The complexities of decentralization

Jeni Bremner

A common challenge across the majority ofcountries in Europe is finding the appropriatelevel for the making and implementation ofpolicy and administration, particularly inhealth care. Many countries have decentral-ized, recentralized and then decentralizedagain in an ongoing cycle, searching the rightbalance of efficiency and responsiveness intheir health care system. Looking at the arguments for and against, in many cases thesame reasons are used to justify movement inopposite directions. So is decentralizationpurely a politically driven phenomenon or isit the wrong instrument used for the right objective?

Arguments for and against decentralizationhave been put forward for many years. In thelater part of the 19th century John Stuart Millstated that “local provision is able to put touse local goodwill, enthusiasm and knowl-edge. Services can be more easily tailored tothe requirements of local people which canvary greatly from one place to another”.Countering this approach, most commonly,are arguments that have at their heart the be-lief that greater efficiency and cost effective-ness is possible in more centralized systems.

These debates are still current and decentral-ization is a highly contested process acrossEurope. In most countries you will find passionate proponents either for or against it.At its most straightforward, decentralizationrefers to the transfer of powers and responsi-bilities from the national to the local level,with centralization being movement in theopposite direction.

Decentralization and health care

The evidence to support arguments for oragainst decentralization in health care are

ambiguous.1 Given the complex multi-dimensional nature of decentralization this isnot surprising and indeed, the lack of evi-dence is due in large part to the difficulties ofattributing outcomes to decentralization asopposed to other health system features orchanges. In reviewing the evidence Saltman etal2 report some positive outcomes, includingincreased capacity to innovate, greater costconsciousness and greater local accountabil-ity; however, they also point to studies thatdo not find clear benefits and some that showgreater inequities. The varying rationales aresummarised in Table 1.

Dimensions of decentralization

Decentralization can be used to refer to different dimensions: devolution, delegation,deconcentration and privatization.2

Devolution is the transfer of political powerfrom a higher to a lower level, be that national to regional, regional to local or indeed national to local.

Delegation is the transfer of administrative orpolicy initiation power to a lower organiza-tional level.

De-concentration is where administration,rather than decision-making power, is transferred to a lower level.

A final but potentially more contentious as-sertion is that the privatization of public serv-ices, with the transfer from public to privateownership, can be seen as a form of decentral-ization. Arguments that some privatizationsare a form of decentralization hinge on thesmaller scale of the private provider, particu-larly if this is a transfer from state ownership.

The multiplicity of the different tiers and dimensions of decentralization placed into

Contents

The complexities of 1 decentralization

Centralizing England 4and decentralizing the United Kingdom:The paradox of power in British health services

Health system 7 decentralization in Spain: a complex balance

Recentralization 1010 years later – success or failure in Norway?

Euro ObserverThe Health Policy Bulletinof the European Observatory on Health Systems and Policies

Spring 2011

Volume 13, Number 1

The Observatory is a partnership between the WHO Regional Office for Europe, the Governments of Belgium, Finland,Ireland, the Netherlands, Norway, Slovenia, Spain, Sweden and the Veneto Region of Italy, the European Commission, the European Investment Bank, the World Bank, UNCAM (French National Union of Health Insurance Funds), the London School of Economics and Political Science and the London School of Hygiene & Tropical Medicine.

Eu r o Ob s e r v e rEu r o Ob s e r v e r Vo l ume 12 , N umbe r 4Vo l ume 12 , N umbe r 4

2

different cultural contexts results in acomplex multi-dimensional picture.Added to this are a variety of intermedi-ate bodies that may not have a specific legal or administrative function, (for example groups of regions or local authorities which form geographicallybased associations) but can be highly influential in policy both regionally,

nationally and on a European level.Whatever the nature of the decentraliza-tion, it is highly context-specific and relative in scope and dimension. This isparticularly true for health care, wherefunding, purchasing and provision maybe provided at different levels of the system by a diverse range of public andprivate bodies.

The importance of country context

Germany and Spain have strong regionalgovernments with decentralized political,fiscal and administrative powers. How-ever, although many see Spain as a highlydecentralized country, some commenta-tors within Spain argue that decentraliza-tion stops at the level of the regional gov-ernments – the Autonomous Communi-ties. In fact it has been suggested that decentralization not only stops at thelevel of the region, but in some of the Autonomous Communities, powers havebeen centralized upwards from local government to the regional level (see casestudy in this issue of Euro Observer).

Spain is not alone in having different expressions of decentralization withinone country. Historically, the UnitedKingdom has had very centralized politi-cal and fiscal powers; however, thegreater independence of Wales, Scotlandand Northern Ireland has led to varyingdegrees of decentralization within thosecountries (see case study in this issue).Looking across Europe there is a complex picture of decentralization ofdifferent scopes and scales, supported by different historical and cultural contexts.

Going in the opposite direction, Finlandis a country that has recently moved tomore centralization. However, in theFinnish context, this merging of local au-thorities transferred powers upwards to anew local government administrative levelserving, on average, a population of 12000people within regional areas covering onaverage 850000 people. By way of com-parison, in Germany, the regional states(Länder) covers an average population ofover five million people, equivalent to thewhole population of Finland. Norway,too, a decade ago, decided to recentralizeresponsibility for hospital services awayfrom the 19 counties to the central state,which then operated through five regionalhealth structures (see case study in this issue). Further exploration of the arrange-ment of health care in other Europeancountries reveals similar and other cultural and contextual nuances makinggeneralizations about centralization or decentralization difficult.

Table 1 Objectives, rationales and controversies of health decentralization

Objectives Rationales Issues and controversies

To improvetechnical efficiency

Fewer levels of bureaucracy and greatercost consciousness at local level.

Separation of purchaser and providerfunctions in market-type relations.

May require certain contextual conditionsto achieve it.

Incentives are needed for managers.

Market-type relations may lead to somenegative outcomes.

To increaseallocative efficiency

Better matching of public services to localpreferences.

Improved patient responsiveness.

Increased inequalities among administrative units.

Tensions between central and local governments and between different localgovernments.

To empowerlocal governments

More active local participation.

Improved capacities of local administra-tion.

Concept of local participation is not completely clear.

The needs of local governments may stillbe perceived as local needs.

To increaseinnovation ofservice delivery

Experimentation and adaptation to localconditions.

Through increased autonomy of local governments and institutions.

Increased inequalities.

To increaseaccountability

Through public participation.

Transformation of the role of central government.

Concept of public participation is not completely clear.

Accountability needs to be clearly definedin terms of who is accountable for whatand to whom.

To increasequality of health services

Through integration of health services and improved information systems.

Through improved access to health care services for vulnerable groups.

To increaseequity

Through allocating resources according to local needs.

Through enabling local organizations tobetter meet the needs of particular groups.

Through distribution of resources towardsmarginalized regions and groups (throughcross-subsidy mechanism).

