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The current crisis, hospitals and healthcare (part 2)

The following questions were asked to HOPE Members:

1. What kind of impact has the crisis had on the budget of hospitals? 

2. Which measures have been undertaken by your government/health insurance?
Dr Ulrike Schermann-Richter
Federal Ministry of Health
The Ministry’s budget going to hospitals is made up of fixed shares of both tax revenues and contributions to the social health insurance system, agreed upon until 2013.
Although 80% of the budget of the Ministry of health goes to hospitals, the cuts in the healthcare budget and the general cuts in the public sector (-5% in 2011) have not directly affected the hospital system. However, hospital budget is decreasing in absolute terms due to reduced tax revenues as well as slightly reduced contributions to social health insurance (attributed for example to higher unemployment).
The third column of hospital financing is made up of financial means of the provinces (Bundesländer) which are also affected by decreasing income, though the extent varies throughout the provinces.
Due to this reduction of hospital budget in absolute terms, efficiency gains are expected in this sector during 2011.
Eva M Weinreich-Jensen
Danish regions
In 2010, the regions have drastically slowed down healthcare spending growth from 3.5%–4.5% annually in 2006 to 2009 to -0,4% from 2009 to 2010, including medicine spending.
The tendency of low growth in healthcare spending continues in the expected accounts for 2011 where the growth is expected to be 0.9%. The same counts for the budget of 2012, where the growth expectation is estimated to 1.3%, including medicine spending.
With the increased funding in 2011, the hospital and healthcare sectors have been asked to increase activity and productivity. 
A 3% increase in activity is planned for 2012 for the five regions as a whole. Productivity is planned to increase by 2% in 2012. A number of initiatives have been put to work to reduce the activity levels in the healthcare sector. A certain number of procedures have been given new guidelines to reduce the amount of patients being led to surgery. The focus is on how it is possible to avoid the surgery by treatments from physiotherapy, dieticians etc. 
The new government has announced a revision of the former one-month guarantee for patients to be treated in a private hospital with public funding. This may lead to a constraint pressure on the activity performed by the healthcare sector.
Dr Aino-Liisa Oukka
Oulu University Hospital
The government has encouraged municipalities to join in order to form larger primary healthcare units, to develop social and health co-operation, and to further develop healthcare pathways between social care, primary care and specialised care. Both in general practise and in hospitals, emergency care will be centralised in fewer service centres. Also in secondary and tertiary healthcare, centralisation and task distribution have continued.
From January to August 2011, in 57 cities (covering a population of approximately 3.8 million inhabitants out of a total of 5,4 million) the healthcare operating costs were increased by approximately 5.8%. In hospital districts, the operating costs increased by 6.4%. In both cases budgetary estimates were surpassed. This can be explained by increase in demand and costs, and shortened time frames in access to treatment by the new law. Decelerating economic growth and tightening of public finances are likely to have an impact on the 2012 budgets of the municipalities and hospital districts. 
The healthcare cuts have created negative impacts on the waiting times and increased the number of patients on waiting lists in some hospital districts, with a negative impact on patient satisfaction.
Inadequate resources in public health sector will be a problem in the future, especially in primary healthcare, mental health services, school and student healthcare.
There is today a strong pressure to adopt e-health tools to increase productivity.
Gérard Vincent
French Hospital Federation (FHF)
Yves-Jean Dupuis
French Federation of Non-Profit Hospitals (FEHAP)
In May 2010, the French President declared that all public hospitals must reduce deficit and reach a balance in their budget. The government is trying to impose the same rate of growth for the hospital and the non-hospital sector: 2.8%. The tool to reach this target on the side of hospitals is the new financing system based on DRGs and implemented progressively since 2004. This policy is expected to produce savings of around €100 million in 2012.
In addition, the government is expecting to save €500 million by fostering public hospital efficiency, through specific programs which target some expenses (such as the rationalisation of hospital purchases or the improvements in their organisational performance) or processes like the fight against fraud. 
