The unexpected growth of the private health sector in Greece

Transcription

1 Health Policy 74 (2005) The unexpected growth of the private health sector in Greece Yannis Tountas a,, Panagiota Karnaki b, Elpida Pavi c, Kyriakos Souliotis a, d a Center for Health Services Research, Department of Hygiene and Epidemiology, Medical School, University of Athens, 25 Alexandroupoleos St., Athens, Greece b Institute of Social and Preventive Medicine, 32 Skoufa st., Athens, Greece c National School of Public Health, 196 Alexandras Avenue, Athens, Greece d Onassis Cardiac Surgery Centre, 356 Sygrou Avenue, Kalithea, Athens, Greece Abstract The article analyses the situation which exists in the private health sector in Greece, it presents data on the growth of the private sector and discusses the reasons for this phenomenon in relation to privatisation trends in other European countries. The growth of private health care in Greece in the last 10 years is evident despite governmental attempts to minimise its role through the development of the National Health System in 1983 and the legislative restrictions on the private sector. Private health expenditure has increased, reaching 3.9% of the country s GNP (43% of the total expenditure in health) in The number of private hospitals and hospital beds has decreased (hospitals decreased from 468 in 1990 to 218 in 2000 and private beds decreased from 25,075 in 1980 to 15,806 in 2000) mainly because of the reduction in the number of small private hospitals. On the other hand, private doctors and private diagnostic centres have significantly increased. This situation is believed to be attributed mainly to the provision of inadequate and low quality public health services which have caused widespread dissatisfaction among the general public, and factors associated to improved standards of living, as well as the rapid growth of private insurance Elsevier Ireland Ltd. All rights reserved. Keywords: Private health sector; Greece; Health services 1. Introduction According to the 2001 national census, Greece has a population of 10, In 2000 infant mortality was estimated at 6.4 per 1000 live births and life expectancy Corresponding author. Tel.: ; fax: address: chsr@med.uoa.gr (Y. Tountas). was 76 years for men and 81 years for women. These figures establish Greece as one of the healthiest populations among European countries [1]. The country s satisfactory health indicators are attributed to the relatively high standard of living, the good climate and healthy nutrition, rather than to the contribution of the health services [1]. For many years, the health system in Greece has been in a state of continuous crisis. The basic aspects of /$ see front matter 2005 Elsevier Ireland Ltd. All rights reserved. doi: /j.healthpol

2 168 Y. Tountas et al. / Health Policy 74 (2005) this crisis involve a fragmented administrative framework, low levels of public expenditure, inadequate hospital services, skewed manpower, a low level of primary health care (PHC) and a poorly regulated private sector [2] The National Health System The National Health System (NHS) in Greece was introduced in 1983 by the newly elected socialist government. Its introduction had met public demand, as there had been widespread dissatisfaction with existing health services [2]. The basic goals of the new system was to increase public health resources, decentralize and administratively reorganize the health system, develop public primary health care services, upgrade hospitals, strengthen human resources and exercise control over the private sector [3]. The private sector was in a problematic situation with loose control and poor services. Measures taken aimed at the gradual dissolution of the private health services as a result of the growth and improvement of the public sector. In this direction, the law introduced full-time exclusive employment for NHS physicians, and prohibited private practice for doctors working in public hospitals or public health centres. Furthermore, the establishment of new private hospitals or the expansion of existing ones was forbidden [3]. In the 20 years during which NHS has been operating, some of the initial aims have been achieved, others were only achieved partially and some of the reform measures were not implemented at all [3] Financing Today, the Greek Health Care System can be characterized as a mixed system, with elements both of the Bismark model (financed mainly by social insurance) and the Beveridge model (financed mainly by the state taxes). In general, the funding system is open-ended and is mainly demand led. In 1998, the health sector was funded by general taxation at a proportion of 34.6%, by social insurance at 22.1% and by private payments (out-of-pocket payments and private insurance) at a proportion of 43.2%. During the last decade, there has been a gradual decrease of funding from social insurance and an increase of funding from general taxation and private payments [4]. Concerning public health expenditure (general taxation and social insurance), 35% concerns expenses of the public hospital sector and 16% covers the purchasing of drugs. On the other hand, private health expenditure estimated from the distribution of family health expenditures mainly covers primary health care (27.92%) and dental care (34.33%). Only 16.16% of private health expenditure concerns hospital care, and drugs at a proportion of 21.5% (Fig. 1) [5]. It should also be mentioned that public hospitals have serious annual deficits and their budget is subsidized by direct state contribution up to 50% [4]. Health care services are primarily provided by: (a) NHS units (128 public hospitals and 185 primary care centers in rural and semi-urban areas), (b) health units belonging to social insurance funds (five hospitals and 300 health centers and special units) mainly the Foundation of Social Insurance (IKA) which covers private employees and (c) the private sector (218 hospitals, 400 diagnostic centers) [6] Private sector The developments in the private sector since the implementation of NHS were one of the greatest failures of the health reform. Instead of its gradual dissolution the private health sector experienced an unexpected growth. The prohibition of the establishment of new private hospitals and the expansion of existing ones was implemented to a considerable extent. However, the conservatives rise to power in 1992 led to the alteration of the law. Thus, the establishment of new private hospitals was once again permitted. The regulations for new hospitals, in terms of construction standards and manpower requirements were so strict that they had a discouraging effect for new investors especially those who planned to build small or medium sized units. Nevertheless, during the last years, the private health sector grew considerably. There was an important increase in private health expenditure and new private hospitals (especially maternity hospitals). In the private primary health care, there was a rapid growth of diagnostic/laboratory centres and an important increase in the number of private doctors [6].