Reduces local autonomy.

Decentralization may improve some equitymeasures but may worsen others.

Source: Saltman et al.2

Vo l ume 13 , N umbe r 1Vo l ume 13 , N umbe r 1 E u r o Ob s e r v e rEu r o Ob s e r v e r

3

Other contingent factors

Adding to this complexity, it is not sufficient to only understand the organi-zational and political arrangements of decentralization but it is essential to alsounderstand the legislative and legalframeworks – and how those are implanted in relation to decentralized political and administrative powers. Howmuch freedom has the region (or othersub-national unit) to initiate policy andchanges in administration and how muchimmunity does it have from the nationalgovernment in making those changes?

Spanish regions have very high levels ofpolicy and administrative immunity andinitiation whilst regions in England andthe Netherlands operate at a much lowerlevel. In some countries the style and con-tent of the regulatory framework can havea greater impact on the level of local initi-ation than the legislative framework. Forexample, in the Netherlands, the strongsystem of health care regulation pushesagainst the freedom of the commissionersand providers, creating a higher level ofuniformity within a market system thanin many other parts of Europe.

Underpinning some of this variationmight be the differing perceptions of thelegitimacy and competence of local government. For political devolution, thelegitimacy of the local or regional tier isessential and for administrative devolu-tion a solid infrastructure is helpful. Pageand Goldsmith3 have equated this challenge with determining what shouldbe the powers and capabilities of local orregional government in modern states.The strength of legitimacy claims can beseen in Europe, for example; many Scan-dinavian countries with a strong historyof powerful regional and local govern-ment have devolved responsibility forhealthcare to the regional or local level.

Arguments for and against

Comparison across Europe is difficultgiven the complex nature of the arrange-ments, the importance of the underlyinghistorical context and the lack of strongevidence. However, across Europe thereis some consistency in the arguments putforward by the centralizers and

decentralizers which tend to follow familiar themes.

Ironically, it seems that the key arguments of enhancing efficiency andbolstering democracy are used by bothsides of the debate. Achieving allocativeefficiency is cited as a reason to centralizein order to allow for the distribution offunds across a national population according to need. However, it is also often argued that decentralization, whichwould bring the planning and prioritiza-tion of services to a lower level, allowsfor a more sensitive local mechanism totarget populations in greatest need.

Cost efficiency is also a contested ration-ale used by both sides of the debate, witheconomies of scale cited as a reason tocentralize while decentralizers point tosavings achieved through less duplicationand better targetting of services. Greaterlocal democratic control and greater control by local people can be a strong argument for decentralization but central-izers contest this, citing the low turnout at local elections in many countries andpositing other mechanisms for effectiveinvolvement of patients and citizens.

If nothing else, the ferocity of some of thearguments for and against decentraliza-tion highlights the political nature of thedecisions. What is probably more inter-esting than the arguments for and againstdecentralization is developing an under-standing of the problems that it is tryingto solve. In many countries this is abouthow a range of services can be appropriateand accessible to local populations,

effectively working together to meet thelocal needs of citizens and patients. Meeting this challenge might be about decentralization but it is in large part alsoabout how we manage our health and social care services and our systems.

The freedom and flexibility we give toour front line staff and managers to adaptand tailor services to meet needs and therequirements we place upon them to engage with their broader communities is crucial. Moving power up and downgeographical or organizational levels maybe one way of addressing these challengesbut every country (centralized or decen-tralized) can point to areas where this isdone well, suggesting that while some ofthe answers might lie in the system struc-ture, many of them lie in broader issuesof culture and management.

REFERENCES

1. De Vries MS. The rise and fall of decentralization: A comparative analysisof arguments and practices in Europeancountries. European Journal of PoliticalResearch, 2000;38(2):193–224.

2. Saltman RB, V Bankauskaite, Vrang-baek K (eds). Decentralization in healthcare. Strategies and Outcomes. Maiden-head: Open University Press, 2007.

3. Page EC, Goldsmith M. Central andLocal Government Relations. London:Sage, 1987.

Jeni Bremner, Director, European HealthManagement Association, Brussels.

San Servolo, Venice, Italy24–30 July 2011

The Ageing Crisis: A Health SystemsResponse

More information is available at:www.healthobservatory.eu

The Summer School provides a chance to spend a week workingintensely with other senior to mid-level health policy makers,planners and professionals with expert support to marshal theevidence on ageing, to review what it means for health systemsand to share experiences of responding through policy and inpractice.

The Summer School addresses a fundamental change that affectsthe entire health system in its widest sense and sectors beyond. Itcreates a chance for you to focus on state-of- the-art knowledgewith your peers and to build lasting networks across Europe.

Early applications are encouraged as places are limited.

Observatory Venice Summer School

Eu r o Ob s e r v e rEu r o Ob s e r v e r Vo l ume 14 , N umbe r 1Vo l ume 14 , N umbe r 1

4

Health policy in the United Kingdom is aparadox of simultaneous centralizationand decentralization. On one hand, sincethe 1998 creation of devolved govern-ments for Northern Ireland, Scotland,and Wales, their and England’s healthpolicy worlds have drifted further apart,with little interest or coordination acrossborders. On the other hand, within eachjurisdiction, and particularly England,every minister has made greater andgreater claims to control the system, atthe expense of intermediate organizationssuch as the medical profession or NHSboards.

The two movements might seem contra-dictory, but they are not. They merely reflect the geography of national identityin a multinational state. To put it simply,it turns out that voters anywhere in theUK seem to care much more aboutequality within England, Northern Ireland, Scotland and Wales than aboutequality within the UK. Whicheverpoliticians are responsible for a systemforge ever more invasive and specific, ifnot necessarily effective, tools to inter-vene in the system’s priorities andprocesses and care ever less about whatother politicians do in other systems.

Constitutional and political structure

The UK has four component units: England, Northern Ireland, Scotland, andWales. Since 1998, there have been electedlegislatures and governments in NorthernIreland, Scotland, and Wales; their creation is known as “devolution” andthey are referred to as “devolved admin-istrations”. The three devolved adminis-trations have responsibility for health andmost personal social services, which areall national health service (NHS) modelswith universal access paid for out of gen-

eral taxation and organized around gate-keeper models. The UK central govern-ment retains responsibility for the tax, income replacement and cash benefit systems. The devolved administrationsare financed out of UK general taxation,with new funds allocated on a per-capitabasis (per the “Barnett formula”) and existing funding giving them slightlyhigher levels of per-capita expenditurethan England.

England is the anomaly. It makes up84–85% of voters, population, and theUK economy, and has significant diver-gence in economic fortunes, health status,and overall per capita government spend-ing between its regions. It is also directlyruled by the UK government. So Englishhealth policy is made by a UK govern-ment, elected by the whole UK elec-torate, while Scottish or Welsh healthpolicy is made by Scottish or Welsh governments.

