What can China learn from Hungarian healthcare reform?

Transcription

1 Student Research Projects/Outputs No.031 What can China learn from Hungarian healthcare reform? Stephanie XU MBA 2009 China Europe International Business School 699, Hong Feng Road Pudong, Shanghai People s Republic of China

2 How to make Chinese healthcare system work more efficiently and let more people to enjoy the healthcare service is one the hottest topics in Chinese society. The government has undergone overall healthcare reform in recent years and the latest government investment in healthcare is RMB180 billion. However, we still heart complains in public about the problem of inadequate and overly expensive medical services. What is the effective way for China to improve its healthcare system is the concern of many scholars in this area. In order to find solutions, we can refer to other countries experience in healthcare reform and come up with ideas which fit for Chinese situation. Hungary, as an Eastern European country, was ruled under the influence of the Soviet Union for more than 40 years. From second half of 1980s, reform in healthcare system was initiated in Hungary. With 25 years of development, Hungary has transformed its healthcare system from centralized state control to a more pluralistic, decentralized model. Both established under communist rule, Chinese and Hungarian healthcare system share very similar foundation. Therefore, the past 25 years experience of Hungarian healthcare system reform is extremely valuable reference for china. We can analyze the reform process, methods and achievements to find ways to solve the Chinese healthcare system problems. We will study the Hungarian healthcare system from the overall structure to the financing system. Furthermore, we will study the hospital funding system with understanding the hospitals performance evaluation criteria. In the end, we will conclude the big events happened in the Hungarian healthcare reform history and learn from the solutions Hungarians raised to deal with the healthcare system problems.

3 I What is the outline of Hungarian healthcare system? How does it work? The above figure outlines the organizational structure of the health care system within the three-tier public administration system. Relationships may be either hierarchical (including ownership and direct control) or contractual. 1 In the aftermath of communist rule, Hungary transformed its healthcare system from centralized Semashko state control to a more pluralistic, decentralized model. Responsibilities divided between various players, while the previous hierarchical relationships have partly been replaced by contractual relationships. Contracts between local governments and providers have replaced direct ownership, and privatization 1 Organization chart: Health Care Systems in Transition: Hungary. European Observatory on Healthcare Systems, 1999

4 within healthcare has grown since Health services in Hungary are funded chiefly from the compulsory National Health Insurance Fund for recurrent costs and from taxation for capital costs. Health services are delivered predominantly by public providers in facilities owned mainly by local governments. Providers contract with the National Health Insurance Fund Administration. The government is the dominant regulator of health services, exercises statutory supervision over the National Health Insurance Fund, provides capital costs, finances and delivers public health services and provides most tertiary care services. Healthcare provision primarily occurs through the local governments. National government runs university and specialist hospitals. County governments run county hospitals. The managed care pilot, introduced in 1999, was another recent reform aimed at monitoring and controlling provider performance and influencing clinical behavior. Under the pilot, a provider is allocated a virtual budget, which is based on capitation payment, and adjusted according to the size and composition of the local population. If the provider spends less than allocated by the virtual budget, the surplus is given to the provider to use to reward staff. 3 Despite theoretical access to health care for all members of society, there are still gaps in the system that prevent certain socio-economic groups from attaining comparable health status. 4 In addition, there are significant variations in health status owing to ethnic origin. And the largely poor Roma minority living in Hungary has a life expectancy 10 years lower than the rest of the population. 1 There were also geographical inequalities in healthcare provision, with Budapest enjoying the best health status and 2 Gaál, P., Rekassy, B., and Healy, J. Health Care Systems in Transition: Hungary. Copenhagen: European Observatory on Healthcare Systems, Gaál, P. Study of the Hungarian Health Care System. Civitas, Gaál, P., Rekassy, B., and Healy, J. Health Care Systems in Transition: Hungary, 2004

5 highest supply of resources by quite a large margin. 5 II What are the funding resources of public hospitals in Hungary? Influenced by both the French and German healthcare systems, Hungarian healthcare funding system is now predominantly through social insurance. 6 The National Health Insurance Fund (HIF) collects premiums at the national level and allocates funds to 20 county branches, which in turn enter into contracts with health care providers. In practice, the HIF is under-financed, and the state government is 5 Orosz, E., and Burns, A. The Healthcare System in Hungary. Paris: Organisation for Economic Co-operation and Development, Financing flow chart: Health Care Systems in Transition: Hungary. European Observatory on Healthcare Systems, 1999.

