meet certain

quality targets, and are remunerated on the basis of such targets.

• Also in the United Kingdom, but in the area of primary health care, a policy of

payment on performance was introduced for primary care physicians who, by contract,

were allocated incentives based on parameters such as health care quality, organization,

patient satisfaction and others.

• In 2008 in France, the management autonomy of health care centers was

strengthened, by establishing strict performance measurement mechanisms and

assessment committees. The director is the main person responsible for management,

supported by a team made up of physicians and organization professionals. The team

draws of the Medical Project. Compliance with such a project is assessed by means of

strict performance measurement mechanisms and result assessment committees, and

incentives schemes are associated with achievement of set targets.

• In Sweden mechanisms have been established to incentivize efficiency at health care

centers via three-year contracts, which define the degree of activity that each supplier

must provide, as well as associated remuneration. Hospitals receive bonuses or

penalties of up to 2% of the annual budget according to achievement or not of certain

quality objectives.


51

In Spain, the teams and, occasionally, individual professionals, can receive economic incentives

for meeting certain strategic targets (for example, the rational prescription of drugs, the use of generic

drugs or the reduction in waiting times); however, the amount of such incentives is insignificant in

relation to total remuneration.

Market mechanisms

In accordance with the estimates mentioned, the possibility of choosing between insurers and

health care providers, is the main factor determining the moderation in the growth of health care

spending in the long term.

For this reason, in addition to its potential role in service provision, purchasing management or

insurance coverage offers potential efficiency gains by introducing competition. In an environment

in which there are no possibilities for risk selection, and in which the basket of basic health care

services is defined by the Public Administrations, the purchasing entities may compete in quality to

attract patients in exchange for a risk-adjusted equivalent premium which is publicly funded. On the

other hand, the effective competition in the health care sector requires that the users have choice,

which in turn ensures system transparency. In this regard, the distinction between the financier

(public) , the insurer and the provider, the competition between public and private agents for the

purchase and provision of health care and user choice offers different combinations which are capable

of generating efficiency gains (table 8).

Table 8

Citizen

Comparison between centers (health care results)

Free choice of insurance company

Free purchase of additional insurance policies

Free choice of physician and center

Key impact factors

52

Planning and financing

Central Administration Autonomous Administration

Taxes

Definition of Service Portfolio

Areas of Health/reference

Quality Standards

Reference Centers

Auditing

Certification of Insurance Companies

Insurance

Universal insurance

Private insurance companies

Public insurance company

Free concurrence

Provision

Public provision

Private provision

Source: Bamberg Foundation

Management formulae such as that of the Alzira model (concession of the overall health care

services – primary, hospital and specialist – of a catchment area in exchange for capitation payment)

contribute towards the sustainability of the public health care system. These collaboration models

bring about benefits for the Public Administration, the professionals and the citizens. A cost of at least

25% less than the average for public management cost is obtained via such concessions, according to

Valencian authorities and Ribera Salud. From the professionals’ perspective, this model supports

management of competencies and recognizes and rewards professional careers. For citizens, this

model means greater accessibility, reducing the waiting lists and more hours of health care, as well as

a more personal treatment. In fact, users in most cases are not aware whether the provision is public

or private. In a survey carried out at the Hospital de la Ribera 94% of patients had no knowledge of

the existing management system.

In the case of Associative Based Entities (EBAS) in Catalonia, the model’s efficiency is shown

in the comparison of average costs in primary health care: 459 euros/inhabitant/year in Catalonia (data

published by CatSalut for 2008) compared to 329 euros/inhabitant/year in the 10 EBAS in 2009. The

average for such centers is of around 130 euros per inhabitant/year, below the Catalan average

(SESPAS Report 2012).

However, public-private collaboration also entails some risk. For instance, it may stand as

barrier for collaboration between health care levels when these are managed by different agents; the

design should therefore be meticulous and all due precautions must be taken to ensure the quality

obtained and to manage problems of political interference between suppliers and, above all, to

contribute towards the alignment of objectives of all health care levels.

There are several experiences at a European level focused on increasing the transparency and

public nature of the performance of health care provision centers (hospitals, primary health care

centers, etc.) and their professionals, which have yielded very positive results. For example:


53

• In Sweden each year a “benchmark” of hospitals is drawn up, including measures of clinical

quality, patient satisfaction, waiting times and efficiency, and a performance comparison by

region is made public.