3 Y. Tountas et al. / Health Policy 74 (2005) Fig. 1. Distribution of family health expenditure according to different health services (2000). Source: National Statistical Service, Family Budget Research 2000, Athens 2001 [5]. The developments which have taken place in Greece in the private health sector both in the domain of expenditures and that of infrastructures are rather intrinsic, since they are not only part of the European move of the last 10 years towards privatisation, but also because they illustrate the strength of the market forces when the public sector provides inadequate and poor quality services, while increase of available income and change in the pattern of consumption are recorded [7]. The analysis of these developments and the discussion of the reasons, which have produced them, are the objectives of this paper. 2. The growth of the private health sector 2.1. Expenditures The growth of the private health sector is first expressed through the increase in private health expenditure. According to Fig. 2, private health expenditure in Greece has shown a continuous increase since 1980, reaching 3.9% of the GNP in 2000, a percentage which is much higher than that of most developed countries (the mean value for OECD countries in 2000 was 2.2%) [8]. During the decade private health expenditure has increased. Between 1989 and 2000 private health expenditure as a percentage of GNP increased by 1.2% while public expenditure increased by 0.5%. As a result, Greece today has the 10th highest proportion of total health expenditure (8.3% of GNP) among OECD countries and the fifth lowest proportion of public health expenditure (4.6% of GNP) [8]. According to latest estimations private health expenditure reached 44.5% of total health expenditure in 2000, which is the highest percentage among countries of the European Union and the second highest among OECD countries [8]. More than 90% of private health expenditure is direct out of pocket payments and only 10% is private health insurance payments [9]. Private health care expenditure has also increased in many other EU countries. In the UK, it has grown from 9% of the total health care expenditure in 1979 to 15% in 1995 [10] but it is usually less than 30% of total health expenditure [8]. A large proportion of private health expenditure in Greece comes from informal private payments (hidden economic activity). Although the provision of NHS

4 170 Y. Tountas et al. / Health Policy 74 (2005) Fig. 2. Public and private expenditure in Greece ( ). Source: OECD [8]. services is free of charge for every citizen, a lot of patients are asked or fell obliged to pay additional fees, as a present to physicians, especially surgeons, although all the NHS personnel is paid exclusively by state salaries [11]. This creates a black illegal economy situation in the health sector, which causes a heavy burden on individual incomes. The estimations made about the extent of the black market phenomenon differ according to the source of investigation. Family income surveys indicate that illegal payments are estimated to be over 20% of the total private expenditure [9]. Black market activities were also fueled by the ban on private practice for public hospital physicians introduced by the new health system which had an adverse effect and posed a serious threat against the fundamental principle of NHS that all citizens were entitled to equal and free of charge treatment [3]. As a result of the increase of private health expenditure, during the last two decades family health expenditure has shown a marked increase from 4.8% of total private consumption in 1974 to 5.7% in 1994 and to 6.8% in 1998 [12]. The largest increase concerns hospital care (37.1%), followed by primary health care expenditure (26.5%), pharmaceutical expenditure (15.6%) and lastly, primary dental care expenditure (15.4%). The amount of money a family spends on health is primarily determined by income. Other important factors, which determine the amount spent on health, are geographic area, occupational status and occupation of the head of the household. Higher family income is associated with higher private health expenditure. Higher private health expenditure is observed among residents of urban areas, primarily those living in Athens (the capital of the country), and also among families the head of which is an executive or a self-employed professional (lawyer, engineer, medical doctor, etc.). Furthermore, private health expenditure is determined to a considerable degree by the extent of insurance coverage which absorbs an increasing percent of annual family budgets [13]. The data derived from the annual household survey do not allow an estimation of the extent of the influence of other factors, such as the severity of illness and the cost and quality of public and private care, which have been suggested by a simple model of demand for medical care in the UK, where public and private care also coexist [14].

