Health Care Around the World

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Pay-for-performance programs in the United Kingdom

December 28, 2009 in Health Care Around the World, P4P, Quality | 1 comment

Pay-for-performance is a hot topic in the health policy world. However, one of the largest pay-for-performance programs has already been implemented in the UK’s National Health Service. A paper by Doran et al. (2006) reviews the overall implementation of the NHS’s P4P program as well as how some physicians used exceptions to greatly increase their scores and bonuses.  Some excerpts from the paper are below:

In 2004, the National Health Service committed £1.8 billion ($3.2 billion) in additional funding over a period of three years for a new pay-for-performance program for family practitioners (the sole type of primary care physician in the United Kingdom). This program was intended to increase family practitioners’ income by up to 25 percent, depending on their performance with respect to 146 quality indicators relating to clinical care for 10 chronic diseases, organization of care, and patient experience.9 For the clinical indicators, practices claim points that generate payments according to the proportion of patients for whom they achieve each target…For example, for asthma indicator number 6, practices gain points for clinically reviewing at least 25 percent of patients with asthma in the previous 15 months. The maximum of 20 points is gained if at least 70 percent of patients with asthma are reviewed.

Evidence-based quality indicators should not be applied unthinkingly, since patients have coexisting conditions that affect their optimal care. It is inappropriate, for example, to strive to control the cholesterol level of someone terminally ill with cancer. Consequently, the new U.K. pay-for-performance contract allows family practitioners to exclude patients from eligibility for specific indicators in the performance calculations….However, exception reporting also provides an opportunity for family practitioners to increase their income by inappropriately excluding patients for whom they have missed the targets (a practice known as gaming).

To evaluate P4P in the UK, the authors analyzed family practice data extracted from clinical computing systems in England in the first year of the pay-for-performance program (April 2004 through March 2005).

Exception reporting by practices was not extensive (median rate, 6 percent), but it was the strongest predictor of achievement: a 1 percent increase in the rate of exception reporting was associated with a 0.31 percent increase in reported achievement…A small number of practices appear to have achieved high scores by excluding large numbers of patients by exception reporting

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Socioeconomic Status and Wait Times in Europe

December 17, 2009 in Health Care Around the World, Wait Times | 7 comments

One of the most contentious parts of the healthcare debate in the U.S. is whether or not to move towards a more European style of health care.  Those in favor cite the equality of the system, the lower cost, and lower administrative cost.  Those against rail against the lack of provider choice and the long wait times for many specialist services (see graphic).

But do all people in Europe experience the same waiting period for medical care?  A paper by Sicilliani and Verzulli (2009) find that individuals with higher socioeconomic status have shorter wait times in Europe.

“…individuals with high education experience a reduction in waiting times of 68% in Spain, 67% in Italy and 34% in France (compared with individuals with low education). Individuals with intermediate education report a waiting-time reduction of 74% in Greece (compared with individuals with low education). There is also evidence of a negative and significant association between education and waiting times for non-emergency surgery in Denmark, the Netherlands and Sweden.”

However, the authors don’t attempt to explain why individuals with higher socioeconomic status have shorter wait times.  Here are some explanations I came up with:

  • Private health insurance spillovers.  Let us assume that the government allocates healthcare resources on a per person basis.  Also assume that wealthier individuals are more likely to buy private health insurance.  If this is the case, wealthy/educated individuals living in “better” neighborhoods will experience shorter waits at the government run health centers because many of their neighbors will be using privately supplied medical services.
  • Buying votes.  The government may allocate more healthcare dollars to neighborhoods with wealthier individuals.  Politicians may do this to court the votes (and donation dollars) of the wealthier voters.
  • Tiebout sorting.  Let us assume that healthcare quality is randomly distributed geographically.  Property values will increase in areas with better public health facilities.  The people who can afford homes/rents in these high-quality healthcare neighborhoods will naturally be those who can afford it (i.e., those with higher socioeconomic status.)
  • Personal connection.  Physicians have high socioeconomic status and are more likely to be friends with patients who have high socioeconomic status.  Thus, they may be doing favors for their friends by getting them in earlier.  This likely happens, but does not explain the large disparities Sicilliani and Verzulli find.
  • Rich people complain.  If more educated individuals are more likely to complain about long wait times, physicians may have an incentive to schedule them first.
  • Bribes.