The health ministry also fixed tariffs for hospital care without taking into account hospital-specific activities and burdens. Consequently, hospitals do not receive enough money with regard to their activity and their specific charges (emergency services, taking care of the elderly …). 
The healthcare budget increase reached 2.7% in 2011 and is planned to be 2.5% in 2012. This slight increase is insufficient to maintain staff and to defray hospital charges which are expected to rise by 3.04% in 2012. Consequently, 40% of public hospitals were facing deficit in 2010. French public hospitals have an overall deficit of more than €430 million. 
The government is demanding huge efforts to the public sectors while it does not provide them with enough money, faulty considering that their activity will increase. On the contrary, it does not pressure private hospitals whose main resources are saved.  
Despite the inadequate resources public hospitals are provided with, there has been no impact on the quality of care.
Dr György Harmat
Hungarian Hospital Association
In 2011, hospital budgets did not increase in comparison to the previous year, due to the excess volume limit, the income of hospitals can be supplemented only by patient care outside the health insurance, however, the ever-worsening financial situation of the population limits this possibility, as unemployment is increasing and the salaries in the public sphere stagnate.
The requirements for the determination of the obligatory necessary care further arose. Services over this limit should be financed either by supplementary health insurance, or by out-of-pocket payments. This is because the present financing of services is restricted, and shows a continuously decreasing tendency, not following even the rate of inflation.
Moreover, neither amortisation is ensured for hospitals.
Dr John M Cachia
Ministry of Health,
The Elderly and Community Care
In 2010, as in the previous years, Malta financed 80% of its healthcare through public funds, while it reduced by 2% the operational costs of the Health Service.
The Budget 2010 established measures aimed at improving the quality of public healthcare services. These included an allocation of €4 million to reduce waiting lists for hospital procedures, and €3 million to finance the expansion of the list of medicines provided by the National Health Service to eligible patients.
As of the beginning of 2011, other measures are being implemented to improve the quality and the efficiency of hospital care: the building on the new oncology hospital is progressing as planned; local specialisation of professionals is being successfully implemented, as the necessary structures are now in place; and a detailed study identifying the factors contributing to the delays in admission to hospital is underway. Moreover, the participation of private GPs in primary health care is being encouraged.
A recent initiative aims to improve patient admissions through the Emergency and Admission Department through the implementation of early medical encounters at triage, the setting up of an observation unit and the drafting of guidelines to facilitate the process. 
Jacques Bettelheim
NVZ Dutch Hospitals 
Hospitals see their growth trends reduced to 2.5% per year (see answer first question). To a lesser extent, government puts pressure on hospitals to limit the growth of labour cost.
More in particular, government has taken, (or will take) cuts on:
  • the coverage of collective funding, e.g. diet advising, programs for quitting with smoking, logopaedics, medicines, physiotherapy;
  • coverage of mental health therapies;
  • tariff cuts on general practitioners;
  • cuts on innovation funds, patients organisations, project subsidies, etc.
Professor Ana Escoval
Portuguese Association for Hospital Development (APDH)
Hospitals will only have a 4% increase with medicines and 0.62% in the hospitals budget in 2010. The hospitals will have to do more with “almost less”. Hospitals need to present a cost reduction plan for the upcoming year. 
The public services, are the most targeted, with hospitals being among the most affected services, in particular through their working force. Hospitals are being merged into several hospital centres and the number of hospital managers has been reduced. 
The primary healthcare service (health centres/family health units) has been restructured to increase the efficiency; and the development of the integrated continuum of care network. 
Further operational highlights include the implementation of the 24-Hour Health Service, the reinforcement of the strategic planning processes of hospitals and the sharing of services. 
A revised methodology for allocating resources to the local health units has been applied. It entails risk-adjusted capitation, with incentives, including the greater relative share of funding, associated with the rational prescription of medicines and economic and financial sustainability and quality. The electronic prescription of medicines and resulting dematerialisation, with the computerisation of the medical prescription circuit, and the reconciliation of invoices, is expected to provide relevant gains in efficiency and control. 