• In Germany, hospitals report a wide range of quality indicators to an independent agency

and, since 2007, a part thereof is made public. On the basis of this information, Internet tools

have been developed to enable patients to compare the performance of each hospital in the

different diseases or procedures and provide visibility for the buyers on provider

performance.

The provision of more information to the users seems to be associated to greater containment in

the increase of health care spending, when the information is on insurance companies. In any event,

the impact of these measures on the moderation of the increase in spending is greater when certain

key decisions (for instance, contents of basic service portfolio) are decided by the government and

cannot be modified by the insurer.

The information on suppliers does not seem to have an effect on expenditure containment in

the long term. In theory the availability of more information should lead users to the most efficient

suppliers. However, this information is difficult to assess for the user38, who occasionally consumes

them. Moreover, users may tend to choose high cost services insofar as they do not pay for them in

full and fail to ascertain whether the incremental cost is fair in relation to the increased therapeutic

benefit. In any event, as stated in the studies cited, that if the dissemination of information on

provider results is not associated to containment of health care spending throughout OECD countries,

this dissemination must be taken into account for reasons of quality transparency and the system’s

ability to respond to user needs.

Hence the importance of competition in the purchasing role (acquisition of health care by the

insured party) and not only in terms of provision of services.

4.3 Reforms on the demand side

"Co-payment” or “ticket moderator” method

This is a frequently used mechanism in countries in our area, both in health care and

pharmaceuticals: the 16 countries appearing in the table below apply it to the pharmaceutical sector.

38 As has already been mentioned, this circumstance is due to the fact that health care responds to the so-called credence goods.

Key impact factors

54

Only Spain, Denmark and the United Kingdom have implemented co-payment beyond

pharmaceutical services. The data shows that only 9 of the 16 countries use it in primary health care.

However, the question arises as to whether the application of charges to users in primary specialist

outpatient care might deteriorate health care results and lead to an increase in cost in other areas (in

emergencies, for example).

Table 9 Co-payment in Europe

Primary health

care Specia l ists Hospital care

Emergency

services Pharmaceuticals

Germany x x x x x Austria x x x x x Belgium x x x x x Denmark No No No No x Spain No No No No x Fin land x x x x x France x x x x x Greece No No x x x Netherlands No x x x x Ireland No No x x x Italy No x x x x Luxembourg x x x No x Norway x x x x x Portuga l x x No x x United Kingdom

No No No No x

Sweden x x x x x

Source: I ES E Business School-University of Navarra

Co-payment places a greater financial burden on households, and is not necessary innocuous

if applied selectively: it may discourage “necessary” demand for health care and lead to minor cases

becoming serious and end up in the emergency service, the most costly health care level. We would

therefore go from an inefficient system due to excess consumption of health care services to another

situation of inefficiency due to insufficient consumption thereof. This may, at least in part, offset the

potential efficiency gains resulting from the correction of “unnecessary” consumption.

In this regard the evidence suggests that certain groups, such as pensioners and lower income

households, are particularly sensitive to co-payment, even under a limited scope. In addition, we have

observed that the demand for high value services falls as much as that of lower value services, where

a reduction in demand of the latter is less likely to generate inefficiencies due to lack of use.

Therefore, charges placed on the user selectively – the selective co-payment – on services of

lesser therapeutic value or with exemptions or ceilings for lower income households or regular health

care users (chronic patients), have more probabilities of generating net efficiency gains. However, it

may not be technically feasible to identify the low value services and for administrative costs arising

from the implementation of the system to be high and able to partially offset efficiency gains. For this

reason, system costs must also form part of the analysis.

There are several co-payment modalities: there are different population groups (children,

pensioners, chronic patients or low income) or health care levels (primary, specialist, hospitals,

emergency and pharmaceutical services), treatments or products. They can be in the form of a fixed


55

feed (i.e. one euro per prescription) or a percentage of cost. A cap may or may not be set. These

different features, and in particular the preferential treatment to certain population groups,

significantly affect its revenue generating capacity.

But the essential purpose of co-payment is not so much the revenue as the rationalization of

the demand, understood as the efficient moderation of consumption of health care, by means of

patient co-responsibility. Moreover, co-payment has proven to improve care quality, such as reducing

waiting lists.

In any event, the effect of co-payment on the reduction of health care spending in the long term,

seems to be smaller than in the short term. The effects on demand rationalization are lessened over

time. In this regard, selective co-payment may be a suitable strategy to contain spending in the short

term, but it the question arises whether to entrust the necessary cost containment in the long term to

demand instruments.