Any others?

Source:  Sicilliani L and Verzulli R (2009) “Waiting times and socioeconomic status among elderly Europeans: evidence from SHARE,” Health Economics, v18(11):1295-1306.

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The country with the largest economy and population in South-East Asia is…

October 7, 2009 in HC Statistics, Health Care Around the World | No comments

Indonesia.  Indonesia has the fourth largest population in the world and is the country with the largest Muslim population in the world.  The island of Bali–where I went for my honeymoon–is the most famous island for tourists.  Unlike most islands, it is largely Hindu.  Java, where the capital of Jakarta is located, is the most populous island in the world.  While Indonesia most recently made it into the news a week ago for the 7.6 magnitude earthquake in Sumatra, Indonesia is a country on the rise.  Other interesting facts about Indonesia:

Health

  • Government spending on health is less than 1% of GDP. 
  • Indonesia has 21 doctors per 100,000 people [compared to 163 per 100,000 in the U.S.] 
  • Data on life expectancy, infant mortality and maternal mortality compared to Indonesia’s peers is available here.
  • According to the Economist, “a public health insurance scheme for the poor, known as Jamkesmas, now covers about 76m people, nearly one-third of the population.  But Ajriani Munthe Salak, of the Legal Aid Foundation for Health, says that the poor often have to pass through a bewildering series of bureaucratic hoops to receive treatment.”  The government plans to extend Jamkesmas to all individuals in 2012.  
  • Half of all health spending in Indonesia is private.

Economy

  • Indonesia has the 15th largest economy in the world at $914 billion.  However, GDP per capita is only $3900, which ranks 155th in the world.
  • The median age is only 27.6 [compared to 36.7 in the U.S.] 
  • Indonesia’s leading trading partners are: Japan 20.2%, US 9.5%, Singapore 9.4%, China 8.5%, South Korea 6.7%, India 5.2%, and Malaysia 4.7%.
  • The national language in Indonesia is Bahasa Indonesia.  In Bali, most people speak Bahasa Bali.  Bahasa Indoneisa is “spoken as a mother tongue by very few Indonesianas at the time of independence, yet now [is] in use in almost every village.”

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Universal Coverage in Thailand

July 13, 2009 in Health Care Around the World | 3 comments

Puenpatom and Rosenman (2008) examine universal health coverage in Thailand:

“In 2001 Thailand became the first developing country to introduce universal health insurance coverage (UC). Six of 76 provinces adopted UC in April 2001, while the remaining provinces implemented UC in October of that year. One of the key elements of the program is capitated-based reimbursement of public hospitals based on enrolled populations in the hospitals’ service areas. Before 2001, the only capitation-based public health insurance program was the Social Security Scheme (SSS), which covered only 9% of the population in 2000. With UC fully implemented almost 90% of the population is covered by capitation. UC capitation is geographically structured so hospitals have fixed revenues based on the local population and financial viability depends on an ability to control costs. One consequence is that hospitals face increased demand from the 75% of the population previously not covered by any formal insurance system.”

Hospitals

This table shows the distribution of hospital beds. About 75% of all beds are in government hospitals and about 21% are in private hospitals. Most public hospitals are run by the Ministry of Public Health (MOPH). Larger regional hospitals provide tertiary and primary care services. Bangkok has a unique structure within Thailand. Most large teaching hospitals are in Bangkok and forty percent of private hospitals are located in Bangkok. Under the new UC system, patients are assigned to hospitals by MOPH.

