Changes to the hospital sector

This section focuses on changes affect ing hospit als, includ ing changes to funding levels, prices, payment methods, invest ment and deliv ery.

Funding and prices

Nineteen coun tries repor ted redu cing hospital budgets, fees or tariffs (Table 5.7).

Latvia’s intro duc tion of a global budget for hospit als (repor ted in Table 5.8) resul ted in a signi fic ant reduc tion in the funding of hospital services. In contrast, Poland and Slovakia made one- off alloc a tions to lower hospital defi cits. Slovakia also aban doned a long- stand ing plan to change hospit als to joint- stock compan-ies, due to finan cial pres sure caused by the crisis and pres sure from medical unions. Poland sought to address hospital debt by provid ing finan cial incent ives to autonom ous public hospit als to become commer cial code compan ies.

Table 5.7 Reported changes to hospital funding and prices, 2008–13

Policy Countries

Aimed to reduce hospital budgets or

overall hospital expendit ure Austria, Bulgaria, Croatia, Denmark, Greece, Italy, Latvia, Lithuania, Netherlands, Portugal, United Kingdom (Northern Ireland) Reduced fees or prices (tariffs) paid

to providers (hospit als or phys i cians) Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, France, Ireland, Poland, Slovenia, United Kingdom (England) Source: Survey and case studies.

Table 5.8 Reported changes to hospital payment methods, 2008–13

Policy responses Countries

Linked payment to perform ance (includ ing payments to encour age day care and outpa tient care)

Planned or intro duced DRG payment Cyprus (planned), Czech Republic, Germany (psychi at ric hospit als), Greece (planned), Latvia (planned), Lithuania, Republic of Moldova, Poland, Slovakia, Switzerland

Replaced per diem and activ ity- based

payments with a global budget Latvia Ceased per diem payment (as part of a

wider reform) Russian Federation

Moved to per capita payment Portugal Source: Survey and case studies.

Table 5.9 Reported changes to the struc ture of the hospital sector, 2008–13

Policy responses Countries

Closures, reduc tion of beds, mergers and

cent ral iz a tion Azerbaijan, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Greece, Hungary, Iceland, Italy, Latvia, Lithuania, Netherlands, Portugal, Romania, Slovakia, Spain, Ukraine Reorganized emer gency services The former Yugoslav Republic of

Macedonia, Latvia, Ukraine Source: Survey and case studies.

Payment methods

Eighteen coun tries repor ted changes to hospital payment methods (Table 5.8).

The intro duc tion of diagnosis- related group (DRG) payment was typic ally part of ongoing reforms that were either partially or possibly affected by the crisis, rather than a direct response to the crisis. An excep tion is the intro duc tion of DRG payment in Greece, which was an EAP require ment (Polyzos et al 2013).

Restructuring

In nine teen coun tries, the crisis created impetus to speed up the exist ing process of restruc tur ing the hospital sector, mainly through clos ures and mergers, albeit with varying degrees of progress (Table 5.9).

118 Economic Crisis, Health Systems and Health in Europe

Table 5.10 Reported changes to invest ment in the hospital sector, 2008–13

Policy responses Countries

Abandoned, stalled or scaled down hospital invest ment plans, includ ing build ing new hospit als

Reduced capital expendit ure Bosnia and Herzegovina, Estonia (follow ing a tempor ary increase), Republic of Moldova (reduc tion followed by an increase), Ukraine, United Kingdom (England, Northern Ireland, Drawing on EU struc tural funds

for invest ment Bulgaria, Hungary

Borrowing to increase invest ment Belgium, France, Romania Source: Survey and case studies.

Policy impact and implic a tions

Measures to reduce hospital spend ing and invest ment were the most frequently repor ted response to the crisis in the area of health service plan ning, purchas-ing and deliv ery. Public spend purchas-ing on inpa tient care fell in aggreg ate between 2009 and 2011, follow ing years of growth (Figure 5.1). The largest reduc tions, of 10–20 per cent, took place in Greece, Latvia and Romania, with reduc tions of around 5–10 per cent in the Czech Republic, Estonia, Hungary and Iceland (Figure 5.4). Denmark, Estonia, Finland, Greece and Lithuania exper i enced reduc tions in two years; Hungary, Iceland and Latvia in three years. No data are avail able for coun tries such as Bulgaria, Croatia, Ireland, Portugal and the United Kingdom, which repor ted efforts to curb hospital spend ing.