5 Y. Tountas et al. / Health Policy 74 (2005) Hospital sector The growth of the private health sector is also expressed by the growth of private hospitals and primary care services. As far as the hospital sector is concerned, in Greece there are two main categories of private hospitals in Greece. The first category includes a small number of prestigious hospitals (no more than 10) of a capacity of beds each. The number of these prestigious hospitals has grown in the last decade mainly in Athens Salonika the second biggest city. The second category concerns small hospitals (less than 150 beds each) the number of which have been decreasing. The few prestigious hospitals are well staffed with established physicians and offer their high quality services with luxury accommodation mainly to private patients or to privately insured patients, while the smaller ones usually provide poor quality services at a much cheaper price to patients of lower socioeconomic status covered solely by social insurance funds. Admissions in private hospitals are approximately 20% of total hospital admissions [4]. After the establishment of the NHS there was a significant reduction in the number of private hospitals. In 1980, there were 468 hospitals, which were reduced to 218 in According to 2000 data, there were 218 private hospitals and 139 state hospitals in the country (128 NHS hospitals and 11 other public hospitals) [6]. A similar reduction was observed in private hospital beds. From 25,075 in 1980, private hospital beds were reduced to 15,806 in 2000 (Table 1). This reduction reflects the closing down of small units that did not survive the low hospitalisation fees set by the state for social insurance funds and the competition from large private hospitals [15]. Small hospitals per diem fees were tied to those of public hospitals, which remained relatively unchanged during the 1980s despite significant inflation increases (more than 20% per year). A small increase was obtained during the 1990s although the average cost of hospitalisation increased between 1992 and 1997 by 125%. Between 1998 and 2000, there was a 15 25% increase in hospitalization fees, while the increase in other fees was approximately 8% [16]. During the last years, hospital care provided through the private sector has been marked by significant market oligopoly trends characterized by the buying off and merging of small with larger hospitals. In certain cases, large private hospitals are gradually becoming multinational corporations, as they are expanding their activities primarily in the Balkan countries. The general trend which seems to prevail is the establishment of General Private Hospitals with a capacity of beds, with an emphasis on the surgical sector [4] Primary health care The growth of private health services has been more prominent in the PHC sector. PHC in Greece is provided through the NHS, the medical services of the social insurance system and through the private sector. Primary health care in rural and semi-urban areas is provided by 185 health centres and 1422 rural medical surgeries which belong to the NHS, and also by a large number of private doctors many of whom are contracted with social insurance funds [6]. Table 1 Hospital infrastructure evolution in Greece Total number of hospitals State hospitals 112 (18.4%) 125 (24.8%) 140 (35.7%) 140 (37.6%) 139 (38.8%) 128 (35.8%) Other public hospitals 28 (4.6%) 22 (4.3%) 3 (0.7%) 3 (0.8%) 4 (1.11%) 11 (3%) Private hospitals 468 (77%) 356 (70.7%) 249 (63.5) 229 (61.5%) 215 (60%) 218 (61%) Total number of beds 59,327 56,358 51,329 51,477 52,227 52,561 State hospital beds 25,905 (43.6%) 31,838 (56.4%) 35,896 (70%) 36,529 (70.9%) 36,717 (70.3%) 34,215 (65%) Other public hospital beds 8347 (14%) 4860 (8.6%) 66 (0.12%) 151 (0.2%) 269 (0.55%) 2540 (4.8%) Private hospital beds 25,075 (42.2%) 19,660 (34.8%) 15,214 (29.6%) 14,797 (28.7%) 15,241 (29.1%) 15,806 (30.2%) Source: Ministry of Health and Welfare [6].

6 172 Y. Tountas et al. / Health Policy 74 (2005) In urban areas, PHC is provided through hospital outpatient departments, social insurance fund polyclinics and private doctors. Furthermore, in urban areas PHC is provided though private diagnostic centres. Some of them, apart from laboratory and other diagnostic tests, also provide medical consultations [6]. The private diagnostic services market in Greece is rapidly growing. It is estimated that more than 400 private diagnostic centres operate today in Greece. According to the Greek Association of Medical Diagnostic Centres data, in 2000 more than five million diagnostic tests courses were carried out, with the annual turnover exceeding 12 million euros [6]. The viability of private diagnostic centres depends to a large extent on the ability to draw contracts with public insurance funds. The financial part of these contracts is based on agreements concerning fees for medical acts established by law in April 1991 when the conservative party governed Greece for 3 years ( ). Fees for medical acts have remained stable for a decade, and as a result prices differ significantly from today s market prices (Table 2). This is the cause for a significant imbalance in the financing of diagnostic centres, which results to additional fees being charged which further increases private expenditure in health care. According to Table 2, state determined fees seem to favor the financing of high biomedical technology, given that the status fees vs. market price differences of complex examinations (CT scan, magnetic tomography, TRIPLEX, etc.) is not high, in contrast to the differences in microbiology or X-rays, where Table 2 Comparison of public and private fees for medical diagnostic examinations (in euros) Type of examination Private sector Public sector Medical consultation * Blood test Triglycerides test P.S.A Chest X-ray F/P Liver-pancreas U/V Heart Triplex Magnetic tomography CT scan Source: Ministry of Health and Welfare [6]. Relative difference (%) state fees lag behind the market prices by more than 75%[17]. As a result of all these developments, the private health services market has shown a further increase during the last few years, as the total turnover has increased from 386,794,000 euros in 1995 to 833,500,000 in A significant increase (115.5%) is observed in total turnover, with private maternity hospitals exhibiting the highest increase (229.8%) (Table 3) [18]. 3. Looking for an explanation As aforementioned, the growth of the private health sector in Greece can be attributed both to the increasing demand for health care services and that of the supply of such services. The demand for private health services has increased as a result of a number of factors, such as the economic growth and the resulting increase in the average family income, which in turn led to a higher purchasing power for Greek families. Another important factor has been the dissatisfaction of consumers with public health services, as expressed in various surveys [19]. Finally, an important part has been played by the third-party payers, the social insurance funds, which have shown an inability to either control or even rationalize the demand for medical services covered, through the provision of comprehensive and integrated primary health care services, and private health insurance which has rapidly grown covering a large scope of health services especially hospital services [20]. At the supply level, the growth of the private sector can be attributed to the high quality private hospital services, which have been developed and are offered to the public by a limited number of providers, the important investment made in cuttingedge diagnostic technology in private diagnostic centers and the rapid growth in the number of private doctors Economic growth Per capita GNP in Greece has traditionally ranked among the lowest in the EU and was equal to 67% of the European average in However, over the last few years, the Greek economy has been displaying a notable improvement, with the per capita GNP rising steadily