The recently approved reform in Spain addresses selective co-payment, although only in

regard to pharmaceutical services (considering the possibility of introducing it into the common

portfolio of additional health care services, or even charging for all services included in the additional

portfolio). The reform replaces the pharmaceutical co-payment table according to age (with a limited

predicament in other countries in the area) by co-payment according to income.

Pensioners will pay 10% of the amount of the prescription (with a cap of 8 euros a month for

those with income below 18,000 euros, of 18 euros for those with incomes between 18,000 and 100,000

euros) and of 60 euros a month for those whose income exceeds the last amount). In the case of

employed workers, co-payment shall continue to be of 40% for those earning less than 18,000 euros, of

50% for those earning between 18,000 and 100,000 euros, and of 60% for incomes above 100,000 euros.

The free dispensation of medication has been eliminated, except for specific cases such as those with

social integration income and non-contributory pensions, or long term unemployed.

The co-payment plan established in the reform requires a segmentation of the population

according to income, which is a difficult procedure to manage. On the other hand, the establishment

of a fee per prescription, as in Catalonia, entails lower administration costs and is less complex.

Other co-responsibility formulae

There are other measures designed to raise the awareness of citizens, and of the professionals

themselves, of the cost of the health system. Thus, for example, some regions of Spain (Madrid or

Key impact factors

56

Andalusia) already issue the so-called “shadow bills”. These reflect the cost of the service received by

the patient and is sent to his address, albeit only for information purposes, as it is not payable.

The emphasis on preventive care is very important. Health care spending and matters are

determined by factors beyond the cost in curative health care, such as the income and behavior of

users. But the expenditure on preventive health and strategies aiming to render citizens co-

responsible for their physical condition must play an increasing role. Governments may contribute to

better health results (campaigns on anti-smoking, alcohol or obesity) but the market mechanisms may

also play a part: to link co-payment or insurance premiums to medical check-ups may help drive the

preventive aspect of heath care.

4.4 The impact of the reforms on the growth in health care spending

The IMF uses a number of indicators prepared by the OECD, representing the various health

care policies (use of fiscal ceilings for health care budgets, degree of decentralization of the health care

policy, competition between insurers, etc.), which it groups into different categories (budgetary

ceilings, improvement in public management, supply mechanisms and demand mechanisms).

Then it goes on to determine the impact that variations in these indexes have had on the

moderation of health care cost in the past in the OECD. This allows it to estimate the effects of, for

example, a change of index of one point in the budget ceiling over health care cost containment.

The variable which represents the forecast growth in health care is the Excess Cost Growth

Growth (ECG) in public health care on the GDP. In other words, the difference between the growth in

health care cost per inhabitant and the GDP per inhabitant forecast up to 2030, once the demographic

impact has been corrected39. Without new economic policy measures (the last reform is not included

in the forecasts) the ECG for Spain would be of 0.6 points. The IMF estimate therefore enables the

different health care policies to be ranked according to impact on the moderation of the cost of health

care cost.

The main conclusions reached for the entire OECD area are:

• The most effective reforms combine all instruments (budgetary, coordination and

management, supply and demand).

39 That is, it isolates part of the difference between growth in health care cost per inhabitant and GDP per inhabitant arising from demographic

aging.


57

• The main potential source of moderation of health care cost growth is, by far, the promotion

of market mechanisms. The improvement in the mechanisms of coordination and public

management and the use of budgetary ceilings have also proven to be useful tools, whereas

the demand management instruments will contribute the least towards the moderation of the

ECG care cost over the next two decades.

Graph 16 Effect of reforms on Excess Cost Growth (ECG) -0.1 -0.2 -0.3 -0.4 -0.5 -0 .6 Budgetary cei ling -0 .24 Fiscal ru les -0 .03 Public management and coordinat ion -0.3 Decentralizat ion -0.36 Market mechanisms (supply reforms) -0 .50 Choice of insurer -0.22 Reforms of demand -0 .1

*Excess cost growth = growth in health cost per inhab – GDP growth per inhab. (corrected by geographical variations). Source: IMF

• The impact on the reduction of ECG of budgetary instruments as well as decentralization

(public management and coordination) is significantly increased if central government

supervision on the accounts of the regions is reinforced.