It is unlikely that a policy analyst woulddesign such a country with a clean sheetof paper, but then again the allocation ofauthority is never a technocratic process.It reflects the map of nationalisms in theUK. The English, however diverse theymay be, show no interest in a decentral-ized England. A referendum on a regional government for the most apparently pro-autonomy region, theNortheast, failed spectacularly.

The Scots and Welsh do have a consensuson the importance of their autonomy, andthe structure of devolution serves that.Northern Ireland’s devolution is part ofits peace process; while its policy issuesand political culture are certainly distinc-tive, the main reason for devolution isthat it is a compromise between the twounsustainable alternatives of integrationin the UK and integration into Ireland.

Health system organization

All four systems are NHS systems, withhospitals owned by the government andprimary care doctors contracting with thegovernment. They are funded out of direct taxation (allocated to the devolvedadministrations as part of their blockgrants).

In each of the four jurisdictions, we haveseen greater claims to authority by thecenter – the devolved administration or,in England, the UK government. Minis-ters, charged with providing equal accessat a reasonable cost, have invented moreand more mechanisms for cost contain-ment and, latterly, quality improvement.The list of these mechanisms is long; theUK is both an early adopter and majorglobal innovator in health policy ideas.Their common denominator is that theyerode the power of intermediate bodiessuch as territorial boards and organizedprofessions, replacing them with regula-tors, management initiatives, and precisely orchestrated market systems designed to balance cost and quality in agovernment’s preferred manner.

Centralizing Northern Ireland, Scotland,and Wales is not that hard. Scotland hasan integrated NHS with 22 boards, 14 ofthem territorial units that provide a fullrange of health care and the rest specialistorganizations responsible for issues suchas health promotion or ambulances. That means the key executives of NHS Scotland can (and do) fit around a table,leaving metaphorical and sometimes literal room for other important playersin Scottish health care. Wales is reorgan-izing into ten boards, similar to those in Scotland, with seven integrated territorialboards and three specialist ones. Northern Ireland is formally keeping a purchaser-provider split, but its reorganization also reduces the number

Centralizing England and decentralizing the United Kingdom:The paradox of power in British health services

Scott L Greer

Vo l ume 13 , N umbe r 1Vo l ume 13 , N umbe r 1 E u r o Ob s e r v e rEu r o Ob s e r v e r

of organizations and lodges planning re-sponsibilities in a single “commissioning”body.

England is far larger and more frag-mented, so it generates and absorbs morepolicy ideas intended to fine-tune theNHS’s balance of cost and access concerns. Margaret Thatcher found anextraordinarily decentralized health system in 1979; for many issues (such asprocurement of high-technology equip-ment) it was difficult to find any respon-sible person in Whitehall. Appointed territorial boards and professionals basically ran the NHS.

Thatcher began the secular trend of centralization and policy development bycreating a general management functionfrom 1983 to 1989, headed by a Chief Executive of the NHS and some boards,whose makeup varied. In 1989, the UKgovernment famously introduced a pur-chaser-provider split, allowing generalpractitioners (GPs) to choose where tobuy care for their patients.

Labour, in 1998, focused first on manage-ment and money, massively increasingspending and target-based “performancemanagement”. This had the compellingadvantage of delivering electorally salienttargets, such as reduced waiting times forelective surgery and primary care appointments. It then followed the Conservatives in trying to engineer amarket-based system that would produceefficiency and quality through market incentives, DRG-style tariffs, and (aLabour addition) much tighter regula-tion. It also struck a blow against territo-rial inequality (“postcode prescribing”)with NICE, the National Institute forHealth and Clinical Excellence, whichenunciates general standards of care andrecommends different procedures andmedicines.

The result was that by 2010, whenLabour lost office, the NHS had threeseparate kinds of central control. Onewas direct management, in which thegovernment gave targets to NHS organi-zations. Another was regulation, inwhich the government created a specialistregulator charged with ensuring quality(such as the Care Quality Commission)or financial stability (such as Monitor,

which oversees Foundation Trusts). Thethird was finely designed market mecha-nisms, which are supposed to ensure efficiency through carefully calibrated incentives.

The new Conservative-Liberal Democ-rats coalition government has taken thelogic to an extreme, proposing to abolishall the territorial commissioners. Shouldthe extraordinarily large reorganizationhappen, tightly regulated groups of doc-tors subject to a central CommissioningBoard will negotiate care with regulatedautonomous hospitals. The simplest andmost time-consuming form of manage-ment, direct performance management,will have given way, but the governmentwill have sculpted the system and be ableto intervene through the CommissioningBoard or regulators.

The big losers since 1983 have been theformerly autonomous intermediategroups. Territorial boards were more andmore tightly controlled and lost moreand more power to the market mecha-nisms, until the final announcement oftheir abolition in 2010. Professionals, especially doctors, had formally runmuch of the NHS until the mid-1980s,but have lost most of that role. More andmore aspects of their practice are regu-lated by the new quality regulators, inwhich they have less and less say.

The driving force, spanning governmentsof different colors and ministers of differ-ent styles, is the endless difficulty of con-trolling costs without damaging qualityin a system that tries to provide universalaccess. They put their energy into design-ing systems to make it happen. What wedo not know is how effective these mech-anisms are on the ground. Eliminatingterritorial units or particular professionalroles is one thing, but eliminating the ef-fects of territory or professionals is an-other. Governments since Thatchershouldered the doctors and territorialboards aside and took the controls. It isnot clear just what those controls actuallycontrol.

Finance

Finance tells the same story: the increas-ing centralization of England, in the

name of access, efficiency and quality;and the increasing decentralization of theUK, in the name of national autonomy.

The NHS system, when created in 1948,inherited a highly unequal landscape ofservices that was deeply marked by thecaprice of donors. Rich towns and London had more hospitals and doctors;rural areas and poor areas were under-served. The postwar history has been ofpolicymakers awakening to this realityand trying to change it, replacing localinitiative and inequity with national expenditures.1

In 1968, a Hospital Plan set out to buildnew infrastructure. The next step was toreallocate spending to underserved areas,through a formula developed by the “Resource Allocation Working Party”(RAWP). Over decades RAWP has nar-rowed the gaps. Likewise, the new finan-cial formulae adopted by the Scottish andWelsh governments after devolution alsorebalanced spending towards areas ofgreater need. The structure of finance after the new coalition government’s reform attempt remains to be seen, butpresumably will allocate money to GPconsortia on an adjusted per-patient basis.

The diminishing intra-regional inequali-ties were accompanied by only small reductions in inter-regional inequalities.Spending in England, which started withthe lowest per-capita expenditure, wentup 55% while spending in Scotland,which started with the highest per-capitaexpenditure, went up only 45%. The result was a slight narrowing of the gap in expenditure between the systems.