7 Y. Tountas et al. / Health Policy 74 (2005) Table 3 Total turnover of selected private health services in thousand euros ( ) Sector Percentage of Increase Diagnostic centers 121,496 (31.4%) 227,700 (27.3%) 87.4 Private hospitals 219,809 (56.8%) 455,800 (54.7%) Private maternity hospitals 45,488 (11.7%) 150,000 (18.0%) Total 386,793 (100%) 833,500 (100%) Source: [18]. to 75% of the European average in The improvement witnessed in the Greek economy is reflected in the fulfillment of the convergence criteria, which allowed Greece to join the EURO zone as a full member on the 1st January During the last five years the economic growth rate of Greece has been higher than the average EU growth rate. In 2003, the economic growth rate was 4.7% [21]. The Second and Third Community Support Frameworks, which amounted to over 50 billion euros and international financial support for the organization of the 2004 Olympic Games have also significantly assisted the country s economic development. Economic growth has in turn strengthened the purchasing power of the Greek families, enabling them to seek health care services in the private sector, thus avoiding any delays or waiting lists. Such services are purchased mainly through direct out-of-pocket payments and, less commonly, through supplementary private insurance. As already mentioned in Section 2, family income has been reported to be the main determinant of the extent of private payments in health care. Data from Household Budget Surveys verify that the two higher income groups spend approximately the same amount on health care services as all the remaining six income groups spent jointly. The same data have displayed a noted increase in the amount of (additional) income earmarked to health care services from 5.7% in 1994 to 6.8% in Such increases have not been as prominent in other categories of spending whereas categories, such as housing, clothing, etc. have shown a marked decline [4] Dissatisfaction Apart from economic growth another main reason for the growth of the private health sector is the fact that Greek citizens according to public opinion and research, are not satisfied with the public health system [15,22,23]. Dissatisfaction concerns primarily low quality hotel services offered by public hospitals, cleanliness, the lack of single bed rooms and the long waiting lists for certain specialties (cardiosurgery, oncology, etc.). The highest cost in time has been observed when citizens attempt to access advanced medical technology departments of public hospitals. Dissatisfaction in the public health system is primarily due to two reasons, namely the lack of large hospitals in certain regions of the country (60% of hospital beds are concentrated in the greater Athens area) and the lack of specialized hospitals or hospital departments in regional cities. There are 4.0 hospital beds per 1000 population in the greater Athens area, while the relevant figure recorded in less developed regions of the country is only On the other hand, only 7 of the country s 13 regions have public general hospitals offering the whole range of medical specialities [6]. The largest insufficiencies of the public sector are located in primary health care [15]. The Primary Health Centers in rural areas operate under inadequate staffing and have inadequate diagnostic equipment. Rural medical surgeries are staffed by medical graduates who tend to have a lack of experience. In urban areas, hospital outpatient clinics and social fund polyclinics are not adequate to satisfy the need for public PHC services. As a result, in both cases long waiting lists are formed and discomfort is caused to citizens [6]. The reasons for the insufficiencies in hospital services are related mainly to the underfunding of the NHS which had delayed the establishment of new hospitals in less privileged regions and the recruitment of additional personnel, especially nursing where