• Among market mechanisms, the increase in the user range of choice of insurance companies,

the competition between the latter, greater use of private provision of health care and greater

competition among suppliers, are particularly important to moderate cost growth. Some

reforms such as transferring to the level of the insurer the ability to make key decisions on the

health system (for example, on the formation of the services portfolio) do not result in any

cost savings.

Price controls seem to be the least effective tools for containing the growth of health care

cost in the long term. Suppliers have mechanisms to deal with this such as redirecting the

users towards higher priced services or products.


59

5. Proposals from Círculo de Empresarios

Círculo de Empresarios believes it is essential to preserve a National Health System which

guarantees universality of a set of basic and publicly defined services, under equal conditions for

all citizens. For this reason it already dedicated in 2006 a Working Document to “A sustainable health

care system”.

Currently Spain is undergoing an unprecedented budgetary adjustment process, with an

accumulated health care deficit of some 16,000 million euros, a recent reform of the health care

system to ensures sustainability, and some health care growth estimates in the long term which

highlight that the increase in the impact of health care on public finances shall be presumably higher

to that of the pensions system.

In this regard, Círculo de Empresarios estimates that one of the lessons which can be learned from

the evolution of the NHS in recent years is that it always ends up adapting to its financial restriction,

even though it may do so in a more or less orthodox manner. Hence, the issue is not so much

whether the system adjusts – since it always does – but how it adjusts.

Another lesson which Círculo de Empresarios wishes to underline is that the best health care

policy is that which renders the system participants co-responsible for its sustainability (users,

medical professionals, supply companies and health care managers).

In light of such reflections, Círculo de Empresarios believes there are a number of initiatives

worth considering:

Governance of the NHS

• Ensure the centralized accountability in a decentralized system.

Centralized supervision requires, as a first step, the existence of public, transparent and yearly

assessment of the NHS. In addition, the system must react to this assessment by establishing,

by means of a decision making mechanism that is more operative than consensus, strategies

and binding targets.

Likewise, an effective compliance tracking mechanism is required to ensure decisions are

followed. This requires some type of penalization for those in breach, beginning with public

denouncement of violations, whereas others could be viewed as coercive penalties.

Proposals from Círculo de Empresarios

60

The Inter-territorial Council of the NHS cannot, under its current configuration, carry out

such tasks in a satisfactory manner. Hence the urgency of its reform. It does not necessarily

mean that central government recovers health care competencies, but that there is a

governing body with executive power which can implement joint decisions.

The Inter-territorial Council of the NHS must evolve into a body of similar characteristics.

Its decision-making mechanism must move away from consensus in favor of a system of

greater or lesser majorities according to the issue and the weighted vote. It seems paradoxical,

in the opinion of Círculo de Empresarios, that widespread formulae throughout the European

Union cannot be used in the governance of the NHS.

Círculo de Empresarios estimates that an executive Inter-territorial Council of the NHS must

drive, as the case may be, in collaboration with the Inter-territorial Council of Fiscal and

Financial Policy, the evolution of the National Health System in areas such as:

- The evolution of the differences in public health care spending per inhabitant

between Autonomous Communities, in the face of budgetary adjustment.

- The deployment of large hospital infrastructures.

- The transparent and systematic management of the portfolio of health care services

and funded medications (additions and withdrawals and budgetary impact).

- The assessment of public-private collaboration experiences in the various

Autonomous Communities and, as the case may be, the extension thereof to all

other Autonomous Communities.

- Personnel policy (mobility, incentives, professional categories and flexibility).

- The integration of health care levels and the orientation of the system towards

chronic diseases.

Only an executive Inter-territorial Council of the NHS would be able to lead the transition

towards an NHS oriented to chronic patients, with co-responsibility mechanisms for all

participants (users, health care professionals, companies and managers) and apply the best

experiences in public-private collaboration to the system as a whole.


61

An improvement in the public availability of NHS statistical information and/or the use

thereof and the interoperability of the information systems used by the Autonomous

Communities.

The recent health care reform has led to the creation of a State Register of Health Care

Professionals, a tool which is vital for human resources management, hitherto non-existent,

which highlights the room for improvement which exists in common information systems.

The statistical comparability between Autonomous Communities, health care levels and

centers must be improved. The users of the various Autonomous Communities must be

aware of how their Community is performing compared to others in terms of quality,

accessibility and cost of service. Synthetic information must be available to the taxpayer/user

and analytical information for the managers and experts.

