Instruments to control and finance the building of healthcare infrastructure in other countries of the European Union

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1 Summary and conclusions This report describes the instruments by which the respective authorities of eight important European Union members control the building, financing and geographical distribution of physical healthcare infrastructure. According to The Dutch National Board for Hospital Facilities (College bouw ziekenhuisvoorzieningen) this report contains useful information so as to assess the influence Europe may have on the organisation of the Dutch healthcare system. This issue is inter alia also dealt with in discussions on new legislation (WEZ). According to The National Board, the possible influence of "Europe" on the Dutch healthcare system tends to focus on the European rules on competition policy. However, it is just as relevant to obtain a good insight in the healthcare system of each member state separately so as to ascertain similarities and differences. This report does not include research examining the efficiency of the various healthcare systems. For the correct interpretation of the findings mentioned below it may however be of importance to mention that the Netherlands in comparison to other EU member states takes a middle position in most statistical classifications. This statement is based on existing figures on healthcare services, e.g. the number of beds available per inhabitant, the number of healthcare personnel per inhabitant, or the number of out-patient visits per person. The cost of these services was assessed using criteria such as healthcare expense per capita or the ratio of healthcare expense to gross domestic product. The following eight countries were included in our study: Belgium, Germany, Sweden, Austria, United Kingdom, Denmark, Spain and France. For the purposes of this report, infrastructure means: the whole of building and site facilities, including sites used by healthcare providers for the purpose of service delivery. Each of the following chapters starts with an overall description of the distinctive features of the healthcare system in each separate country. There are two main systems by which the overall healthcare service is financed: through social insurance premiums on the one hand and tax levy on the other hand. The graph attached to this report as Annex I shows the proportional classification of various sources of healthcare financing per EU country. The healthcare systems in the United Kingdom, Denmark, Spain and Sweden are mainly financed via tax levy. In Belgium healthcare is financed through both tax levy and insurance contributions, each accounting for more or less half. Moreover, in Belgium fees payable by the individual contribute towards the costs of healthcare. In Austria, Germany and France, like in the Netherlands, financing takes place via social insurance contributions. Next the tools by which in these countries the building of healthcare infrastructure is controlled and financed are described. For this purpose, it has been investigated to which extent the government - in contrast to private healthcare providers and market mechanism - has instruments to control the building, geographical distribution and costs of infrastructure, as well as to determine the ownership ratios. In this context, the term government means not only the central government, but also the federal state, provincial, regional and municipal authorities.

2 The set of instruments by which authorities control and influence the building or use of infrastructure was assessed taking account of three significant aspects. First, the division of property of infrastructure between authorities and non-government parties was evaluated. Next, it was assessed who bears the costs involved with the building and maintenance of infrastructure and the way in which these projects are financed. Finally, the report sets out to which extent authorities use planning, regulatory or incentive measures to control the quantity and geographical distribution of, and the costs involved with infrastructure. The most important conclusions are mentioned below. Property of infrastructure As for 6 of the 8 countries not enough information could be found on the division of property in the care sectors, the division of property of hospital infrastructure was described. As the information was sometimes based on studies done in different years, it has been assumed for the purpose of mutual comparability that the relative property shares did not change in the intervening years. Comparisons of the division of property of healthcare infrastructure between authorities and nongovernment parties indicate that in 6 of the 8 investigated countries more than 60% of the property is owned by the authorities. The graph below shows this division. The two neighbouring countries of the Netherlands, Germany and Belgium, however, show a different outcome: the authorities in these countries own less than half of the infrastructure. In this respect the Netherlands take the first place since its government does not own any healthcare infrastructure at all: after the privatisation of municipal authorities, all hospitals passed to individual non-profit organisations. Of all investigated countries the two Scandinavian countries and the United Kingdom show the highest percentage of hospital property owned by authorities. Besides, study finds that in the two largest countries, Germany and France, about a fifth of the bed capacity is operated by private for-profit hospitals.

3 Division of property of hospital infrastructure, in terms of percentage* (in proportion to the number of beds) Netherlands Belgium Germany France Austria Spain** Sweden** United Kindom Denmark 0% 20% 40% 60% 80% 100% authorities private-non-profit private-profit private *) The definition of hospitals varies slightly among the different countries **) For these countries only data on private healthcare sectors as a whole are available, without any distinction between profit and non-profit As for the care-sectors, information on the division of property of infrastructure was only available for Germany and Austria. In these countries the private non-profit organisations own relatively much more infrastructure than the authorities. In the Netherlands infrastructure is even solely owned by private non-profit organisations. By and large in the care-sectors far less information is available, as a result of which comparisons can not easily be made. Therefore, criteria to obtain a good insight into the influence of authorities on infrastructure in these sectors are more limited. The following conclusions emerge. First, the authorities of the 8 countries with the exception of the Netherlands do play an important role as an owner of healthcare infrastructure; in this respect the situation in the Netherlands can be defined as exceptional.