8 174 Y. Tountas et al. / Health Policy 74 (2005) the ratio of nurses per public bed is only 1:1 [2]. Concerning PHC, apart from the lack of adequate funds, PHC in urban areas has not been properly developed because social insurance institutions are not willing to incorporate their services into the NHS, and thus, abolish their control. As a result, the highly fragmented provision of PHC services by social insurance creates problems of coordination, low efficiency and great inequalities [2]. As secondary reasons for the problematic provision of public health services can be included the lack of Information Technology in the public health sector, the lack of planning mechanisms in the Ministry of Health and a very bureaucratic central control which delayed all necessary actions [2] Insurance policies Policies exerted by the private and public health insurance sectors have also been a reason for the growth of the private health sector. In Greece all citizens are insured according to their professional status in 32 different social insurance funds. Most of them (50%) are insured in the Foundation for private workers and employees, 20% in the Organization of agricultural insurance and the remaing in smaller funds. Most of the smaller funds provide better services in comparison with the two large ones [3]. About two million of the insured population have additional private health insurance coverage. This number represents 20% of the total population. The corresponding percentage in the UK in 1997 where a NHS also exists was 12% [24]. Social insurance pays low prices for medical charges and has inadequate control of utilization. Private insurance on the other hand gives almost free access (at the point of delivery) to expensive private care. The private insurance sector has developed significantly in the last 20 years (rapid increase between 1992 and 1997, relative stabilisation between 1997 and 2001), a phenomenon observed in many other European countries [25]. One of the reasons for the rapid growth of private insurance in Greece was the existence of tax relief incentives for private insurance. Since 1992, basic insurance schemes have allowed free access to private hospitals, almost exclusively to the prestigious ones, through the use of hospitalisation cards. Under these insurance schemes, there is no cealing in medical expenses and there is a rather inadequate retrospective control on the justification of services consumed. The number of people insured under these schemes amount to more than 800,000. These provisions have led to overconsumption and overpricing of private hospital services bringing the private insurance sector into a crisis. As a result, in the last few years, private insurance schemes have restricted their provisions, are trying to exercise control mechanisms prior and during hospitalisation and are negotiating fixed prices per diagnostic category. Nevertheless, over 85% of admissions in the few prestigious private hospitals are covered fully (total bill) by private health insurance [16]. Concerning social insurance, each fund, based on its own regulations, determines the provisions its beneficiaries are entitled to, and the way in which these are provided. During the last years, uniform rules apply across sick funds concerning various provision categories, in an attempt to promote a single health care provision policy [17]. Insured persons of the more prosperous social insurance funds (approximately 10% of the insured population) are covered, to a large extent, for hospitalisation in prestigious private hospitals for all illnesses (internal medicine, cardiological, surgical, etc.), specialised operations (like cardiosurgery, arthroplasty of hip and knee) and for specialised examinations (like digital angiography, magnetic resonance imaging and computer tomography, echocardiography, etc.), since the prices set by the state for these services are considered satisfactory. The remaining socially insured population have free access to public hospitals and to small private hospitals which usually provide services of poor quality [17]. All insurance funds have expressed complaints concerning the methods of payment followed by private hospitals, which allow for the billing of additional medical services of questionable necessity and without the possibility of any substantial control, since there are no clinical protocols in use neither payments according to diagnostic categories. The fee for service payment system is loosely controlled, as already mentioned, by retrospective evaluation of hospital bills [17]. As far as the use of private primary care is concerned, the policy of the various sick funds differs substantially. Each sick fund has its own policy, but

9 Y. Tountas et al. / Health Policy 74 (2005) usually they all provide free access to public health services, contracted private diagnostic centres and private doctors. In both cases the lack of any substantial control before consumption and inadequate control that follows consumption, has led to a significant overconsumption of primary medical services. Apart from overconsumption, a rather astonishing illegal practice is the billing of social funds by some private providers, mostly doctors and diagnostic centers, for health services which have never been provided since the lack of computerized archives and medical records makes it difficult to exercise control over billing [17]. In any case, the providers give no economic incentive for control of medical consumption in the private health sector, since both social insurance funds and private insurance organizations pay by fee for service and not by capitation and do not exercise any economic recuperation for overconsumption. This is a phenomenon which contributes further to the growth of the size and profit of the private health sector in Greece Quality of services According to a survey of the National School of Public Health conducted in collaboration with WHO, the few prestigious private hospitals are top in citizen s preferences as far as the environment, freedom of choice and hospitalisation conditions are concerned. According to the same study, these factors are important choice incentives especially for the higher income social groups [26]. Prestigious private hospitals apart from increased patient satisfaction have also achieved higher efficiency indicators as far as the average length of stay (AloS), occupancy rates, manpower and subsequent cost structure are concerned. AloS differ significantly between small downgraded hospitals and larger prestigious private hospitals. More specifically, in 2000 the AloS in private hospitals on the whole was 8.05 days, while in the prestigious private hospitals of Athens the corresponding figure was 3.27 days [6]. Similar differences are observed in the occupancy rate of private hospitals. The annual average occupancy rate in private hospitals is 47%, while in two of the more prestigious hospitals in Athens it is around 80%, which shows an increase of 10% from the beginning of the last decade [6]. In the public sector, the average AloS in 2000 was 6 days for large hospitals, 5 days for middle size hospitals and 4.8 days for smaller hospitals. The respective occupancy rates were 75, 69 and 55% [6]. Another important difference between public and private hospitals is the number of doctors and nurses employed. In 1998, in the public sector there were 56.7 doctors per 100 beds and only 22.8 doctors per 100 beds in the private sector. For nurses, the ratios were 100 per 100 beds for the public sector and 37.5 per 100 beds for the private sector. The ratio of nurses per doctors was 1.8 for the public sector and 1.6 for the private sector [4]. From the data presented above, it is evident that the few prestigious private hospitals are more efficient than public hospitals at least in terms of AloS and occupancy rates, but on the other hand public hospitals are more efficient than small private hospitals. Of course these comparison have to be carefully considered since the existing data on the function of private hospitals are limited and most importantly since there is a lack of case-mix homogeneity across different hospitals. Efforts to adjust for case-mix differences have been made only for public hospitals [27]. Results from relevant comparisons in other EU countries have not been consistent. In Germany, for example, empirical results showed that hospitals in the public and welfare sector are relatively more efficient than private hospitals [28]. Also, of specific interest is the comparative cost structure of a sample of private and public hospitals. Table 4 confirms the substantial divergence between Table 4 Indicative cost structure in public and private hospitals Cost category State hospital (%) Private hospital (%) Pay roll Food supplies Medical material Laboratory expenses Pharmaceutical material Other Total Source: Souliotis [4].