The current government has also com-mitted to pass a law that would transferresponsibility for about 20% of Scottishrevenue to the Scottish Parliament; thiswould come from a share of income tax,which could thence vary in Scotland, anda number of small taxes. This will allowScotland greater financial responsibilitybut does not change the underlying Bar-nett formula, which continues to fundScottish government overall at a higherper-capita rate than the rest of the UK.

The UK is currently engaged in an extraordinary series of government

5

Eu r o Ob s e r v e rEu r o Ob s e r v e r Vo l ume 14 , N umbe r 1Vo l ume 14 , N umbe r 1

6

cutbacks, more or less unprecedented fora country without a currency crisis.Health is a protected expenditure cate-gory in England and will mathematicallybecome a larger part of the welfare stateas a result, although that is unlikely to bemuch consolation to a service whosecosts increase substantially each year andthat is about to undergo its most radicalreorganization. The devolved administra-tions will feel the cuts though changes totheir bloc budgets. They are less commit-ted to protecting health. In each case, theresult should be more efficiency as thefour health systems draw back from activities that are past the point of maxi-mal marginal productivity (no matterhow socially useful). It should also meanan unpredictable environment; whetherthe UK government loses credibility depends on whether it can deliver such a successful retrenchment that voters forgive it the cutbacks.

Future

The decentralization of the UK is likelyto continue. It is always possible that thedifferential expenditure in the UK couldbecome politicized. The conservativepress, which sells very few copies outsideEngland, has long cultivated an Englishsense of injustice at higher per-capitafunding in Scotland. Such issues becomepoliticized, however, when political eliteschoose to politicize them, and it is notclear which party’s leadership wouldchoose to make an issue of it. The Conservatives have the most incentive todo so: they do best in England, face aLabour party with strong devolved sup-port, and can reasonably view their voters as subsidizing a Scottish welfarestate. On the other hand, they are committed to the Union and are notpresently interested in breaking it up.

So devolution might not make sense, butit continues to work. The clean-ness of itsdivision of powers means that coordina-tion is mostly a problem for issues thatcross borders, and the fact that no gov-ernment has tried hard to coordinate canbe criticized but at least means that therehave been no crises. And it means that, inthe absence of cross-border debate, theideational worlds of health policymaking

in the four capitals of the UK diverge-even if there are scraps of evidence thatthey might also compete for the better.2,3

The centralization of English health pol-icy will also continue for the time being;the current reforms, should they goahead, would be the apotheosis of cen-tralizing policies that replace intermediateterritorial and professional groups withagents of the state. Such centralization,pulverizing old centers of power in theNHS, is a powerful trend that spans political lifetimes. So long as the govern-ment is responsible for access, cost, andquality, it seems that it will continue todevelop more and more ways to make theNHS produce some combination of thethree that suits it.

But health policy has a long history ofcostly misfires; even policies that sub-stantially increase the effectiveness of thestate (for example targets) can produceunintended results (for example gaming).The longer-term question is whethergreater state power over health services is worth the price in reorganization, management, and regulation.

Lessons

What does the UK experience teach therest of the world about the allocation ofauthority in health care? First, the allocation of authority has health policyeffects but is not always a health policy.Devolution in the United Kingdom hap-pened because of pressure from Scottishand Welsh activists and political elites. Itdid not happen in England because only a few people sought it. The logic of nations, not technocracy, is at work here.

The second and most important is thatdecentralization can mean centralization.It is a commonplace of comparative political economy that the introductionof regulated markets can mean a more effective central state.4,5 In fact, the in-sight dates back to Alexis de Tocqueville’swork on the French Revolution: destroy-ing old intermediate bodies such as terri-torial boards can put the government in

more direct contact with its citizens, tothe benefit of the government’s power. Soeliminating territorial boards allows GPsand regulators to be the government’spresumably more effective agents in running the English NHS. By contrast,the strong territorial governments of devolution are, if anything, increasinglydivergent in style.

In other words, the key issue is power.The UK relinquished much centralpower over the devolved administrationsand seems prepared to relinquish more.But in England, and in the devolved administrations, governments take theirresponsibilities very seriously and arecentralizing power unto themselves.How else, ministers might ask, are theyto balance cost, quality, and access in atime of cuts?

REFERENCES

1. Gorsky M.Sheard S. Introduction. In:Gorsky M, Sheard S (eds). FinancingMedicine: The British Experience Since1750. Abingdon: Routledge, 2006.

2. Greer SL. Devolution and health:structure, process and outcome since1998. In: Lodge G, Schmuecker K (eds).Devolution in Practice 3. Newcastle-upon-Tyne: IPPR North, 2010.

3. Greer SL. United Kingdom. In: Costa iFont J, Greer SL (eds). Federalism andDecentralization in Heath Policy. Basingstoke: Palgrave Macmillan, 2011.

4. Vogel SK. Freer Markets, More Rules:Regulatory Reform in Advanced Indus-trial Countries. Ithaca: Cornell Univer-sity Press, 1996.

5. Giaimo S, Manow P. Adapting the welfare state: the case of health reform inBritain, Germany, and the United States.Comparative Political Studies 1999;32(8):967–1000.

Scott L Greer, University of Michigan School of Public Health and LSE Health, The Lon-don School of Economics & Political Science.

Vo l ume 13 , N umbe r 1Vo l ume 13 , N umbe r 1 E u r o Ob s e r v e rEu r o Ob s e r v e r

In the brief time-span of a decade (fromthe mid-1970s to the mid-1980s), Spainwas transformed from an authoritarian,centralist regime to a democratic, quasi-federalist state. The complex intertwiningof these processes explains the dynamicsand results of health system decentraliza-tion.1 This article takes a look at the divi-sion of competencies between nationaland regional health authorities, how itworks in practice and the main outcomes.

Institutional change

Political power in Spain was substantiallydevolved by the 1978 Constitution to 17regions (Comunidades Autónomas, CAs)and two autonomous cities in northernAfrica (Ceuta and Melilla), giving themwide-ranging autonomy – although someCAs have more powers than others. Theagreement was that a two-chamber Parliament, elected by direct vote, and aNational Government would be at thecentre of a ‘federal-like system withoutfederation’. Central government wouldcontrol certain policy areas (for example,defence, foreign affairs), while CAs,through their own elected regional parlia-ments and governments would exercisetheir own legislative and executive authority over an increasing number of policy fields, including health (the protection of which was recognized as aConstitutional right).

The division of responsibilities in healthcare was designed as follows:

– Central government is expected toprovide a common basic frameworkfor health and health care in order toensure equity, cohesion and commonquality standards;

– Implementation is the responsibility ofCAs, which spend 89.81% of publicfunds – which are mostly (not ear-marked) budget transfers from thestate;

– Each CA has a regional health depart-ment and health minister responsible

for health policy within the regionplus a health service which managesservice delivery; jointly they handlearound 30% of each CA’s total budget.

