What can we learn from European healthcare?

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What can we learn from European healthcare? Yanick Labrie, M.Sc. Economist, Montreal Economic Institute Third Annual Healthcare Efficiency Conference Westin Harbour Castle, Toronto September 11, 2012

What should Canada learn from European experiences? The MEI began studying models in other countries and focused on reforms undertaken in France, Germany and UK in recent years. In our examination of these healthcare systems, we sought to answer the following questions: What public policy reforms did these countries implement in recent years aimed at improving quality and efficiency in healthcare? Have these policies succeeded without compromising the principles of universality and accessibility? What lessons should Canada learn from these countries?

Comparative figures for the Canadian and selected European healthcare systems Indicators Canada France Germany UK Healthcare spending as a % of GDP (2010) 11.4% 11.6% 11.6% 9.6% Healthcare spending per capita, US$ PPP (2010) Public spending on health as % of total (2010) Population 65 years old and over (2011) Source: OECD Health Statistics 2012 US$ 4,445 US$ 3,974 US$ 4,338 US$ 3,433 71.1% 77.0% 76.8% 83.2% 14.4% 17.3% 20.7% 16.2%

Accessibility and wait times Patients who must wait 2 hours or more in emergency room (%), 2010 80% 70% 67% 60% 52% 50% 50% Number of days before seeing a specialist, 2010 90 80 70 60 83 68 57 40% 37% 35% 50 44 30% 20% 20% 40 30 34 10% 0% 20 10 0 14 Source: Results from the International Surveys of the Commonwealth Fund, 2010

Accessibility and wait times Patients who must wait 4 months or more for elective surgery (%), 2010 30% 25% 20% 25% 22% 21% 21% 15% 10% 5% 7% 7% 5% 0% 0% Source: Results from the International surveys of the Commonwealth Fund, 2010

Source: David Squires. Explaining high health care spending in the United States: An international comparision of supply, utilization, prices and quality. Commonwealth Fund, May 2012. Cost efficiency in hospital spending $16 000 $14 000 $12 000 $10 000 Hospital Spending per Discharge, 2009 (US$, Adjusted for Differences in Cost of Living) $ 13,486 $8 000 $6 000 $ 6,222 $ 5,204 $ 5,072 $4 000 $2 000 $0 Canada OECD (median) France Germany

Four key elements of success in these European healthcare systems Competition: Allowing private providers within the public healthcare system Activity-based funding: Making money follow hospital patients Benchmarking: Making performance comparisons and quality indicators publicly available Freedom of choice: Giving patients freedom to choose between providers

Allowing a greater role to private providers: the example of France The private for-profit sector in France: 38% of hospitals (and 23% of beds) in France are for-profit 55% of surgeries and nearly 70% of ambulatory surgery in France Nearly 50% of people with cancer and 27% of births 2 million passages each year in 130 emergency services 50% of patients receiving social security under the CMU (for least welloffs) are treated in for-profit hospitals

Allowing a greater role to private providers: the example of France Private hospitals in France: Have developed in underserved areas, where public hospitals failed to meet the needs of the population Patient-focused care: 91% outsource food services, laundry and waste disposal Perform more innovative procedures and provide a better quality of care, measured by the probability of dying Increased competition has led to improved access to care and reduced waiting lists for surgeries

The three largest hospital chains in France Sources: Annual reports of Hospital chains; Fédération de l hospitalisation privée; Ministère français de la santé, Le panorama des établissements de santé, édition 2011 Générale de santé Vitalia Capio Total for-profit hospitals Hospitals 110 48 26 1,051 Beds 16,200 5,700 3,830 96,460 Average hospital size 147 beds 119 beds 147 beds 92 beds Employees 23,800 7,200 5,100 150,000 Revenus 2,0 B 650 M 490 M 12,1 B

Allowing a greater role to private providers: the example of Germany The private for-profit hospitals in Germany: 33% of hospitals (and 17% of beds) in Germany are for-profit The number of for-profit hospitals increased by 90% since 1991 64% more investments per case than in public hospitals Patients are admitted 16% faster than non-profit and 3% faster than public hospitals Greater efficiency gains in privatized hospitals on average than in public hospitals (3.2%-5.4% between 1997-2007)

Allowing a greater role to private providers: the example of Germany The private for-profit hospitals in Germany: Higher productivity: 23% more patients treated per doctor than in public hospitals Leaders in innovation and management practices Rhön is the pioneer of teleportal clinics in Germany that serve patients in isolated areas HELIOS developed the medical report in 2000 now used as a benchmarking tool in all hospitals in Germany and in Switzerland