Physicians

“Physicians in Thai public hospitals are employees of the hospital and as such are paid by MOPH according to budgetary structures through the hospitals.”

Old System vs. New System

This table gives a comparison of health insurance coverage under the old an new system. In 1991, two thirds of Thais had not health insurance. By 2000, only 20.3% of Thai individuals were uninsured. After the enactment of Universal Health Coverage (UC), this number fell to less than 4%.

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Dutch Hospital Industry

June 29, 2009 in Health Care Around the World, Hospitals | No comments

What are hospitals like in the Netherlands?  A paper by Blank and Van Hulst (2009) give some insight.  The paper studies Dutch general hospitals.  These hospitals make up 80% of beds on 70% of hospital costs.  Non-general hospitals include academic hospitals and specialty hospitals (e.g., eye clinics and rehabilitation clinics).

Hospitals in the Netherlands

“Hospitals, like other health-related institutions in The Netherlands, are owned and operated predominantly by locally controlled, private not-for-profit foundations (stichtingen).” [Saltman and de Roo (1989)]  The hospital sector in general is highly regulated.  Provider wages are regulated.  The central government regulates capacity and provides prospective payment budget.

“Budgets consist of a fixed component related to capacity and a variable component related to production. The fixed component is based on the so-called adherence (the number of patients potentially using the hospital), the number of beds, and the number of associated physicians. The production related component is based on regional agreements on the numbers of first-time visits, inpatient days, daycare patient days, and the number of discharges.”

Severity of cases and the type of specialists on staff can also affect budgets as well.  This budget, however, is a legal and not a monetary measure.  Insurance companies pay the hospital through prices set by the Central Tariffs Health Care agency.  Hospitals can not make a profit, but surplus revenue can go towards capital improvements.

“Another important feature of the Dutch hospital sector is that hospitals cannot choose their patients.Patients are referred to a hospital by general practitioners. They choose a hospital with a convenient location compared with other hospitals and based on availability of the appropriate specialties.Hospitals are obliged to treat any patient presented to them, provided that they have the medical knowledge required for the treatment. In practice, hospitals can attract patients by supplying particular specialties or a high quality of care. This implies that expansion of high-tech medical treatments may be another goal.”

Statistics and Trends

Statistics on the Dutch hospital industry can be found in this table.  We see that the number of general hospitals decreased from 109 in 1995 to 89 2002.  This was due to both closures and mergers.  First-time hospital visits increased at an annual rate of 4% per year, but the number of inpatient days decrease by about 4% per year.  This indicates a trend towards fewer overnight hospital stays.  Overall, costs rose by more than 6% per year in nominal terms or about 4% in real terms.

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Top Countries for Biotechnology Innovation

June 8, 2009 in HC Statistics, Health Care Around the World, Pharmaceuticals | No comments

Scientific American has an article ranking countries based on how conducive they are to biotechnology innovation.  The criteria are based on what is best for biotech firms and not necessary what is best for society.  The rankings are based on the following metrics:

  • Intellectual Property (IP) protection.  In this ranking, more IP protection is considered better.  For a firm’s point of view, better IP laws lead to more profits and a higher incentive to innovate.  However, IP also increases cost and may decrease innovation of biotech companies modifying existing patented compounds.  The U.S. ranked #1 in this category with Canada, Japan, and a number of EU nations tied for 2nd place.
  • Intensity.  This looks at the how much money is directed towards R&D and how much drugs a country can afford.  Metrics include: public companies per capita, portion of overall R&D spending used for biotech.  Here, Iceland is by far the leader, the U.S. is 2nd, and New Zealand third.
  • Enterprise Support.  Measures how “business friendly” a country was perceived to be and the availability of various forms of capital, which are essential to support the growth of emerging biotechnology firms.  Top 3 Countries: U.S., Singapore, Australia.
  • Education Workforce. The more educated the workforce, the better the score.  Education was measured in the number of R&D and biotech workers as well as the number of published papers.  Top 3: Singapore, Switzerland, U.S.
  • Foundations.  Includes broad measures of foundations for biotech innovation.  Top 3: Israel, Sweden, Finland.

