Financing of Healthcare Sector in the Olomouc Region Václav Rýznar Regional Authority of Olomouc...

Financing of Healthcare Sector in the Olomouc Region

Václav RýznarRegional Authority of Olomouc Region

• Introduction

• Characteristics of the healthcare sector in the Olomouc Region

• History of healthcare financing in regions and the Czech Republic

• Financing of healthcare in the Czech Republic

• Financing of healthcare facilities

• Major issues within the system of healthcare financing in the Czech

Republic

• Suggestions for possible solutions

• Conclusion

Contents:

Area• situated in central Moravia and parts of northern Moravia• 5 267 sq kilometres• representing 6.5 % of the overall size of the Czech Republic Structure• 5 former districts - Jeseník, Olomouc, Prostějov, Přerov, and Šumperk• together with the Zlín Region - the NUTS II – Central Moravia Cohesion Region

Population • 639 894 inhabitants (the 6th most populated region) representing 6.2% of the overall number of inhabitants in the country

Introduction

Characteristics of the healthcare sector in the Olomouc Region

Primary care in the Olomouc Region:

• 1 846 physicians (outpatient treatment) registered in the region (2007)

Of this, there were:

368 dentists

299 general practitioners

141 paediatricians

76 gynaecologists

332 specialists

In addition, there were 442 physicians working at outpatient wards in hospitals.

There were on average 1 457 patients registered per 1 physician (compared with 1 588 in the Czech Republic).

General practitioners’ offices reported over 3 million attendances.

The average incapacity for work in 2007 was 6.4% citizens in the working age (4th in the country).

Acute residential treatment:

all medical specializations

available in 8 healthcare facilities

established by various authorities:

the average residential treatment time 7.1 days

the cost of treatment in hospitals offering acute residential healthcare services - from CZK 2 407 per day to CZK 7 380 per day, with the average of CZK 4 183 per day.

Number of acute beds in the Olomouc Region is higher than necessary or that the bed fund is insufficiently structured.


a total of 3594 acute-treatment beds

the Ministry of Health

the Ministry of Defence

private founders

the Olomouc Region (3)

The payments for acute residential

treatment are provided under

budgetary regime.

Table 1 - Acute residential treatment

2007

NumberBed

utilization (days)

Average treatment

timeNumber of

bedsNumber of

patients

Olomouc Region 3 594 128 423 251,5 7,1

Jesenická nemocnice, spol. s r.o. 126 5 179 218,5 5,3

Šumperská nemocnice a.s. 523 23 000

Olomouc University Hospital 1 433 44 191 242 7,9

Olomouc Military Hospital 230 5 531 230,2 9,6

Nemocnice Šternberk, o.z. 250 10 343 275,3 6,7

Nemocnice Prostějov, o.z. 469 17 428 292,1 7,9

Nemocnice Přerov, o.z. 315 16 156 262,2 5,1

Nemocnice Hranice, a.s. 144 6 979 260,9 71,5


Nursing, palliative hospice and long-term care hospital beds

847 nursing, palliative hospice and long-term care hospital beds

1890 after-care beds available (nursing, palliative, hospice and long-term care, as well as beds in Special treatment institutions)

Payments in these facilities are provided as fixed fees per patient, bed and day.


The region lacks 306 rehabilitation beds for after-care programmes.

The number of palliative and oncology care is insufficient, owing to the increasing needs.

It is necessary to provide specialized beds in the region for oncology patients and the ageing

population of the Olomouc Region.

History of healthcare financing in regions and the Czech Republic

Introduction:

In 1951 - state‘s full responsibility for the provision of healthcare services (Soviet Union model followed). Healthcare 100% financed from public taxes.

In 1989 - reform of the Czech healthcare system (model of a general health insurance with compulsory participation)

in 2007 - 249 state-owned healthcare facilities in the Czech Republic of the total number of 27 628

Currently 193 hospitals in the Czech Republic, of which 168 are non-state.

The system was ineffective, wasteful and

extensive.

The responsibility shifted to 27 health

insurance companies (controlled by the

state to a great extent)

clear trend towards privatization of healthcare providers

Financing of healthcare in the Czech Republic

The Czech Republic spends 7.1% of its GDP on the healthcare system.

Switzerland 11.5% of GDP

Germany 11.1% of GDP

Czech Republic

7.1% of GDP

Russia 5.6% of GDP

Estonia 5.3% of GDP

Table 1 Comparison of GDP expenditure on healthcare systems

in Europe:

Table 2 The total budget of CZK 224 billion in 2007 was allocated as follows:

Residential care 50.8%

Outpatient care 21.7%

Medicines on prescription

21.5%

Medical products 2.8%

Spas, transportation, etc.

3.2%

It corresponds to CZK 224

billion.

Table 3: Development of overall expenditure on healthcare:

Development of overall expenditure on healthcare:

6,00

6,50

7,00

7,50

8,00

1995

1997

1999

2001

2003

2005

Year

%

Ratio of expenses inGDP, percentage


The healthcare budget:

The state pays for its insured persons (representing 58.5% of the population) approximately CZK 50 billion!

The rest (CZK 150 billion) is paid by employees and employers, plus self-employed persons.

Late indexation of the state’s contribution for its insured persons = the main cause leading to cyclically repeating financial deficits in the

financing of the healthcare system.


= 25% of the overall expenditure on healthcare = 1.4% of GDP

= 5.7% of GDP

Obvious disproportion in the

generation of the budget of the

healthcare system.