The three largest hospital chains in Germany Helios Kliniken (Fresenius) Asklepios Rhön Klinikum Total for-profit hospitals Hospitals 75 66 42 679 Beds 23,000 18,000 16,000 74,735 Average hospital size 308 beds 273 beds 380 beds 110 beds Employees 43,000 33,500 38,000 n.a. Revenus 2,7 B 2,3 B 2,6 B n.a. Source: Annual reports of Hospital chains; German Statistical Office

Making money follow hospital patients Activity-based funding of hospitals: France (2004), Germany (2004) and England (2003) all adopted activity-based funding of hospitals during the last decade These reforms gave hospitals better incentives: good performance is now rewarded with increased funding Reimbursement based on activity also contributed to improve access to care and reduce waiting lists Reimbursement based on average cost (of treatment) put pressure on management to improve cost efficiency

Making money follow hospital patients Activity-based funding in England (2003): Average length of stay fell rapidly after the implementation of the reform Better use of resources by hospitals led to more patients being treated with no reduction in quality of care The median wait time for elective surgery decreased by more than 60% between 2002-2010, partly because of ABF Reduction in wait times for cataract surgeries and hip and knee replacements has been greater for patients from less well-off areas

Activity-based funding of hospitals and wait times

Making quality indicators publicly available and giving freedom of choice Free choice of hospital and publicly available quality indicators: France, Germany, England and many other European countries allow performance comparisons between providers At the root of the competition based on quality: It gives hospitals incentives to improve performance Contribute to increase transparency and accountability Can allow knowledge/best practices sharing between providers

Making quality indicators publicly available Examples: France: PLATINES Patients can compare performance of hospitals based on various quality indicators UK: ewin Portal (NHS North West trust) Hospitals can compare performance against peers (turnover rates, sickness absences, etc.) Include case studies showing how hospitals have improved productivity

Conclusion: What lessons for Canada? The evidence from Germany, France and England suggests that healthcare systems with more competitive elements, and where private ownership is allowed, can lead to: Improved access to care and reduced wait times Increased innovation: new and better ways of delivering care Improved management practices and cost efficiency Higher quality and more patient-centered care

References Barrie Dowdeswell (2009), Rhön Klinikum, Germany, dans Bernd Rechel et al. (eds), Capital investment for health: case studies from Europe, European Observatory on Health Systems and Policies, World Health Organization, pp.143-157. Carine Milcent, Hospital ownership, reimbursement system and mortality rates, Health Economics, Vol. 14, No. 11, 2005, pp. 1151-1168 Cathy Schoen, Robin Osborn, David Squires, Michelle M. Doty, Roz Pierson, and Sandra Applebaum, How Health Insurance Design Affects Access To Care And Costs, By Income, In Eleven Countries, Health Affairs, Vol. 29 (2010), No. 12, pp. 2323-2334; Frederik Roeder and Yanick Labrie, The private sector within a public health care system: The German example, Montreal Economic Institute, February 2012. Nicholas Bloom, Carol Propper, Stephan Seiler and John Van Reenen, The impact of competition on management quality: evidence from public hospitals, National Bureau of Economic Research, May 2010. Oliver Tiemann and Jonas Schreyögg, Changes in Hospital Efficiency after Privatization, Hamburg Center for Health Economics, 2011. Oliver Tiemann et al., Which type of hospital ownership has the best performance? Evidence and implications from Germany, EuroHealth vol.17 (2011), no 2-3, pp.31-33. Reinhard Busse, Ulrike Nimptsch, and Thomas Mansky, Measuring, Monitoring, And Managing Quality In Germany s Hospitals, Health Affairs, Vol. 28 (2009), No. 2, pp. w294-w304. Richard Cookson, Mauro Laudicella, Paolo Li Donni and Mark Dusheiko, Effects of the Blair/Brown NHS reforms on socioeconomic equity in health care, Journal of Health Services Research & Policy, Vol. 17 (2012), suppl. 1, pp. 55-63. Shelley Ferrar et al., Has payment by results affected the way that English hospitals provide care? Difference-in-differences analysis, BMJ, Vol. 339 (2009), p. b3047. Yanick Labrie and Marcel Boyer, The private sector within a public health care system: The French example, Montreal Economic Institute, April 2008. Yanick Labrie, Activity-based hospital funding: We ve waited long enough, Montreal Economic Institute, May 2012. Zach Cooper et al., Does hospital competition save lives? Evidence from the English NHS patient choice reforms, The Economic Journal, Vol. 121 (2011), pp. F228-F260; Zachary N. Cooper, Alistair McGuire, S. Jones, J. Le Grand and Richard Titmuss, Equity, waiting times, and NHS reforms: retrospective study, BMJ, Vol. 339 (2009), p. b3264.