6 obliged to cover a mix of tax and social insurance-based funds responsible for financing Hungary s system its deficit. So the result is a mix of tax and social insurance-based funds responsible for financing Hungary s system. 7 Health insurance (HIF) contributions are collected from employees, who pay 3% of their total incomes, and employers who pay 15% of the employee s gross salary. 8 The population also pays local and national income tax, which helps to finance the investment costs of health care. Patients make co-payments on certain services, including pharmaceuticals, dental care and rehabilitation. These out-of-pocket payments have increased substantially since 1990, and currently contribute 18% to health care financing. 9 In 2001, 63% of total expenditure was financed by the Health Insurance Fund and 12% by the national and local governments. As regards private sources, 21% of total expenditure was financed by out-of-pocket payments and 1% by private health insurance. 10 III How does the healthcare funding system work? What is the relationship between public hospitals performance and the funding system? The HIF reimburses healthcare providers in various ways: Hospital outpatient clinics are paid fee-for-service in hospitals, and the fee-forservice payment scheme discourages treatment as an outpatient and encourages hospitals to treat as an inpatient for financial gain, rather than for the ideal treatment of the patients. 11 Acute/chronic centers paid according to a Diagnosis Related Group based system 7 Datamonitor- Hungary: Country Analysis Report. 8 Datamonitor- Hungary: Country Analysis Report 9 Gaál, P. Study of the Hungarian Health Care System. Civitas, Healthcare system in transition-hungary summary Orosz, E., and Burns, A. The Healthcare System in Hungary. Paris: Organisation for Economic Co-operation and Development, 2000.

7 and by length of hospital stay. GPs can be paid by the local government, as independent private practitioners, or through the local hospital. However, the majority (77%) of GPs opt for functional privatization, a payment scheme in which GPs contract with the HIF and are paid a capitation fee based on a patient list. As a result, the financial incentive is to refer patients on, resulting in a weak gate keeping system. Therefore, although choice and competition between GPs is theoretically favorable to patients, the current payment system does not encourage GPs to serve their patients. 12 IV What is the relationship between doctors and hospitals? Most medical specialists and other health care personnel are public employees and salaried according to a pay scale determined by the National Assembly. Their employers, mainly local governments, are reimbursed by the Health Insurance Fund according to the corresponding reimbursement system. 13 In Hungarian, due to the effect of communist rule, the salary for health care personnel is rather low, which gave the health care personnel big incentive to chase for informal income- Under-the-table payments: Under-the-table payments are also known as gratitude payments by patients, a Communist legacy, continues to play an important role in Hungary. Lower then average salaries in the healthcare sector encourage these gratitude payments, which are subject to income tax, to guarantee quality or more speedy access to care. They substantially supplement most physicians salaries, but their existence clearly puts poorer patients at a disadvantage. Since 2002, the current government has raised the salary of all public employees 12 Gaál, P., Rekassy, B., and Healy, J. Health Care Systems in Transition: Hungary. Copenhagen: European Observatory on Healthcare Systems, Healthcare system in transition-hungary summary 2005.