– Health policy coordination betweencentral government and CAs is ensured though an Inter-TerritorialCouncil (Consejo Interterritorial)without executive power (it only provides “consensus recommendationsto promote cooperation and exchangeof information towards equity”) withrepresentatives from the central andeach regional health department.

In 1986 the country’s social health insur-ance system was transformed into a taxfunded national health system (SistemaNacional de Salud, SNS)* with decentral-ized governance offering universal coverage to all residents, including immi-grants.** The principles of universal pro-vision, equity in access to services, systemintegration and decentralization were rat-ified as founding principles of the healthsystem by the SNS Cohesion and QualityAct (2003), which shaped the current decentralization. Today, primary healthcare is provided by publicly salaried pro-fessionals (one doctor and nurse for every1500 inhabitants with numerous preven-tion programs) and 71.2% of all availablehospital beds are in the hands of the pub-lic sector (with 40% directly owned andthe remainder subcontracted from theprivate sector), including 80% of acutecare beds, 36% of psychiatric beds and30% of long-term care beds. Accordingto national surveys there is generally ahigh level of user satisfaction and systemlegitimacy. For example, a combined totalof 69.2% of respondents agreed that “theSNS works quite well” and “works wellyet needs changes”.2

Positive effects

Decentralization has certainly coincidedwith and most likely contributed to posi-tive effects in Spain, particularly in termsof improvements in health outcomes. Forexample, average life expectancy at birthrose from 72.88 in 1970 to 81.24 in 2008while the infant mortality rate fell sub-stantially from 20.78 per 1000 live birthsto 3.35 over the same period.3,4

Spain now enjoys a high position in mostworld health outcomes rankings. It is 4thin average life expectancy at birth (3rd forfemales), 4th in life expectancy at age 65and occupies 4th best place in rankingsfor female potential years of life lost. Ithas below-average infant mortality com-pared to other EU countries (rankingsixth in the average annual rate of declinesince 1970) and among the lowest mortal-ity rates for top causes (cardiovasculardiseases, cancer and respiratory diseases)in Europe since 1970. The only area inwhich Spain shows clearly worse out-comes is in diabetes-related lower-limbamputations, with 26.5 amputations per100,000 in 2006, compared with theOECD average of 14.9 amputations.5

Moreover, reductions in avoidable mor-tality6 during the period 1991–2005 sug-gest that there is substantial health careaccess, quality and safety of services. Asimilar picture of improvement emergesfor the five-year relative survival rates forselected cancers (breast, colorectal andlung) from 1990 to 2002, which are comparable to the advances made inFrance, Germany, Italy and the UnitedKingdom.7

Importantly, such results have beenachieved with what seems to be a very efficient level of expenditure in terms ofinternational comparisons – in 2007 Spain

7

Health system decentralization in Spain: a complex balance

Antonio Durán

*Between 1948 and 1985 the social health insurance system was financed by compulsorycontributions (covering first workers and later their families).

** Only 0.5% of the population, consisting of high-income, non-salaried individuals refuse to be registered.

Eu r o Ob s e r v e rEu r o Ob s e r v e r Vo l ume 14 , N umbe r 1Vo l ume 14 , N umbe r 1

8

spent US$2671 per person, or 8.5% of itsGDP on health care, versus 16% in theUnited States.5 Looking at the percentageof revenue by source, public sector fund-ing represents 71% of the total*, out-of-pocket direct expenses (mostly for pharmaceuticals) is 22.5% and private insurance 5.5%. As a percentage of publicfunds spent, specialist care represents54% of the total, pharmaceuticals 19.8%,primary health care accounts for approxi-mately 16%, and prevention and publichealth some 1.4% (with the remaining8.8% in the ‘other’ category).8

In summary, there is consensus that thedecentralized health system in Spain (coinciding with a period of sustainedeconomic growth in the country beforethe financial crisis began in 2008) hasstimulated investment in health care, encouraged flexibility and innovation inthe delivery of health services and fostered approaches that are attuned tolocal preferences.9

Tensions and challenges

Despite these successes, some tensionsand challenges that were always therehave become increasingly visible. Firstly,regions have tended to over-spend theirallocated budgets, with Parliament andcentral government having virtually nocontrol over such expenditure.** Becauseof this, for some commentators, the financial sustainability of the SNS is under threat.10

Secondly, the Ministry of Health and In-ter-territorial Council have encounteredserious obstacles to effectively coordinat-ing health and (especially) health servicepolicies due to partisan struggles betweennational and regional political parties. Asa result, geographical differences in healthoutcomes and financing as well as intra-region inequities arguably have changedlittle; average life expectancy at birth forboth sexes ranges from 82.5 in Navarra to79.8 in Andalucia.11 Since differences inhealth status reflect income and wealthdifferences, it would be unfair to blame

the health system decentralizationprocess entirely, yet as pointed out byMontero-Granados et al ‘healthcare decentralization in Spain seems to showno positive effect on convergence inhealth, as measured by life expectancy atbirth and infant mortality betweenprovinces… Some provinces improvedtheir situation overtaking others but thefinal result is one of greater dispersionthan at the start”.12

The real issue is that decentralization haskept per capita expenditure uneven. TheSNS Cohesion and Quality Law (2003)created the National Cohesion Fund topromote policies addressing geographicinequalities but it has primarily been usedto pay for costs generated by patients being treated in health care facilities in regions other than their own, failing topromote the expected degree of nationalcohesion and reductions in inequality.Furthermore, in the period 1992–2009 thevariation coefficient of expenses amongregions increased – and changes in popu-lation- protected volume fail to explainsuch variability.8

Legislation was passed in December 2009to create a new regional financial systemaround a Guarantee Fund for Fundamen-tal Public Services which integrated theCohesion Fund, and holds 80% of the resources for key public services such aseducation, social services and health care.Monies for the Fund are collected centrally from tax revenues and then dispersed. However, critics argue thatarrangements disproportionately reflectthe demands of some regions (namelyCataluña) in the context of electoral poli-tics. Publicly funded health care expenses(budgeted) per person in 2010 still dif-fered by €557 (ie. 40.73% of the averageof €1343) between the Balearic Islands(79.37% of the average) and the BasqueCountry (120.84%).14

There is little wonder then that the Spanish health care system shows unwar-ranted variability in access, quality, safetyand efficiency, across regions, health care

areas and hospitals6, including:

– 5-fold variation in the use of percuta-neous transluminal coronary angio-plasty (PTCA) between areas and 2-fold variation in mortality afterPTCA (hospitals);

– 7.7-fold variability in prostatectomyrates across health care areas;

– 28 times more frequent admissions toacute care hospitals due to affectivepsychosis between health areas;

– 26% of hospitals with between 501and 1000 beds are at least 15% moreinefficient than the average;

– 12% of hospitals with between 201and 500 beds are at least 25% less efficient than the standard for treatingsimilar patients.