As neither Iceland nor Romania repor ted direct cuts to hospital budgets, spend ing reduc tions in these coun tries may be the result of restruc tur ing. In general, spend ing reduc tions are unlikely to have come from the intro duc tion Investment

Twenty coun tries repor ted changes to hospital invest ment (Table 5.10). Nine coun tries attemp ted to raise extra resources for hospital invest ment, but in most cases only partially or possibly in response to the crisis. In contrast, 12 of the 14 coun tries that attemp ted to reduce invest ment did so in direct response to the crisis.

Figure 5.4 Public spend ing on inpa tient curat ive and rehab il it at ive care, annual per capita growth rates, 2007–11, selec ted European coun tries

Source: OECD- WHO- Eurostat Joint Data Collection (2014).

of DRGs as a payment method because DRGs have not actu ally been fully imple men ted in several of the coun tries that repor ted intro du cing them (Cyprus, Greece, Latvia). Also, the European exper i ence suggests limited poten tial for cost contain ment through DRGs (Busse et al. 2011). By the time the crisis began, almost all EU coun tries had intro duced some form of DRG payment for hospit als, usually with an element of global budget ing to keep spend ing under control (Thomson et al. 2009).

We will not know whether hospital budget cuts have contrib uted to effi ciency gains until eval u ations are avail able. In some coun tries, tariff reduc tions were relat ively small and unlikely to have led to signi fic ant changes in productiv ity, quality or access. A handful of coun tries also expli citly exten ded waiting time guar an tees as a way of managing this process. For example, Estonia increased the maximum waiting time for outpa tient special ist visits from four to six weeks in 2009. However, in coun tries such as Greece and Latvia hospital budgets were reduced dramat ic ally and resul ted in unin ten ded consequences. In some hospi-t als in Greece, reduc hospi-tions in inpuhospi-t coshospi-ts were coun hospi-ter bal anced by increased spend ing on consum ables, over heads and secur ity. In Latvia, large reduc tions in hospital spend ing led to such long waiting times for services that were not prior it ized that these were impli citly excluded from public cover age. Several coun tries repor ted increases in waiting times for hospital- based care, includ ing emer gency care.

The crisis gave poli cy makers the lever age to close, merge or cent ral ize hospital facil it ies. Many also delayed invest ment in infra struc ture projects as a means of coping with fiscal pres sure. Nevertheless, efforts to close or merge hospital wards were some times unsuc cess ful due to lack of trans par ency and public engage ment in the process (Iceland) (Olafsdottir et al. 2013).

120 Economic Crisis, Health Systems and Health in Europe

Where there was an acknow ledged need for hospital restruc tur ing, and some sort of plan ning for this had taken place before the crisis, meas ures to address excess capa city were likely to have gener ated savings and effi ciency gains (Rechel et al. 2009; Kutzin et al. 2010). In such circum stances, restruc tur ing would be a largely posit ive devel op ment, espe cially if accom pan ied by policies to strengthen altern at ive facil it ies and services, reduce inap pro pri ate admis-sions, and facil it ate quicker discharges (Rechel et al. 2009).

Several coun tries delayed public invest ment or sought private invest ment as a way of saving money. However, decisions taken rapidly to minim ize costs rather than promote effi cient ration al iz a tion may fail to account for import ant aspects of hospital capa city plan ning, such as the alloc a tion of human resources (Ettelt et al. 2008). The poten tial for short- term savings should there fore be balanced against the increased costs and inef fi cien cies of oper at ing with run- down facil it ies and equip ment – for example, risks to staff and patient safety. Evidence from Europe suggests the use of public–private part ner ships to finance hospital invest ment is prob lem atic and may not reduce costs or promote effi ciency in the longer term (Rechel et al. 2009).