In alignment with the measures defined by the Economic Adjustment Program, legislative changes are being put in motion, namely Mandatory circulars (MC) applied by the Central Administration of the Health Systems Institute (ACSS) and the national legislation publication: 
  • Cost reduction with non-urgent patient transportation; 
  • Rules for reporting certain debts (requested by the troika); 
  • Suspension of direct payment of reimbursement to users; 
  • Requirement for monthly reporting of expenses related to billing of services by public and private sector with the aim of containing spending and rigorous management of public resources; 
  • Requirement for monthly reporting of expenses related to billing of services by public and private, related to primary healthcare. 
  • Integration of emergency vehicles in the INEM (Portuguese Medical Emergency Services); this ruling defines the means of emergency pre-hospital advanced and immediate life support for the INEM, acting under the Integrated Emergency Medicine, and the general basis of their integration into the network of emergency services; 
  • New measures for hiring medical personnel through the provision of services;
  • Adopting measures to reduce the costs with extraordinary services and healthcare establishments, including the ones of a business nature; 
  • A set of procedures to introduce adjustments on the prescription of supplementary diagnostic and therapeutic testing (MCDT); 
  • Set a fixed reference for the reduction of the hospitals’ operating costs, hospital centres (hospitals groups) and local health units integrated in the State’s business sector for 2012, with an 11% lower value than in 2011; 
  • Changes in prices agreements for haemodialysis; 
Regulation of special conditions for accessing the NHS, determining the user’s fees, maintain the principle of limiting the NHS amount to one third of the price and instituting the annual automatic update value for the user’s fees according to the inflation rate. There is also the revision of the exemption from user’s fees, based on the rationality and positive discrimination criteria of the most and disadvantaged. Families with total income, per person, under 1.5 times the value of the Social Support Index, set at €624 are exempt from paying the user fees (so far, the reference value was €485). In cases of chronic patients, the exemption applies only to the chronic disease and not the other diseases. 
Simon Vrhunec
Association of Health Institutions of Slovenia
In comparison with 2009, the total income of hospitals established by the Republic of Slovenia increased in nominal amounts by 1.05% or €12,790,071. Higher income results from over-work programs for Health Insurance Institute of Slovenia (HIIS) in areas where waiting lists are long and from additional funds for new, innovative biological drugs.
In 2009, the total income of hospitals established by the Republic of Slovenia increased in nominal amounts by 6.05% (or €69.8 million) compared to 2008. The increased income in public hospitals is the result of the wage-system reform in the public sector implemented on 1 August 2008 and with fully visible results in 2009.
In 2009, additional programmes or extension of programmes brought hospitals €4.7 million additional funds.
In the first half of 2011, in comparison with the first half of 2010, an increase by 2.8% of total income in hospitals was recorded.
In general, in the recent years HIIS and the Ministry of Health have been implementing measures which reduce hospital financial resources in various ways.
In 2009, the Government issued decisions determining that competent ministries in the entire public sector must adopt the following measures concerning the provision of public services:
  • reduction of costs in payment for goods and services and for the purchase of tangible assets or construction by at least 20%;
  • reduction in the number of employees through natural attrition, non-replacement of employees whose employment ceases;
  • optimisation of internal organisation.
Hence, the Health Insurance Institute of the Republic of Slovenia adopted several measures to ensure the financial sustainability of the healthcare budget: reduction of healthcare service prices by 2.5%; selective reduction of material costs in health-care service prices; rationalisation of operations for provision of funds for the promotion of employees; reduction of the calculated share of wages in the price of healthcare services by 5%. In 2009, these measures brought €96.3 billion of savings, while the savings at the annual level amounted to €138.9 billion.
The measures adopted in 2009 also applied in 2010. Moreover, in 2010, Slovenia amended the Decision on determining the percentage of the payment of health services provided in compulsory health insurance, which increased the share of the cost of certain health services covered by voluntary health insurance. 