Overall the Top 5 Countries for Biotechnology Innovation

  1. U.S.
  2. Singapore
  3. Denmark
  4. Israel
  5. Sweden

You can see the full list of rankings here.  More discussion on these rankings can be found here.

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Graph: GDP/person and Life Expectancy

May 1, 2009 in HC Statistics, Health Care Around the World | 2 comments

Watch the relationship between GDP/capita and Life Expectancy evolve over time: Gapminder World.

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Health care in India

April 23, 2009 in Health Care Around the World, International Health Care Systems | 3 comments

Highlights from The Economist’s article on Health Care in India:

  • India spends only about 5% of GDP in medical care.  Of this spending only one fifth is public spending.
  • With an overwhelmed public sector, relatively low levels of insurance, a premium is put on frugal innovation.  Fortis, a hospital chain in New Delhi, elects to have ‘world class’ scanners, but not necessarily the newest.
  • Surgical procedures are also innovative.  Vivek Jawali has developed an open heart surgery procedure where the patient is still awake.  ”Because such ‘beating heart’ surgery causes little pain and does not require general anaesthesia or blood thinners, patients are back on their feet much faster than usual. This approach, pioneered by Wockhardt, an Indian hospital chain, has proved so safe and successful that medical tourists come to Bangalore from all over the world.”
  • Health IT use in U.S. hospitals: 20%
  • Health IT use in Indian hospitals: 60%
  • Tiered pricing: Aravind, the world’s biggest eye-hospital chain, employs “a tiered pricing structure that charges wealthier patients more (for example, for fancy meals or air-conditioned rooms), letting the firm cross-subsidise free care for the poorest.”
  • “In health care, as in life, there is need for both Ferraris and Tata Nanos.”

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Health Care Around the World: Canada

April 25, 2008 in Health Care Around the World, International Health Care Systems | 4 comments

Canada has a single payer system but the provinces have the bulk of the responsibility of running the health care system for their own residents. In order to qualify for federal funding, each province must meet the following criteria.

  1. Universality. Available to all provincial residents on uniform terms and conditions;
  2. Comprehensiveness. Covering all medically necessary hospital and physician services;
  3. Portability. Allowing residents to remain covered when moving from province to province;
  4. Accessibility. Having no financial barriers to access such as deductibles or copayments; and
  5. Public administration. Administered by a nonprofit authority accountable to the provincial government.

Nevertheless, the 2005 Canadian Supreme Court ruling striking down Quebec’s prohibition on private insurance contracting may foreshadow significant changes in Canada’s health care system. 

Percent Insured. ~100%

Funding. Funding is provided jointly by the federal and state governments. The federal government uses funds from general revenue to provide a block grant to each of the provinces. The block grant finances only about 16% of each province’s health care expenditures. The remainder is funded by provincial taxes: mostly personal and corporate income tax. Health care spending makes up between one-third to one-half of provincial social welfare spending. For the nation as a whole, health care costs only 9% of GDP.

Private Ins. “At one time, all provinces prohibited private insurance from covering any service or procedure provided under the government program. But in 2005, the Canadian Supreme Court struck down Quebec’s prohibition on private insurance contracting.” Private clinics are barred from offering medical services which are covered by the Canada Health Act, but many begun to offer services in the black market.

Physician Compensation. Physicians work in private practice and are paid on a fee-for-service basis. Since these fees are set by a centralized agency, wages are fairly low which has lead to a physician shortage. There are only 2.1 physicians per 1,000 people. This is far less than the OECD average of 3.0 physicians per 1,000. Hospitals are funded on a global budget basis. Capital expenditures are reviewed and approved on a case-by-case basis.