Remarkably, the population does seem toperceive the lack of geographical equityin financing: only 42% of respondents inthe Health Barometer survey believe thatthe same health services are offered to allcitizens despite region of residence, com-pared with around 87% who assess treat-ment is equal despite patient's gender andaround 70% who assess treatment isequal despite a patient's social class andwealth.2

Other problematic aspects of decentral-ization in Spain include the very limitedconnectivity across the country and between regional health systems in termsof health information, which is based toomuch on resource or activity data (to thedetriment of outcomes information). Inspite of considerable financial investment,no systematic assessment of SNS per-formance, whatever the level of disaggre-gation, is currently feasible. In addition,there is little information on the healthworkforce; in the absence of any centralregistry, numbers of public sector staffare uncertain and whole time equivalentsneed to be estimated from different partial registers.

Paradoxically, devolution has had littleeffect on SNS staff and patients’/citizens’voice on how health services are man-aged. While decision-making at the national level has been clearly decentral-ized, processes at regional level have beenrather over-centralized, copying the

* Of which taxation is 94.07%, professional mutuality schemes 2.53% and civil servantsmutual funds 3.4%.

** For example, there was over 130% growth in capital expenditure in 2000–2008.5,14

Vo l ume 13 , N umbe r 1Vo l ume 13 , N umbe r 1 E u r o Ob s e r v e rEu r o Ob s e r v e r

centre, with plenty of duplication of thechain of delegation and accountability.15

In addition, remarkably “[CAs] … havebeen belligerent against municipal powers… and have tried to grab their compe-tences”.16

Decentralization patterns have beenquoted as the cause behind the complexrelationships between regional adminis-trations and the medical profession. Oneassessment is worth quoting at length:“Health services management in Spainwas born in an unfavourable context: obsolete public administration, bureau-cratic inheritance, lack of qualified human resources… In spite of it all, amodernizing wave gave birth to a spec-tacular improvement… But while thisgeneration of enthusiastic managers im-proved facility and service management,they did so at the expense of enforcing acentralist model tainted with enlighteneddespotism, sidelining away from power –especially in big hospitals – even the influential medical leaders who rather informally but effectively led life in thebig public institutions for decades”.17

Future developments

Perhaps the best way to signal the hopesand limitations of the current situation isthrough the proposal of a NationalHealthcare Agreement (Pacto por laSanidad) involving all regions and politi-cal parties in the context of the Inter-Territorial Council. Originally proposedin June 2008 by former Minister ofHealth, Bernat Soria, the draft proposalcovered no less than “human resourcespolicy, common services, budget sustain-ability, common health policies, qualityand innovation and prevention of drugaddiction”.18

When the next Minister of Health andSocial Policy, Trinidad Jimenez, was appointed in April 2009 in the context ofthe financial crisis, she enthusiasticallyembraced the initiative, establishing sixworking committees whose membershipincluded the national ministry of health,regional health authorities, professionalassociations and patient groups. How-ever, her latest statement on the matter inApril 2010 suggests that any agreementwill not be signed before 2013.

REFERENCES

1. Colino C. The Spanish model of devolution and regional governance: evolution, motivations and effects on policy making, Policy & Politics2008;36(4): 573–86.

2. Agencia de Calidad del SNS. Institutode Información Sanitaria. Barómetro Sanitario 2009. Madrid, 2010.

3. WHO. European Health for All Database, May, 2010

4. Instituto Nacional de Estadística. May 2010.

5. OECD. Health Care Quality Indicators, OECD Health Data 2009,Paris www.ecosante.org

6. INEBASE, Social Indicators 2006.INE, June 2008.

7. KantarHealth. Oncology Market Access, Europe, Data from EUROCARE-4, 2010.

8. García-Armesto S et al. Spain: Healthsystem review. Health Systems in Transition 2010;12(4):1–295.

9. Borkan J et al. Renewing primary care:lessons learned from the Spanish healthcare system, Health Affairs 29, 8,2010:1432–41.

10. Martín JJ. Crisis económica y sostenibilidad del Sistema Nacional deSalud, El Médico 2010;1109:16–19.

11. Ministerio de Sanidad y Politica So-cial. Indicadores de salud 2009. Evoluciónde los indicadores y el estado de salud enEspaña y su magnitud en el contexto de laUnion Europea, 2009. www.msc.es/estadEstudios/estadisticas/inforRecopilaciones/docs/Indicadores2009.pdf

12. Montero-Granados R et al. Decentralization and convergence inhealth among the provinces of Spain(1980–2001), Social Science & Medicine2007;64,:1253–64.

13. Federación de Asociaciones para laDefensa de la Sanidad Pública. Diferencias notorias en el presupuesto percápita entre CC.AA, January, 2010.www.medicosypacientes.com/noticias/2010/01/10_10_05_ccaa

14. WHO. National Health Accounts –Country Information, Spain.www.who.int/nha/country/esp.pdf

15. Flores Juberías C. Spain: delegationand accountability in a newly establisheddemocracy. In: Strøm K, Müller W,Bergman T (eds). Delegation and Accountability in Parliamentary Democracies. Oxford: OUP Press, 2003.

16. Ramió C. Las AdministracionesPúblicas. In: Alcántara M, Martínez A(eds). Política y Gobierno en España, Valencia: Tirant lo Blanch, 1997:381–404.

17. Belenes R. Un balance personal de 25años de gestión sanitaria moderna en elSistema Nacional de Salud, Gaceta Sanitaria 2003;17(2):150–6.

18. Ministerio de Sanidad y Politica Social (MSPS). Bernat Soria ofrece a lasCCAA un gran Pacto por la Sanidad paragarantizar el futuro del Sistema Nacionalde Salud, (2 June) 2008. www.msc.es/gabinetePrensa/notaPrensa/desarrolloNotaPrensa.jsp?id=1206

Antonio Durán, Director of the international consultancy, Técnicas deSalud, Spain.

9

New HiT on United Kingdom/England

The Health System in Transition report on England is the most comprehensiveoverview of the health and social care system in England produced this century. It provides a wealth of detail about all aspects of the health care system, as well asdevelopments in the health of the population.

Drawing on a detailed analysis of the changes to health care introduced by a series of Labour governments between 1997 and 2010, the report’s author Seán Boyle giveshis assessment of the impact that these changes have had in terms of access, equity,

efficiency, quality and health outcomes. This definitive report on one of Europe’s largest and complex healthcare systems will be a valuable resource for policy analysts and health system researchers for years to come.