10 176 Y. Tountas et al. / Health Policy 74 (2005) the respective payroll cost (54% compared to 63%) and the cost of medical material (16% compared to 9.6%) [4]. Due to the rapid growth of the private sector, high biomedical technology was concentrated, to a great extent, in private hospitals and diagnostic centers, which rapidly followed and adapted to technological developments. It is indicative that approximately 90% of private health investments are directed towards high biomedical technology, while the respective percentage of public health investments is estimated at around 30% (for the period after 1987) [4]. Lack of reliable data makes it also difficult to establish the differences in the services provided especially regarding the critical and complicated cases. Small private hospitals do not have the necessary resources for treating such cases. The same holds true for the small public hospitals. On the other hand, the few prestigious private hospitals although they are well staffed and equipped do not seem to be preferred by the public for critical and complicated cases. This is partly due to the fact that university medical units, which are the most qualified settings for such cases, are functioning within public hospitals. According to Souliotis [4], critical and complicated cases represent less than 15% of the case-mix of the private sector, when psychiatric cases represent 26.7% and maternity cases 53% Medical manpower Finally, an important role in the growth of the private health sector has been the increase of private medical doctors who bear the load of PHC in Greece. In 2000, approximately 53,000 doctors were working in the country which corresponds to 4.4 doctors per 1000 population [3]. This ratio, which is one of the highest in Europe, (second only to Italy) is primarily responsible for producing supplier induced demand, resulting in overconsumption of medical services. The phenomenon of overconsumption which is evident in many western European countries [29] is especially prevalent in the private health sector in which 65% of Greek doctors are employed. There are more than 20,000 doctors with private offices with million visits per year, a number that corresponds to the 30% of total health visits [6]. The annual rate of medical visits per capita in Greece is about eight which is higher than the corresponding rates in most Western European countries, although life expectancy in Greece ranks between the top eight places in the world [8]. Apart from the large number of doctors, overconsumption is fed by the lack of any sort of control over the practice of private doctors who do not implement any gatekeeping role, neither for hospital care nor for referral to diagnostic or other specialized services. In most cases, doctors are paid a percentage for each referral. A similar situation occurs for drug prescription which pose a burden on the overall cost of medical care [4]. 4. The implications of privatisation The growth of private health expenditure and private health services in Greece, raises the issue of privatisation high in the health agenda of the country. According to a WHO technical briefing note, privatisation in health is defined as a process in which nongovernmental actors become increasingly involved in the financing and/or provision of health care services [30]. From the previous discussion of the situation in the country, it is obvious that this process has taken place in Greece, especially during the 1990s International developments This phenomenon is of course not only restricted to Greece. During the last decade, there has been considerable international mobilisation around minimising the role of the state in health care, not only as an unavoidable process but also as a preferable development [31]. According to the World Bank, the new global policy should reduce the level of governmental involvement and spending in health care, target it for the benefit of the poor, and promote the private sector [32]. It has been argued that there must be an expanded role for the private market in the provision of health services in order to provide incentives for efficiency, acquire capital and redirect limited public resources to public priorities [33,34]. Privatisation has grown more rapidly mostly in lower and middle income countries, but it has also been a phenomenon observed in upper income countries even in those with well established national health systems [10,32].

11 Y. Tountas et al. / Health Policy 74 (2005) Classification Different combinations of public and private financing and provision of health care may exist and five types of privatisation have been described [35]. The case of Greece seems to fit better with the fifth type, which has to do with the rapid growth of the private sector as a result of the failure on part of the government to meet the health care demands of the people. As already mentioned, the NHS is characterized by important insufficiencies and low quality services, which have created an advantageous environment for the growth of the private sector, especially in urban areas. The literature on privatisation also distinguishes between incremental or passive privatisation, which is largely unplanned in response to the failure of the public sector, and programmed or active privatisation, which originates from the implementation of proprivate government policies [36]. The underfunding of public services and consequently the subsidizing for private ones, has not resulted from political choice or as a strategic planning alternative. Lack of public resources and inadequate public health services, especially in the PHC sector, have imposed those choices which have been implemented mainly by the conservative party which has ruled for a short period of time ( ). The abolishment of the ban on the building of new private hospitals or the extension of existing ones together with the permission for the establishment of private diagnostic centers can be considered proprivate government policies, which were implemented though as a rather passive and unplanned response to the problematic public health sector. These policies have not been altered by the socialist party, which has governed since then, not because there was a preference for them but because they were considered as unavoidable, since important investments of private capital were in a state of realization. It was also an opportunity of the socialist party to adopt a more liberal policy and a more flexible framework for the health services in Greece. On the whole in Greece, passive privatization is more widespread than active privatization [37]. It also seems that in most cases individuals may use both public and private services. At least this is the case in the UK and in Greece, where the health system have many similarities, since they both have a NHS with a dominant role of the state in the health sector [10]. On the other hand, experts on healthcare policy throughout Europe agree that no matter what form has been adopted in different countries, the resulting public private mix has never been right [29] Criticism The main criticism on privatisation has been based on the principle that healthcare reform should be structured on improving people s health, and not in containing costs [38]. Another common criticism is directed towards the weak knowledge base which exists concerning the validity of assumptions made about the cost, quality and efficiency of services offered by private health care providers [10]. It has been argued that the quality of care offered by many private providers (especially in developing countries) is poor [39]. In Greece, data presented about private hospitals, demonstrate large differences on efficiency. The few prestigious private hospitals are more efficient than smaller private hospitals and public hospitals. This supremacy is mainly a result of the much higher prices prestigious private hospitals charge their clients, than the prices paid by social insurance towards public and small private hospitals. This difference brings the discussion to the critical issue of equity. There has been a lot of criticism on the failure of privatisation to foster a more just system [40]. It has been argued that a predominantly private system is likely to generate economic and political forces which will make movements towards justice more difficult [31]. In Sweden, the risks of privatisation have been considered as threats to the fundamental principles of equity on which the Swedish healthcare system was founded [41]. In Greece, the significant increase in private spending and the fact that high quality private hospital care is only available to one fifth of the population who can afford additional private health insurance or out of pocket payments emphasize the need for consideration which has to be given towards equity issues. At least from the point of view of financing, the health system in operation today seems to be even more inequitable than the system which was in place in the early 1980s when the private sector provided only private physicians and low quality complementary hospital services for the socially insured population [16].