Except for the Czech Republic, only Cuba reports a similar ratio in the financing of its healthcare system.


low financial contribution of the population in the

healthcare system

money wasting and misusing of

healthcare services

gradual increase

in the

population’s

contribution in

the healthcare =

sensitive

political issue

in 2008, fees introduced for the dispensing of medicines in pharmacies, together with regulatory fees for an appointment with a physician and for one day of hospital treatment

the ratio of the healthcare budget to GDP is stable X

88% of the expenditure on the healthcare system (2007)

12% the expenditure on the healthcare system (2007)

patient’s contributions have been increasing very slowly

In the Olomouc Region, the hospitals run by the regional authority were transformed into a single joint-stock company and the

healthcare services were leased to a company managing 18 other healthcare facilities.


January 2001 - regions established in the Czech Republic

1 January 2003: The indebted district and regional hospitals were transformed from the state to the new regional

authorities, in the form of subsidized organizations.

hospitals are not economically tied with the national budget

but with regional budgets

the problem of debts generated by hospitals has been transferred from the state to regions and

municipalities

other possibilities of managing hospitals and transformation of hospitals into commercial corporations

X

Financing of healthcare facilities

There were 26 health insurance companies established - obliged under the valid law to sign an agreement with each existing and newly established healthcare

facility

The performance system led to a depletion of finances from the public health insurance system and was one of the causes leading to the bankruptcy of 17

health insurance companies

In 1989 experts began looking for ways to finance the healthcare

sector

new establishment was inexperienced

a chaotic system

No limits imposed on the newly established residential treatment facilities, diagnosis centres (laboratories, CT centres, ultrasound centres) and on

investment plans either. Payments were based on the actual

performance. This was a sort of a “ZERO-SUM

GAME”

Role of state (chaotic steps)

Major issues within the system of healthcare financing in the Czech Republic

1. Medicines and drug policy CZK 3-5 billion 2. Influence of pharmaceutical companies on physicians’ decisions regarding

the prescription of certain medicines, physicians’ invitations to conferences abroad – not calculated

3. False recipes – CZK 380 million4. Action by the categorization committee – competition among the suppliers

of medicines is suppressed, not calculated5. Medical products and the influence of pharmaceutical companies on the

decisions of physicians towards the use of specific materials. Estimated CZK 3-5 billion

6. Investments into instrumentation, imbalanced equipment of regions – not calculated

7. Construction investments, imbalanced construction, failure to use capacities – not calculated

8. Hospitals – redundant residential care, redundant number of acute beds and long treatment periods – CZK 7 billion

9. Physicians’ corruption, ineffective setup of the system of sickness benefits, supporting high sickness figures – CZK 2.4 billion

10. Operations, bribery with the aim of gaining preference for operations – not calculated

11. Diagnostics and ineffective use of expensive diagnostics even where cheaper methods are reasonable – CZK 1.5 billion

12. Prescription of medicines and high rate of consultations with general practitioners, often associated with the prescription of over the counter medicines – CZK 6 billion

13. Failure to consider new treatment methods, spa vouchers, obsolete indication list offering spa treatment even where new treatment procedures do not require this – CZK 450 million

14. Significant losses are also caused by the redundant capacities of beds for residential treatment and high number of consultations with physicians.

15. Political corruption and lack of competence, non-transparent selection of candidates for management positions.– not calculated – likely to reach billions of CZK

16. Doubtful legislation, laws not coherent, implementation of laws associated with high expenses – not calculated.

17. Public contracts, failure to respect valid legislation, often circumvention and violation of the public procurement laws – CZK 3.9 billion

Major issues within the system of healthcare financing in the Czech Republic

Total loss in the

system of public

health

insurance

and sickness

insurance – CZK

29.13 billion

Health insurance companies responsible

for the network of healthcare facilities

Combination of health insurance and social

security

Regular indexation of the state’s payments for state

insured persons

Higher personal involvement in one’s health condition – increasing the

contribution to at least 20%

more effective inspection

system serving health

insurance companies

The state and regional

authorities should only

play a methodical,

inspection and penalizing role

Better equipment with IT

technologies

Clear definition

of standards

Solidarity of the healthy

with the sick

Increasing the retirement agenew technologies, medicines and

medical procedures

Possibility of commercial

supplementary insurance

1. System measures:

Suggestions for possible solutions

2. Structure related measures:


Reduction in the number of

acute beds

Reduction of the treatment period

Emphasis on outpatient treatment

3. Payments:


Specialists:

• performance system

• the examination and treatment should require prior recommendation by a general practitioner (with prescription limitation according to the national average, and with unlimited availability of gynaecologists, dentists and opticians)

• general practitioners - capitation allowance (with a prescription limitation according to the national average)

• Budget system for facilities offering acute residential treatment, with regular indexation of incomes and the possibility of entering into contracts with health insurance companies for the introduction of new examination procedures.

Conclusion

mentioned problems + low salaries of hospital staffs + the worst demographic expectations in Europe

general understanding of the need to introduce a reform of the

healthcare system in the Czech Republic

probably no ideal solution as regards the financing of healthcare • primarily seeking reserves

(savings) within the system

• increasing the income in the form of indexation of the payments for

state insured persons

• increasing the retirement age

It is necessary to increase people’s

personal involvement in one’s health

condition

Thank you for your attention!

Contact details:

Václav RýznarDepartmental Manager of the Health Care

DepartmentOlomouc Region Authority

Jeremenkova 42a779 11 Olomouc

Phone: +420 585 508 858

Email: [email protected]

www.kr-olomoucky.cz

mailto:[email protected]

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