Physician Choice. Referrals are required for all specialist services except the ED.

Copayment/Deductibles. There are generally no copayments or deductibles for services. However, British Columbia, Alberta and Ontario charge insurance premiums (although health services cannot be denied because of inability to pay).

Technology. The U.S. has five times as many MRI machines per capita as Canada and three times as many CT scanners. However, because of Canada’s proximity to the U.S., many Canadians do have the option of coming to the U.S. for treatment.

Waiting Times. In a 2005 decision striking down part of Quebec’s universal care law, Canadian Supreme Court Chief Justice Beverly McLachlin wrote that it was undisputed that many Canadians waiting for treatment suffer chronic pain and that “patients die while on the waiting list.” For instance, the Fraser Institute finds that 800,000 Canadians are waiting for treatment at any given time. “According to [the Fraser] survey, treatment time from initial referral by a GP through consultation with a specialist, to final treatment, across all specialties and all procedures (emergency, nonurgent, and elective), averaged 17.7 weeks in 2005.”

If you are interested on more information about the Canadian health care system, see my October 2, 2007 post.

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Health Care Around the World: Germany

April 24, 2008 in Health Care Around the World, International Health Care Systems | 3 comments

The most significant difference between Germany’s health care system and that of other countries is its use of sickness funds. All Germans with incomes under €46,300 are required to enroll in one of the sickness funds. Those with higher incomes can either join a sickness fund themselves or opt out and instead buy private insurance.

The federal government decides the global budget and which procedures to include in the benefit package. The National Association of Sickness Funds and the National Association of Physicians also help to form which benefits are included in the sickness fund benefit package. The state government regulates physicians and sets physician reimbursement rates.

In 2006, Angela Merkel proposed reforming the health care system by creating a centralized health fund, shifting funding from payroll taxes to general revenues, trimming benefits, and increasing cost sharing. This plan was abandoned due to a lack of public support and political opposition.

Percent Insured. 99.6% (There are about 300,00 uninsured individuals)

Funding. Sickness funds are financed through a payroll tax which averages 15% (but varies depending on the fund chosen). The tax is split between the employer and employee. In 2006, Germany ran a €7 billion deficit and the government has proposed a 1% increase in the payroll tax.

Private Ins. Approximated 9% of Germans have supplemental insurance. The private, supplemental insurance covers items not paid for in the sickness fund benefit package. As mentioned above, only middle- and upper-class individuals can opt-out of the sickness funds. Of those eligible to opt out, only about 1/4 of individuals do decide to opt out.

Physician Compensation. Physician reimbursement is set through negotiation with the sickness funds. Most of the negotiating power, however, lies with the sickness funds. Thus, the purchasing power of German physician’s wages is about 20% of that of physicians in the U.S. In 2005, there were physician strikes over low wage compensation. Further, physicians have to deal with significant reimbursement caps and budget restrictions. According to Tanner, physicians only attempt to provide the minimum care necessary.

Copayment/Deductibles. Until recently, there have been almost no copays or deductibles. Recently, Germans have begun paying €10 copays for prescription drugs, doctors visits, and hospital stays.

Technology. The U.S. has four times as many MRI units per capita and twice as many CT scanners per capita. Tanner claims that the existence of a small private insurance market helps to supplement technology spending. For instance, CT scanners at one point were almost non-existent in the public sector, but competition with private insurance companies meant that the public system had to add more CT scanners.

Waiting Times. It is a matter of some debate whether or not there are long waits for medical care in Germany. A WHO report says that “Waiting lists and explicit rationing decisions are virtually unknown.” On the other hand, another study finds that care is frequently rationed. For instance, the elderly and those with terminal illnesses are often denied care. Since hospitals are run through a global budget, this can reduce their incentive to treat those with serious, expensive-to-treat medical conditions.

Benefits covered. There is an extensive benefit package which even includes sick pay (70% to 90% of pay) for up to 78 weeks.

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