Available online in March 2011 at www.healthobservatory.eu

In 2002, after a political process that wasunusually swift, the responsibility forhospital services in Norway was trans-ferred from 19 counties to the state. Thehospital reform was marketed as a “responsibility and leadership reform”.1

Now, almost ten years later, the organiza-tional model in Norway is more contro-versial than ever, drawing support onlyfrom one of the three parties in the coali-tion government (Labor). This articlebriefly describes the background for, thecontents of and the results of the recen-tralization reform. It discusses why thereform has been controversial, and brieflysketches some future options for the organization and governance of the Norwegian health care sector.

Why the 2002 reform?

The Norwegian health care system is partof what is termed the Nordic health caremodel.2 This model is characterized by astrong focus on equity, decentralized po-litical governance and dominantly publicownership and control. Norway differs,however, in two areas. First, there is notradition in Norway of discretionary local taxation. Thus, local political gover-nance is executed under strict fiscal cen-tralism. Second, the responsibility forprimary and specialist care was dividedbetween two levels of local government;the municipal and the county level.

For specialist care a principle of regional-ization, established in 1974, meant thatwhile (19) counties were responsible forboth providing specialist health care totheir inhabitants and running hospitals,they cooperated closely within five regions. Thus, highly specialized serviceswere provided in one (teaching) hospitalwithin the region. The period of countyownership is described elsewhere;3 suf-fice it to say that a combination of blamegames over budget deficits, geographicaldifferences in access to and utilization of

services, and duplication of services bothwithin counties and regions eventuallyled to the 2002 state takeover of hospitals.

The state takeover meant moving owner-ship and responsibility from 19 countiesto the state, who exercised its governancethrough five regional health authorities(RHAs). These regional authorities wereorganized as trusts and governed by aboard of trustees (with only appointedand no elected members, and no politi-cians). The RHAs, in turn, owned thehospitals (named health authorities)which were also made into trusts. Thus, a model of devolution was replaced by amodel of administrative decentralization.

Another important element of the reformwas to include the financing of capitalcosts in the budgets of the regional healthauthorities. Previously, investments hadbeen financed separately and depreciationwas not considered a cost. Finally, the“leadership” element of the reform wasfollowed up through a national trainingprogram for mid-level hospital managers.

Main issues

Geographical equity was one of the mainmotivations for the reform. Countieswere responsible for other services thanhealth care, and hence prioritized differ-ently. Thus, the state takeover also meantthat unconditional grants to countieswere replaced by specific health carebudgets to the health authorities. The distribution of funds between the fiveRHAs soon became one of the major political issues. A capitation based modelrecommended by a government-appointed committee was rejected by theMinistry of Health, mainly because it wasfelt that it would lead to a too large redis-tribution of income relative to the countymodel. It took six years, and the work of a second government-appointed committee, before a universally accepted

capitation-based model could be implemented in 2009.

Hospital payment in Norway has been amixture of fixed budgets and activity-based payment (using DRGs) since 1997;i.e. well before the state takeover. Theshare of activity-based financing was ini-tially set as low as 30%, but increasedsteadily to 60 % in 2003. This initiatedconcern that the incentives to cream skim,both by incorrect coding and by selectionof ‘profitable’ patients, were too strong.4

Following a few years where the share ofactivity-based financing fluctuated be-tween 40 and 60%, it has now been stableat 40% since 2006. There is still, however,an ongoing discussion about whether thisshare is too high. Interestingly, whileNorway was one of the first countries toimplement activity-based financing on anational level, it is now moving in the opposite direction of other countries suchas Denmark, Germany and England,where the share of activity-based financing is substantially higher.

One of the main motivations for the statetakeover was to end the economic blamegame3 between hospitals, counties andthe state. Hospitals would run deficitsand look to the counties – in their capac-ity as owners – for help. As noted, coun-ties in Norway cannot set tax levels attheir own discretion, and thus would regularly turn to the state to bail themout. Deficits thus became a natural conse-quence of a model with decentralizedownership but (essentially) centralized financing. In this context, a state takeoverseemed like a good idea, with total re-sponsibility now at one level. Neverthe-less, four out of the five RHAs ran sub-stantial deficits. Changing governmentswould all respond with extra funding,while at the same time trying to send amessage that this deficit funding was a“once only” occurrence. In fact, it wouldtake the RHAs eight years (in 2009) be-fore they collectively ran a small surplus.

The fact that the boards of trustees hadno politicians as members raised someconcern about the reform creating a “democratic deficit”. Thus, from 2006 theboards were reorganized with govern-ment appointed politicians constitutingthe majority of the RHA boards, and

Eu r o Ob s e r v e rEu r o Ob s e r v e r Vo l ume 14 , N umbe r 1Vo l ume 14 , N umbe r 1

10

Recentralization 10 years later – success or failure in Norway?

Jon Magnussen

Vo l ume 13 , N umbe r 1Vo l ume 13 , N umbe r 1 E u r o Ob s e r v e rEu r o Ob s e r v e r

11

RHA appointed politicians constitutingthe majority of the local boards. It is notable that these politicians are notelected, but there was still the belief thatappointed politicians would make theboards more receptive to local needs thanprofessional board members.

Strategic and operational governance

The basic governance idea in the presentmodel is that parliament should focus onthe larger policy issues, creating a frame-work under which the Ministry of Healthshould execute strategic governance andregional health authorities focus on oper-ational governance (which at local levelalso would include strategic governanceof that particular geographical area).

Parliament, however, is populated bymembers who every four years need togo back to their constituency (county)and ask for renewed confidence. As aconsequence the focus of many MPstends to be centered around local issues;the location of a maternity ward, thewaiting lists for a particular group of pa-tients, the choice of local providers forservices that are contracted out, and – itwould sometimes seem – generally anyissue that the local MP thinks may raise

his or her credibility with voters.

The major policy issues – what types ofservices should be decentralized and whattypes should be centralized; what typesof services should be included and whattypes should be excluded from the publicbenefit package; how should governmentdistribute scarce resources betweenhealth care and other public services (andavoid deficit funding) – these are ques-tions conspicuously played down in thenational health policy debate. Occasion-ally, they may be raised by policy expertsor researchers, often resulting in angryresponses from politicians who find itway easier to propose budget increasesthan to “put value on human life”. Whenultimately confronted by the boundariesof a governance and financing system thatthey have themselves put in place, withregularity they turn to ‘health care reform’ as the viable exit.

Further change – what are theoptions?

As noted above, the only political partydefending the current model is the Laborparty. It is therefore not unlikely that wewill see some kind of change in the nottoo distant future. The question then is –where will health care in Norway go?

Before considering the alternatives it isuseful to briefly recapitulate the major is-sues that need to be dealt with, regardlessof the model. In broad terms they are:

(i) How large a share of the public budgetshould be allocated to health care?*

(ii) How should these funds be distrib-uted evenly among geographical areas?

(iii) How should the delivery of hospitalservices be structured; that is, what typesof services should be offered where?**

(iv) Is capital special, in the sense thatcapital financing needs to be more centralized?