In 2009, partners that annually agree the extent and funding for the health-service programme also encouraged the restructuring of programmes to reduce acute hospital care and consequently increase outpatient specialist activity. Public hospitals thus recorded a 0.84% drop in acute hospital care compared with 2008 (at national level, which covers both public and private providers of health-care services, the level of reduction was 1.4%), while specialist outpatient activities increased by 2.8%. In addition, the partners supported the restructuring of acute hospital care to favour day-hospital care and specialist outpatient clinics in the field of primary healthcare (learning clinics and reference centres). They also agree on the need to reduce the number of patients in mental hospitals and on the introduction of multidisciplinary teams.
All savings measures at the national level were adopted with the aim of preserving the level of healthcare programmes and accessibility of services. Thus, the scope of the health-care service programme was not reduced; instead, certain rationalisations are expected from providers focused on the optimisation of labour and material costs with no impact on the quality of health services.
Dr Sara C Pupato Ferrari
Institute for Health Care Management (INGESA)
All the Autonomous Communities are undertaking measures in order to reduce their deficits and the delays on payments.
The main measures adopted concerning hospitals address human resources and pharmaceuticals. In 2009 the drugs expenditure per medical prescription was reduced by 2.36%. Between 2010 and 2011, a package of new measures including reduction of staff salaries, enhancement of retirements and cuts of new hiring have been adopted to cut spending by €1.5 billion. For 2011, the managers must ensure the effective, efficient, and equitable sharing of public resources allocated to them to save 1.2 billion in the autonomous regions and municipalities.
Moreover, in 2010, reductions of general expenses by 15% and investments by 25% were established and it was decided to develop a common strategy for the care of chronic patients in the NHS.
From 2011, common policies on pharmaceuticals will be adopted. A package of rational drug use has been developed, which includes measures to boost the quality of pharmaceutical care and control of pharmaceutical expenditure amounting to €1.5 billion through an amendment system of reference prices, rebates, generic drugs, and setting maximum prices for medicines for minor symptoms.
Roger Molin
Swedish Association of Local Authorities and Regions (SALAR)
In 2009, and even more in 2010, most county councils/regions showed a surplus, thanks to temporary increases of government grants, other income enhancements and efforts to save costs. In this way, county councils/regions, which are responsible for the provision of most healthcare services have been able to ensure their inhabitants adequate healthcare.
Mike Farrar
NHS Confederation
As mentioned earlier, providers in England are facing a net price reduction of -1.5% across all services, with efficiency savings in the tariff for the next 2–3 years and new rules restricting payment for emergency activity.
Hospitals are planning to deliver cost improvement plans of at least 4.4% in 2011/12 and similar levels during the following two years, with some organisations facing much higher efficiency savings of up to 10%. A relatively large number of local payers are examining the options for restricting some services where there are doubts about clinical effectiveness, and waiting times are increasing.
On emergency activity in particular, hospitals are no longer being reimbursed for emergency readmissions within 30 days of discharge following an elective admission. All other readmission rates are subject to locally determined thresholds, with a 25% decrease where achievable. The Foundation Trust Network estimated that an average Trust stands to lose €2.71 million in a full year, and scaling up to a national picture this policy would result in trusts across England losing €548.2 million. Further to this, they are only reimbursed at 30% marginal pricing for emergency admissions beyond 2008/09 levels.
From the Government’s side, a national programme has been launched to improve efficiency, productivity and to safeguard quality (QIPP). NHS organisations are developing a range of initiatives as part of the QIPP programme. These include programmes such as:
  • achieving non-recurrent savings though querying and subsequent non-payment of contract activity (though this is savings-neutral across the NHS as a whole)
  • improved procurement of non-medical services by grouping together to achieve economies of scale
  • use of enhanced recovery experience to drive down lengths of stay tendering of pathology services to secure efficient provision.
The government has also launched a review into the long-term options for changing the funding basis for social care. A government White Paper is expected in 2012 setting out the proposed changes with a Bill to follow.
In non-clinical terms, VAT was raised throughout the UK from January 2011 to 20% which brought with it cost implications. It should also be added that cuts of over 25% in the local authorities’ budgets in the social sector could have the result of increasing admissions and stays in healthcare settings.