12 178 Y. Tountas et al. / Health Policy 74 (2005) Public private relationship Nevertheless, no matter how well supported the criticism on privatisation is, it seems that there is an unavoidable movement towards a complementary relation between the public and the private health sector. Distinctions between services delivered by the public and the private sector are breaking down in many areas, and as the Cabinet Office white paper states for the UK, this is opening up the way to new ideas, partnerships and opportunities for devising and delivering what the public wants [42]. In the European Union, over the past eight years the European Commission has advocated the use of public private partnerships and has used government grants to set them up [43]. This swing towards cooperation and away from competition is not yet the case in Greece. Actually, one of the measures of the recent health reform which permits public hospitals to provide care to private patients through private payments both in the outpatient department in evening hours and in inpatient well accomodated departments, will reinforce the competition between the public and the private sector [2]. Private insurance agencies are very interested in signing collaborative agreements with public hospitals in order to pay lower fees for their patients hospitalization than the fees they pay in the prestigious private hospitals. On the other hand, recent reform measures planned for primary health care, include the establishment of a new institution of family doctors who are going to be private doctors signing collaborative agreements with social security and the National Health System [2]. This measure will permit the development of an organized public PHC system, especially in urban areas, in collaboration with the private sector. Finally, it is important to emphasize that cooperation between the public and private sector requires an organisation, such as the state, to act as coordinator and guarantor of equitable access of care and fair distribution of costs [40]. Even in countries like the UK, which have a long tradition of public health care, the private health care sector is not effectively regulated by government actions [36]. In Greece, this deficiency is even more prominent since most of the legal regulations are either too old or tailored to the false assumption made by the implementers of the National Health System that the private health sector would gradually dissolve as a result of the growth and improvement of the public sector. Apart from the strict law for new hospitals, the rest of medical and paramedical services function either in very loose legal framework or in a legal vacuum, as is the case for geriatric services or in vitro fertilization units [4]. Additionally, no institution for accreditation or quality control exists so far in Greece. A new law for the private health sector in Greece is on the agenda of the Ministry of Health but its scope and direction is not yet known. 5. Conclusion Apart form the specific provisions that the new law will introduce, it is evident from what has been previously discussed that the issue of the uncontrolled growth of the private health sector in Greece can be confronted by three main policies. The improvement of the quality of public health services, the exercise of a more effective control on prices and volume of private health services bought by public and private insurance funds and a substantial decrease in the production of medical doctors. Public health services can become more competitive if there is a substantial increase in public health expenditure. This will allow for the recruitment of additional personnel, especially nursing, which is a crucial factor in the quality of health services. It will also permit improvements in the infrastructure and the technology of hospital services, which are at present a major source for dissatisfaction. Concerning PHC, the organization of a new system in urban areas with the participation of private doctors and the collaboration of social insurance s services, will upgrade public primary health services making them more competitive. In order to exercise a more effective control on prices and volume of private health services, it will be necessary to establish a more effective mechanism in the social security sector in order to negotiate and purchase private health services which will fulfill the criteria of cost and quality. This will require the computerization of the social security health provisions, an endeavor which is still under development. Finally, it is obvious that with the present number of medical doctors and the high rate of their annual growth, it is difficult to control the growth of the private sector which is annually supplied by about 1000 new doctors. Efforts to restrict their production have not