Likewise, the interoperability of the information systems of the Autonomous Communities

must be ensured, in order to help drive the different initiatives of an administrative nature

(health care cards, co-payment and other) and a health care nature (e-health).

To boost assessment mechanisms, ensuring their homogeneity via a centralized and

independent body providing services to the Central Administration and the Autonomous

Communities, instead of a network of agencies or bodies, in two main areas:

- development of assessment of health care technologies enabling an active

management (with inclusions and exclusions) of the portfolio of health care

services and a clinical definition thereof which is accurate and enables a reduction

in the variability of interpretations and therefore, health care practices among

Autonomous Communities, and

- performance assessment of units and centers, and the methodology required to

assess health care managers and professionals and align system objectives.

The most straightforward way of ensuing homogeneity is centralization in an

independent agency providing service in both areas to the autonomous and State

health services, and which is functionally independent from either. It must be set up

with existing resources and thus contribute to the required fiscal adjustment. There

is little sense in a health care technology assessment of one Autonomous

Community should differ from another, in the opinion of Círculo de Empresarios.


62

Supply

On the side of the supply, Círculo de Empresarios, in line with available evidence, believes there

is considerable potential to gain efficiency in the following fronts:

• Autonomy and accountability of managers. Círculo de Empresarios believes that substantial

progress must be made in the autonomy of managers of health care centers in the planning

and management of human resources, among other areas. Performance assessment of health

care personnel only makes sense if the manager himself is also assessed and incentivized in

terms of his own performance. The professionalization of health care managers must be

fostered, and an effort must be made to ensure that their permanence is unconnected to the

political cycle.

• A more flexible approach to the statutory condition of NHS personnel would not only help

the activity of the current system managers but would also help reduce entry barriers for new

operators. One of the largest potential sources of system efficiency is its exposure to

competition and, for this to become operational, it must include both public and private

operators.

Círculo de Empresarios believes that the efficiency gains arising from a more flexible personnel

policy in terms of allocation and motivation of human resources (homogeneous definition of

professional categories, greater share of performance-based remuneration, incentives in terms

of training and geographical and functional mobility) must be used in part to boost a more

flexible approach to the statutory system of health care personnel. It leads to a situation where

professionals receive a significant share of the gains obtained. The process would be much

more easily managed by an NHS Inter-territorial Council with executive powers.

• Strategies of integration among health care areas (primary and secondary) must be

encouraged, so that the target is the patient and not the service. In this regard, policies of

promotion of primary health care physicians as managers (and, as the case may be,

purchasers), on behalf of the patient, of health care services, are worth considering.

• Introduction of competition and user choice. A public system with universal coverage

allows for several different configurations, although the role of financiers and the

establishment of the basic rules of the system (e.g. the definition of the basic basket of

services) must necessarily remain in public hands. The use of public-private collaboration is

unequal throughout the Autonomous Communities and, surprisingly, there has not been

much interest shown by the Public Administrations in publicizing comparative assessments

and improvement proposals.


63

In accordance with available evidence, competition between health care providers and

insurers, which act as purchasers on behalf of the users, contributes, if designed

appropriately, to considerably contain the increase in health care costs.

Additionally, the various schemes for introduction of competition can help integrate health

care networks and for the public insurer to have cost and quality provision benchmarks by

different types of agents.

• On the other hand, patients demand more participation in the system. User choice and

competition would lead to them being treated more as clients than users.

The system must guarantee transparency, so that citizens receive all the information relative

to health care provided in a simple way, enabling them to compare professionals or centers,

thus guaranteeing a free and informed choice.

Demand

• Co-responsibility: In order to increase co-responsibility among citizens Círculo de Empresarios

believes that additional funding mechanisms must be established by the users, both of health

care and pharmaceutical services. Selective health care co-payment is a measure used in

almost all countries in our region, although there are different modalities of this method. It

can be applied to certain health care services or levels (for instance, penalizing the overuse of

the emergency services by way of primary health care, as in Italy) and to different amounts,

depending on the administration cost of the instrument.

Círculo de Empresarios believes that the universality of the health care system is not

synonymous with it being free of charge. The system must evolve toward the incorporation

of co-payment in other areas beyond the pharmaceutical, such as hospital stays, which are

used frequently in countries in our region, and applied selective so as not to affect the most

vulnerable segments of the population.

Other alternatives for penalizing misuse of the system may also be worth considering, such as

payments for failure of patients to turn up at appointments.