(v) How should hospitals be paid, capita-tion, cost-volume contracts, global budg-ets or activity based financing? (Table 1)

In this setting, the choice of governancemodel implies choosing a degree of polit-ical centralization, choosing the types ofissues that should be politicized andthose that could be handled administra-tively, and finally choosing the degree ofadministrative decentralization.

* Private supplementary funding is not anissue in Norway, so we’ll leave that be.

** Remember that Norway is a large, butsparsely populated country.

Table 1 Health reform issues and policy options

Issue Policy Today Alternative Policy Probability of Change/Reform

Size of healthcare budget

Parliament sets budget and activity goals,but budget is partly open ended throughactivity based financing

Decentralize to regions or counties, combine with localtax discretion

No

Geographical distribution offunds

Capitation based model and an addi-tional activity based part

Decentralize fund raising to regions or counties, com-bine with some income equalizing grants, but open upfor geographical variationsOrAbolish RHAs and distribute funds directly to hospitalsbased on the population in their catchment area.

Decentralized fund raising unlikely. RHAs mayvery well be abolished. Either a central healthdirectorate will take their place or downsizedregional offices will remain.

Hospital structure

This is the responsibility of the RHA, butneed approval from owner (i.e. Ministryof Health)

Devolve to elected regional or county boards/councils. OrCentralize to Ministry of Health as part of a nationalhealth plan

Centralization likely, but it is unclear howdetailed the political governance would be.Most likely a central directorate of health woulddo much of what is today done in the RHAs

Capital financing

RHAs fund investments, but can get stateloans for 50% of costs for larger projects

Capital financing of large projects (i.e. new hospitals)is done through a national plan with central funding

Only likely in the case of a centralization of hospital structural decisions (see above)

Hospital payment

RHAs decide. All RHAs use a mixture ofcapitation and activity- based financing.

Cost-volume contracts, using DRGs in budget settingrather in an open ended activity-based financing.

Unlikely. The rhetoric attached to “money following the patient” is too strong.

World Health

Organization

Regional Office

for Europe

Government

of Finland

Government

of Norway

Government

of Ireland

UNCAM

Government

of the

Netherlands

European

Commission

Government

of Spain

Government

of Slovenia

European

Investment

Bank

Veneto

Region of

Italy

World Bank

London School

of Economics

and Political

Science

London School

of Hygiene &

Tropical

Medicine

THE EUROPEAN OBSERVATORY ONHEALTH SYSTEMS ANDPOLICIES PARTNERS

Government

of Belgium

EditorAnna Maresso

Editorial TeamJosep FiguerasMartin McKeeElias MossialosSarah Thomson

To join the mailing list, please contact

Anna MaressoObservatory – London HubEmail: a.maresso@lse.ac.uk

The views expressed inEuro Observer are those of the authors alone and not necessarily those of the

European Observatory onHealth Systems and Policies orits participating organizations.

© European Observatory onHealth Systems and Policies

2011.

No part of this document maybe copied, reproduced, stored

in a retrieval system or transmitted in any form withoutthe express written consent ofthe European Observatory onHealth Systems and Policies.

For information and orderingdetails on any of the Observa-tory publications mentioned in

this issue, please contact:

The European Observatory onHealth Systems and Policies

WHO ECHPRue de l’Autonomie, 4

B - 1070 Brussels, Belgium Tel: +32 2 525 09 33Fax: +32 2 525 0936

Email: info@obs.euro.who.int www.euro.who.int/observatory

Design and production by Westminster European

ISSN: 1020-7481

Government

of Sweden

12

E u r o Ob s e r v e rEu r o Ob s e r v e r Vo l ume 12 , N umbe r 4Vo l ume 12 , N umbe r 4

The most likely scenario, given thepresent political landscape, is that theregional health authorities will beabolished. Some argue that these aremerely an unnecessary bureaucraticlevel between the state and the localhealth authorities (hospitals). Othersare critical of the power that lies inthese (essentially administrative) or-ganizations to determine issues thatare felt to be more political than ad-ministrative. With the structuralchanges that have taken place since thestate takeover the number of localhealth authorities has been reducedsubstantially, and now closely resem-bles the number of counties (22 healthauthorities versus 19 counties). Thus,an administrative decentralization di-rectly from the state to the local healthauthorities is now a more feasible option than it was in 2002. Notably,local health authorities all receive theirbudgets through the same capitationmodel that sets the distribution offunds to the RHAs so removing theRHAs would not lead to the need fora new model of resource allocation.

This leads us to the dilemma of thepresent Norwegian debate: which decisions should be taken at what political level. Or put differently, howdevolved should the system be? A return to the devolved model ofcounty councils owning and runninghospitals seems unlikely; even amongcritics of the present model it is hardto find people who express nostalgicfeelings about the period of countyownership. Therefore, the most likelysolution is to strengthen the centralpolitical governance of the sector; i.e.the role of parliament. Proponents ofthis solution point in the direction ofusing a national health plan as a moredetailed policy instrument. Under thegeneral (and presumably specific)framework laid out by such a plan theadministrative burdens would be reduced, there would be no need forthe RHAs and local health authoritiescould be governed directly from theMinistry of Health (or a directorate).

This model hinges on the ability ofparliament to design a health plan thatactually is detailed enough to provide

policy guidance for whatever is left ofthe bureaucracy. History does notmake us optimistic, but nevertheless,one should perhaps give the ideasome serious consideration. However,for those who today are concernedabout the “democratic deficit” in theRHAs, it may be worthwhile spend-ing some time contemplating the pos-sibility that parliament may remainrather impotent in its ability to maketough local level policy decisions, andthus will need to rely on the new(centralized?) administrative unit.Therefore, rather than having fiveRHAs with local boards we may endup with a centrally located directorateof health. Presumably, the effects ofthis structure may be the theme for anarticle in EuroObserver in 2020.

REFERENCES

1. Ministry of Health and Social Affairs. Parliamentary propositionNo. 66: Om lov om helseforetak mv[On the law of health authorities etc].Oslo, 2000–2001.

2. Magnussen J et al. The Nordicmodel of health care. In: MagnussenJ, Vrangbæk K, Saltman R (eds).Nordic Health Care Systems. RecentReforms and Current Policy Challenges. London: OUP, 2009.

3. Hagen, TP, Kaarbøe O. The Norwegian hospital reform of 2002:Central government takes over own-ership of public hospitals. Health Policy 2006;76(3).

4. Directorate of Health. Activity-based Funding of Health Services inNorway. An Assessment and Suggested Measures. Oslo: 2007.www.helsedirektoratet.no/publikasjoner/rapporter/activity_based_funding_of_health_services_in_norway___an_assessment_and_suggested_measures___84034

Jon Magnussen, Professor of healtheconomics and head of the Depart-ment of Public Health, NorwegianUniversity of Science and Technology,Trondheim and adjunct professor ofhealth economics, University of Oslo.