4 Second, it may be stated that as regards the hospital sector the authorities of most countries own a major part of the infrastructure. In Germany and Belgium, though, less than 50% of the infrastructure is owned by authorities. Infrastructure financing The eight countries included in our research show a wide variety as regards the extent to which and the way in which infrastructure is financed. The extent to which government authorities contribute towards the costs varies from almost nil in the Netherlands and France, to 100% by the provincial authorities in Denmark. Evidence from 3 of the 8 investigated countries, namely Germany, Denmark and Sweden, indicates that hospital infrastructure is in many cases completely financed by the authorities, provided that or insofar as the providers comply with certain rules. The same goes for 94% of the hospitals in the United Kingdom, and for all hospitals located in 10 of the 17 autonomous regions in Spain. Hospitals that do not fully meet the financing terms and conditions, however, do not automatically have the right to pass on the cost of capital to the insurers by increasing tariffs, as a result of which these costs are often passed on to the patients and in some cases to the owners. Besides, there is also a marked contrast between the instruments by which infrastructure is financed in the Netherlands - and in this particular case also France - and other countries, since the Dutch and French authorities - contrary to 7 of the investigated 8 countries - are in no way whatsoever involved in infrastructure financing. In the Netherlands the possibility is being considered to admit foreign providers to the Dutch insurance system. This would enable healthcare insurers and health insurance funds to contract healthcare providers established abroad. Healthcare insurers faced with long waiting lists may wish to contract services from healthcare providers outside the Netherlands. Another reason to opt for contracting foreign-based healthcare providers - especially in the border regions of the Netherlands - may be to distribute healthcare services more equally. In the neighbouring countries cost of capital is not (Germany) or partly (Belgium) included in the tariffs. The tariffs charged in Belgium and Germany are nevertheless comparable to those charged by healthcare providers in the Netherlands. It is nonetheless doubtful whether these countries will continue this policy of excluding cost of capital from the costs involved with rendering healthcare services to patients from other countries. Discussions about this issue are already taking place. Besides, an increase in contracting healthcare services rendered abroad may lead to a decrease in utilisation of Dutch healthcare centres and, thus, in profitability. The EU member states are now free to organize their own individual healthcare systems. Despite the EU principle of free movement of services, however, certain requirements may be applied for service acquired abroad. It is therefore important to apply more closely defined criteria to determine whether or not this approval should be given. Pursuing a policy which allows broad approval may have considerable implications for the financing of Dutch healthcare. In this respect it is doubtful whether countries in which cost of capital is subsidised, can continue this policy since it may be in conflict with general EU legislation. It is therefore advisable for the Dutch Ministry of Health to explicitly deal with the above-mentioned topics.

5 Instruments to control healthcare infrastructure Authorities can choose from a wide range of instruments and institutional structures to control the building, costs and geographical distribution of infrastructure. The most direct and efficient option is to have decisions exclusively taken by a government body especially appointed for these purposes. The powers designated to the provincial governments in Denmark and the hospitals joint together in the National Health Service in the United Kingdom are clear examples of this policy. In both cases the providers do not only own the entire property, but are also fully responsible for infrastructure financing. A system in which authorities have relatively little responsibility as regards infrastructure in contrast to the system described above is one allowing private institutions to make independent decisions on the measures to be taken concerning expansion or reduction of infrastructure. In this case, control over infrastructure takes place through - for example - legislation, regulation, financial incentives from the respective authorities and in the case of collective financing - through applicable terms and conditions. The Netherlands and Germany are clear examples of this type of system. Additionally, in Germany, the applicable legislation does not even contain a prohibitory provision: no permission from the authorities is needed for building infrastructure, provided that the centres do not pass the costs on to the insurers by increasing tariffs. On the other hand, the German authorities have complete ownership over at least 40% of the institutions, as a result of which it can play a more direct role in the decision-making process. For the government-owned providers (well over 30% of all) in Belgium, authorities have a variety of instruments enabling them to have a more direct role in the decision-making process, compared to the Netherlands. The Belgian legislation also provides for a broad set of instruments by which the authorities have a more direct role in the decision-making process on and the planning of infrastructure. Furthermore, the Belgian authorities cover more than half of the building costs by granting subsidies, provided that certain conditions are met. The considerations per country indicate that - in comparison to the Netherlands most other EU countries use a more diverse set of instruments, as a result of which they have more direct control over the building and use of infrastructure. It should be remarked that in a lot of countries there is discussion about the different instruments by which to establish a liberalisation of legislation (deregulation). In the Netherlands proposals for such a liberalisation have also been presented. Compared to other, especially neighbouring countries, these proposals may be considered as far-reaching. Research on the different foreign systems by which infrastructure can be controlled and financed, show that an increasing number of countries use socalled Estate Strategy Plans (long-term housing plans) in their decision-making process on building projects. In the Netherlands deregulation proposals have been presented which increase the status of the Estate Strategy Plan. These are in line with developments in a number of other European countries.

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