64

• Prevention: Lastly, health care prevention and promotion must be developed. The citizen

must be made aware of the cost of health care so that, in addition to controlling the demand

he makes on health care services, he adopts healthy lifestyle habits (exercise, diet, regular

check-ups, etc.). As is the case in some countries (i.e. the United Kingdom), patients who, once

treated, fail to follow the guidelines recommended by professionals, should be penalized.

• Generation of new revenue: Círculo de Empresarios believes that the NHS must encourage the

generation of revenue by charging fees for administrative procedures, services or functions

not strictly associated with the basic, common or additional health care service (that is, free of

charge or associated with co-payment) to the extent possible and without it having an adverse

effect on user access to other health care services..

Círculo de Empresarios has noticed that a large share of the public debate is focused on the

extension and design of co-payment mechanisms. Nevertheless, it wishes to emphasize the fact that in

the long term the benefits for containment of increasing costs will also stem from reforms made in

the areas of competition and user choice, within a public health system of universal coverage. In

order to tackle the changes on the supply side in an orderly fashion, the governance of the system

must be improved.


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6. APPENDICES

6.1 Health systems

Japan United Kingdom France Sweden

Access Universal coverage for residents.

Three insurance options. All

citizens obliged to have

insurance.

Employer insurance: for

companies between 5 and 300

employees. The cost is shared

equally between worker and

employer.

Co-payment = 20% in hospital

and 30% in outpatient care

SME employees: covered by the

government. Civil servants and

teachers: covered by mutual

insurance group with no public

aid.

National Health Insurance:

workers not covered by employer

insurance

.Co-payment

= 30%

Pensioner Insurance: the

elderly and disabled =10%

Universal coverage and access

to legal residents of UK, EU and

citizens of countries with

reciprocity agreements.

Universal health care coverage:

combination between private

and public insurance

Obligatory public universal

insurance, funded by the

government. Covers most

services.

Co-payment: 20% for hospital,

30% for outpatient services + co-

payment per consultation with a

limit of 50 euros per annum (co-

payments usually refunded by

complementary insurance)

Additional private insurance

(covers only 92% of residents),

funded equally by employers and

employees. Government pays

additional insurance for whoever

cannot afford it

Those not covered (0.4%) such

as unemployed: universal health

care coverage (covers residents

in France for a period over 3

months and automatic universal

public insurance). Patients may

choose physicians and to

consult specialists directly if

they accept lower refund

levels.

Universal coverage and access

Health care provided mostly at

health centers. Patient can

choose physician and request

treatment anywhere in the

country

Funding By government, entrepreneurs and beneficiaries, Costs controlled by government Co-payment between 10 & 30%. Reduced to 1% over and above a monthly amount

Premiums according to income

Mainly via general taxation

(76%) + national insurance

contributions (19%) and user

charges (5%). Rest: direct

payments and premiums from

those who have private

complementary insurance

Few co-payments and with

exemptions (dentistry and some

medications)

The Parliament approves the

annual health care Budget,

funded by means of taxes and

salary contributions

Co-payment + refund

Via provincial and municipal

taxes + national government

contributions

Reduced co-payments and

with a limit of 900 Swedish kr.

per year in health care and of

1800 in medications

Service provision

Via mainly private non-profit

institutions,

Latest technological

advancements

Patients can choose primary

health care physician and

specialist. No filter

Primary health care physician

= filter to specialists. Most have

a contract and are paid by local

entities (salary, capitation and

payment per service)

Maximum waiting time: 18 weeks

Quality: NICE for cost-

effectiveness assessment and

Commission for Health

Improvement

Public and private non-profit

hospitals: providing a wide

range of services. Private non-

profit hospitals focus on minor

surgical procedures. Most beds

(65%) are in public hospitals.

Physicians and professionals:

they work as independent

professionals and are paid on

payment per service

Decentralized system: provision

by provincial councils and

municipal administrations.

Central Government establishes

guidelines.

Maximum guaranteed waiting

time: 90 days as of requirement

for care is determined. If this

deadline is exceeded: the care

required is provided elsewhere,

at the expense of the provincial

council

Provincial councils own the

emergency hospitals, but can

subcontract the health care

services (10% are private)

Source: CIVITAS


67

6.2 Services added to the basic portfolio by the Autonomous Communities Services added to the basic portfolio

of Primary Health Care Services added to the basic portfolio of Hospital Health Care

Andalusia Dental health for children under 16 years. Dental health for the mentally disabled. Podiatry services for diabetics. Control of diabetic retinopathy. Oral anti-coagulant treatment. Health check-ups for the over 65s. Minor surgical procedures. Care of disabled carers. Management of nursing cases. Physiotherapy in center and home.