13 Y. Tountas et al. / Health Policy 74 (2005) succeeded so far because of the unwillingness of the two ruling parties to dissatisfy public opinion which prioritize the opportunity for medical studies in a top position. References [1] Center for Health Services Research. The State of Health in Greece. Ministry of Health and Welfare, Athens; 2000 [in Greek]. [2] Tountas Y, Karnaki P, Pavi E. Reforming the reform: the Greek national health system in transition. Health Policy 2002;62: [3] Tountas Y, Stefansson H, Frissiras S. Health reform in Greece: planning and implementation of a National Health System. International Journal of Health Planning Management 1995;10: [4] Souliotis K. The role of the Private Health Sector in the Greek Health Care System. Athens: Papazisi Publications; 2000 [in Greek]. [5] National Statistical Department. Research of Family Budgets Athens: Prologos Publications; 2001 [in Greek]. [6] Center for Health Services Research. Health Services in Greece. Ministry of Health and Welfare, Athens; 2001 [in Greek]. [7] Souliotis K. Analysis of health expenditure in Greece In: Kyriopoulos J, Souliotis K, editors. Health expenditure in Greece methodological problems in the measurement and consequences on health policies. Athens: Papazisis Publications; 2002 [in Greek]. [8] OECD. Health data A comprehensive analysis of 29 countries. Paris: OECD; [9] Souliotis K, Kyriopoulos J. The hidden economy and health expenditures in Greece: measurement problems and policy issues. Applied Health Economics and Health Policy 2003;2: [10] Propper C. The demand for private health care in the UK. Journal of Health Economics 2000;19: [11] Pavlopoulos P. The hidden economy in Greece. Athens: Papazisis Publications; 1987 [in Greek]. [12] National Statistical Department. Research of Family Budgets Athens: Prologos Publications; 1996 [in Greek]. [13] Sissiouras A, Karokis A, Kalomenidis K, Mitropoulos M. Socioeconomic inequalities in the level of health and use of health services in the Greek population. Results from an empirical research in the population of Patras. In: Proceedings of 6th scientific conference: social inequalities and social exclusion. Athens: Saki Karagiorga Foundation; 1998 [in Greek]. [14] Goddard M, Smith P. Equity to Access to Health Care. University of York Center for Health Economics Discussion Paper; [15] Kyriopoulos JE, Tsalikis G. Public and private imperatives of Greek health policies. Health Policy 1993;26: [16] Liaropoulos L, Tragakes E. Public/private financing in the Greek health care system: implications for equity. Health Policy 1998;43: [17] Kyriopoulos JE, Liaropoulos L, Boursanidis X, et al., editors. Health insurance in Greece. Athens: Themelio; 2001 [in Greek]. [18] ICAP. Private Health Services. Athens: ICAP Databank; [19] Eurobarometer, [20] Souliotis K, Lionis C. Creating an integrated health care system in Greece: a primary care perspective. Journal of Medical Systems 2004;28: [21] National Statistical Service of Greece. Quarterly National Accounts, Athens [22] Ferrera MEC citizens and social protection: main results from a eurobarometer survey. Brussels: Committee of the European Community; [23] Liaropoulos L, Kaitelidou D. Changing the public private mix: an assessment of the health reforms in Greece. Health Care Analysis 1998;6: [24] Doyle Y, Bull A. The role of the private sector in the United Kingdom healthcare system. BMJ 2000;321: [25] Propper C, Green K. A larger role for the private sector in health care: a review of the arguments. The Centre for Market and Public Organisations Working Paper No. 99/009; [26] Kyriopoulos JE, Gregory S, Oikonomou C. Health and health services in Greece. Athens: Papazisi; 2002 [in Greek]. [27] Aletras VH. A comparison of hospital scale effects in short-run and long-run cost functions. Health Economics 1999;8: [28] Helming B, Lapsley I. On the efficacy of public, welfare and private hospitals in Germany over time: a sectoral data envelopment analysis study. Health Services Management Research 2001;14: [29] Richards T. European health policy: must redefine its raison d etre. BMJ 1996;312: [30] Muschell J. Privatization in health. In: Health economics technical briefing note: WHO task force on health economics. Geneva: World Health Organisation; [31] Mossialos E, Dixon A, Figueras J, Kutzin J, editors. Funding health care: options for Europe. Milton Keynes: Open University Press; [32] World Bank. Investing in Health: World Development Report Washington, DC: World Bank; [33] Rosenthal G, Newbrander W. Public policy and private sector provision of health services. International Journal of Health Planning and Management 1996;11: [34] World Health Organisation. Health care systems in transition. World Health Organisation, Regional Office for Europe, Copenhagen; [35] Commander S, Killick T. Privatization in developing countries: a survey of the issues. In: Cook P, Kirkpatrick C, editors. Privatization in less developed countries. New York: Harvester Wheatsheaf; [36] Saltman RB, Figueras J, editors. European health care reform: analysis of current strategies. WHO-Europe: Copenhagen; [37] Bennett S, McPake B, Mills A. The public/private mix debate in health care. In: Bennett S, McPake B, Mills A, editors. Private health providers in developing countries: serving the public interest. London: Zed Books; 1997.

14 180 Y. Tountas et al. / Health Policy 74 (2005) [38] The Ljubljana Charter on Reforming Health Care. BMJ 1996;312: [39] Zwi AB, Brugha R, Smith E. Private health care in developing countries. BMJ 2001;323: [40] Buchanan A. Privatization and just health care. Bioethics 1995;9: [41] Dahlgren G. Framtidens Sjukvardsmarknader. Vinnare och for Lorare. [Markets for Health Care in the Future Winners and Losers.]. Stockholm: Natur och Kultur; [42] Cabinet Office. Modernizing Government. Stationary Office, London; [43] European Commission. Government investment in the framework of economic strategy. Brussels: European Commission; 1998.