Healthcare and the Euro-zone crisis, part 2

Posted by healthblogger on 27/06/12

Euractiv has reported on Commissioner Dalli’s comments that the Euro-zone crisis should not turn into a public health crisis. He added: “difficult times can indeed

Johnny C Fiddle

Policy options may look good, but do they actually play decent music? (Photo credit: Cindy Funk)

provide an incentive to think creatively and push forward in-depth reforms and contain costs, while building modern, responsive, and sustainable health systems fit for the future.”

I agree, yet despair.

Countries have healthcare systems for good reasons and allocate resources because they believe the system in place is the best solution. What we are now seeing is that these systems are very costly, perhaps with weak GDP, almost unaffordable in terms of medical inflation and the impact of demographic factors on services, which outstrip society’s ability to afford more, given other competing demands.  The ability to affect needed healthcare reform is further complicated by governments with limited policy instruments or imaginations. Some may have been literally captured from a policy perspective by powerful vested interests.

My hope is that the current austerity will be a spur to reform; however, in this case, my thinking is that governments need to see themselves as encouraging innovation, and not protecting the status quo.  We can no longer afford to continue to put taxpayers’ money into unreformed governmental and healthcare systems.

As I have written elsewhere, governments fear the creative destruction of public institutions, yet these are frequently the ones most likely to be the barriers to system reform.

The Euractiv article gave some illustrations of the responses by government, none of which involved in-depth reforms. Let’s take a look at some of the examples in the Euractiv article and deconstruct them a bit: (the Euractiv’s text is italicised, my deconstruction follows).  The following comments are not intended to be comprehensive, and I have not addressed in detail whether in some cases there was fundamental logic in the actions. I am looking at these actions in the context of IF you’re thinking like this, THEN you are NOT thinking of more sustainable strategies. You are only, as they say, kicking the can down the road for others to deal with in a few years.

  1. Many countries in Europe have cut public health budgets drastically since the beginning of the global financial crisis in 2008. Regretfully, this is usually the simplest and easiest thing for governments to do. I accept that healthcare system reform is not easy, particularly because of the perceived influence and power of healthcare professionals, and the public’s deep lack of knowledge of how healthcare funding can be mis-spent. That expenditure might be too high for the delivered value of the expenditure actually buys is of course the real issue, not whether budgets can be cut per se.
  2. In France, the government expects to reduce spending by €2.4 billion on the health insurance side. Some 40% of these reductions will be made through a shift to generic medications and savings on medical devices, while measures in favour of greater efficacy in hospitals are expected to lower cost by €1.5 billion. France has failed to balance its public accounts since the 1970s — why should now be any different? The centrality of government in France makes it hard to use local or regional drivers of change as there is the bureaucratic overhang of the centre — what is surprising in France is that despite this overhang, and the central ministry of health employing over 15,000 people (what do all these do all day??) regional outcome differences exist.  Despite some regional level reforms (the ARS), hospital cost structures and payment to doctors (in France doctors can extra-bill!) are the real cost drivers. Shifting to generic medicines is a typical knee-jerk approach. But medicines spending often suffers from poor, even irrational, prescribing practices, weak medicines use management, and weak patient adherence programmes — perhaps 30% is misused, unused or disposed of so much of this expenditure may be suspect.  France has a weak record in biotechnology (despite what they say) and its research has worried the Ministry of Health as it lacks global visibility across a broad spectrum. But investment in life sciences R&D is, for most countries now, seen as a critical driver of economic growth (despite the fact that few countries actually have the research, development, university or commercial infrastructure to do just that). So as generics replace branded medicines, so investment in life sciences research will leave to more congenial countries (other macroeconomic policies may encourage this). The same can be said of trying to save money on medical devices; though devices are not priced like medicines and do not behave like medicines — there are no generic devices in that sense. So it is hard to image what might be meant by savings here. As for hospitals, the great sink hole of healthcare expenditure in any country, what tools are available to drive ‘greater efficiency’?  Country after country is grappling with this. However, €1.5 billion is not a lot of money in the French system which accounts for 11.8% of French GDP (3rd highest in the OECD), which translates into €3872 per person, of which €1639 per person is spent on hospitals. I would be looking for significant analysis of hospital cost structures, skill and service mix, utilisation, etc. to know how efficiency gains will be realised through resource releasing strategies.
  3. In Estonia since July 2009, the sickness benefit rate has been reduced from 80% to 70% of the insured person’s income. The sickness benefit rate in the case of caring for a child under 12 was reduced from 100% to 80%. Cost-shifting to the patient is a regretfully increasing tendency; it also affects lower incomes more than higher incomes. The likely ability to alter patient behaviour and use of healthcare is not completely clear, though the research does show that increasing or even the existence of co-payments reduces the likelihood individuals will seek healthcare and hence lead to increased burden of ill-health, particularly amongst those most price-sensitive. Better to have targetted the underlying costs, first; however, with a shift to a larger co-payment, there is the potential to increase public awareness of healthcare costs and use consumer behaviour to drive faster and more thorough-going reform than simply through government diktat.
  4. The Greek government this year decreased its mental health services by 50%, and the budget was further reduced to cover only 45% of the psychosocial rehabilitation services. In the end, I suspect that this will have a longer term negative impact on mental health status, the problems from which Greece will not be able to export to other EU member states, under the cross-border health rules. Reductions in budgets alone, though, do not tell the whole story as embedded in these services may be higher overheads and administrative burden, inefficient work patterns, and poor use of available expertise (perhaps low case loads); these comments do not say Greek therapists may not be up to the challenge, but the system they work in may constrain their ability to deliver better care through infrastructural and systemic inefficiences. This is where I would look. My view is that as these are broadly predictable costs within known demographic factors, decoupling this debt component from the total would be sensible as it can in the end by better managed than through short-term quick fixes.
  5. In Latvia, nurses’ salaries have fallen 20-40% since 2009. Between 2006 and 2010, the number of hospitals in Latvia have decreased to 39 from 106 and the number of hospital beds decreased to 493 from 761. Reducing the number of hospitals, in and of itself, is not a problem, nor is the reduction in numbers of beds. Bed utilisation is what matters and the intensity with which beds are used, such as length of stay and whether people are hospitalised inappropriately, or held in hospital because of poor discharge facilities (e.g. step-down units, community care) all of which can be provided at substantially lower costs (owing partly to different skill mix, and partly to lower capital costs). Cutting nurses’ salaries (and presumably doctors, physiotherapists, pharmacists, etc., too, though I doubt it) may be counterproductive as it will simply create a reason for people to leave; there is a global shortage of nurses. Better, is to focus on work processes. We know that up to 30% or more of a nurse’s time can be unproductive in terms of patient care. By simply reducing this waste of time through systematic reform of work practices, staffing can increase the equivalent of 15% or so; equally, nursing is a highly stressful job, and nurses tend to have very high absenteeism rates; perhaps 10% of the nurse complement exists simply to respond to absenteeism.

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