Certain medications excluded from funding under Royal Decree 1663/1998 when prescribed by physicians registered with the Public Health Care System of Andalusia. Ortho-prosthetics. No contribution provided that the sale price is the same or lower to the maximum amount included in the General Catalog of Ortho-Prosthetics Sex change surgery if reports justifying need and amount of procedures are available.

Asturias Care for child obesity Care for attention deficit disorder Care for patients with muscle-skeletal conditions Care for adult patients with bronchial asthma Care for patients with ischemic cardiopathy Care for carers Detection and treatment of anxiety disorders

Aragón Dentistry program for children aged 6 to 16 since 2005

Balearics Oral anticoagulant medication in Primary Health Care Advanced individual and group intervention and support to stop smoking Child Dental Program

Transportation services under decree 40/2004 of 13 April. Pharmaceutical services under Decree 26/2008 of 19 September regulating prescription and dispensation in health care services in the Balearic Islands of post-coital interception medication

Canary Islands Broadening of the portfolio of dental care. Detection and treatment of domestic gender violence. Continuity of home care services

Oxygen provision at patient’s home. Provision and payment of ortho-prosthetic apparatuses and wheelchairs, as well as organization and payment of surgical procedures, consultations and treatments in private centers.

Cantabria No

Castilla-La Mancha Dental care Podiatry Ophthalmological check-ups

Castilla y León Care for carers Care for teenagers Care for children with asthma Anti-smoking care Care for dementia Gender violence Prevention activities Broadened dental care Menopausal urinary incontinence Consultations for Young adults in situ Ultrasounds in primary health care

Catalonia Dental care since beginning of reform Ortho-prosthetics Home respiratory therapy Complex product treatments Medical transportation

Valencian Community

The portfolio of common services and those of specific services in the community is contained in the following Internet address: www.san.gva.es/cas/ciud/homeciud

Ortho-prosthetic services Home oxygen therapy Non-medical treatments and diets Refund of expenses for emergency, immediate and vital care provided outside the NHS

Extremadura Children dental plan Dental plan for the mentally disabled Dental plan for pregnant women

Galicia Dentistry (fillings and teeth cleaning)

Madrid The primary care portfolio of services of the Community of Madrid includes all activities regarding promotion of health, health education, disease prevention, health care, maintenance and recovery of health, as well as physical rehabilitation and social work as included under Royal Decree 10030/2006 of 15 September which establishes the portfolio of common services of the NHS in Appendix II

Navarra Children dental program (6 to 18 years) Medication to help stop smoking

La Rioja Anticoagulation Telecardio Smoking: prevention and treatment

Fuente: PriceWaterhouse Coopers (2012)

http://www.san.gva.es/cas/ciud/homeciud

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68

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Ministerio de Sanidad (2012) Sistema Nacional de Salud. España 2010.

OCDE (2011) Health at a glance 2011. OECD Publications.

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8. Recent publications by Círculo de

Empresarios

XXVIII Edición del Libro Marrón, The future of the euro, July 2012.

Documents Círculo de Empresarios, General State Budget 2012: emergency consolidation as a first step,

March/April 2012.

Joint document Círculo de Empresarios-Cepyme on the SMEs as a key to recover growth and

employment, February 2012.

Yearbook 2010 Intemationalization of the Spanish corporation, Wharton School & Círculo de

Empresarios, January 2012.

Documents Círculo de Empresarios, A program of adjustment and growth for the next

legislature, October/November 2011.

XXVII Edición del Libro Marrón, How to reform Territorial Administrations, September 2011.

Documents Círculo de Empresarios, The SMEs: the key to recovering growth and employment,

July/September 2011.

Así está la economía [The state of the economy]... monthly publications from February 2011 to

June 2012.

Economic considerations of Círculo de Empresarios, number 5, June 2011, Spain: still waiting for

recovery.

Documents Círculo de Empresarios, Territorial administrations: proposals for the improvement of

efficiency and market unity, March/April 2011.

Ideas on the table 2, The rescues of two Eurozone economies: Greece and Ireland February 2011.

a sustainable health system ii

Health & Medicine