8 substantially by an average of 50%. It has also paid a loyalty bonus to nurses and other qualified paramedical workers who have been working for at least four years. However, the average salary in the health care sector is still lower than in most other sectors of the economy. Another Hungary s healthcare system has been plagued by overprovision, oversupply of resources (including doctors) and duplication of services. In contrast to the oversupply of doctors, there is an undersupply of nurses. This results in doctors performing the duties of nurses - an unfortunate misuse of resources. The additional problem with Hungarian healthcare system is : A weak gate keeping system and high specialist referral rates have undermined attempts to condense hospital systems and strengthen primary care: GPs (family doctor) can be paid by the local government, as independent private practitioners, or through the local hospital. However, the majority (77%) of GPs opt for functional privatization, a payment scheme in which GPs contract with the HIF and are paid a capitation fee based on a patient list. As a result, the financial incentive is to refer patients on, resulting in a weak gate keeping system. Therefore, although choice and competition between GPs is theoretically favorable to patients, the current payment system does not encourage GPs to serve their patients. Last but not least, for the reimbursement of acute and rehabilitation inpatient care, a system based on diagnostic-related groups (DRGs) has been gradually introduced since Since 1993 the DRG reimbursement system has been applied countrywide. Only a few high-cost medical interventions, such as bone marrow transplantation, are reimbursed on a case basis. Chronic (long-term) care is paid on the basis of patient-days adjusted according to the complexity of the case Healthcare system in transition-hungary summary 2005.

9 Current DRG system under capped budget conditions encourages over-treatment, DRGcreep and point inflation. Hospitals currently have no financial incentive to treat people as outpatients rather than inpatients, V Conclusions Milestones of Hungarian healthcare reform: By 1970, free healthcare was made available to every citizen with quite extensive public welfare system. From second half of 1980s, reforms were instituted. In 2004, several measures were introduced to encourage the provision of higherquality rehabilitation services: rationalization of the professional certification system, launch of a hospice programme, and the introduction of financial incentives to rehabilitation activities. In late 2006, introduced fiscal austerity measures. In 2007, the government initiated reforms to administer the health insurance system by involving private insurance companies to avoid insurance frauds, and ensure the efficient operation and effective cost control of the social insurance system. Problems in Hungarian healthcare system: Hungary s healthcare system has been plagued by overprovision, oversupply of resources (including doctors) and duplication of services. Serious structural problems in the Hungarian healthcare system, including an excessive supply of hospital beds for acute care (covering most accidents and surgery), and a corresponding lack of emphasis on preventive care, as well as a shortage of beds for long-term illnesses. The ratios for nurses and physicians are relatively low, comparing with the highest specialist-to-population ratios in the OECD.

10 Hospitals do not have the flexibility to adjust pay and conditions appropriately, so there are shortages of specialists in some areas. Slow progress in increasing reliance on primary healthcare and out-patient facilities, with the result that hospital care remains overly dominant in the system. These factors all contribute to long patient stays in hospital. System Inequalities:Despite theoretical access to health care for all members of society, there are still gaps in the system that prevent certain socio-economic groups from attaining comparable health status. Gratitude payments by patients, a Communist legacy, continue to play an important role in Hungary. A weak gate keeping system and high specialist referral rates have undermined attempts to condense hospital systems and strengthen primary care. Solutions raised in the reform process: A cut on hospital funding and pharmaceutical subsidies, and the introduction of fees for medical consultation and hospital stay. The hospitals will be structured along general, specialist and outpatient services to increase cost efficiencies. Replace the national healthcare fund with 22 separate funds, one for each county. Private insurers will be allowed into the system for the first time, with stakes of up to 49% in each of these regional funds. In return, the insurers will have to pay the government a share of the paid contributions. The size of the welfare system will also be reduced, specifically in the area of early retirement and disability benefits. Early retirement benefits may be removed in the medium term and the statutory retirement age will be increased beyond 62 years. Disability benefits may be conditional on participation in rehabilitation programs. Reorganization of healthcare services into regional centers for emergency care. Emphasis on prevention and rehabilitation, and the acquisition of modern diagnostic and surgical equipment.

11 OEP continues to reclassify prescription medicines as over-the-counter (OTC). Government pushes drug companies to lower their prices, and will try to shift spending away from expensive imported medicines towards generic drugs. The managed care pilot, introduced in 1999, was another recent reform aimed at monitoring and controlling provider performance and influencing clinical behavior. Healthcare reform has been the big trouble for government, no matter the developed countries or the developing one. For China, it will be wise to learn from other countries reform experience to accelerate its reform. The 25-year Hungarian healthcare reform experience will be a good lesson for Chinese government.