Cost Containment and Efficiency in National Health Systems: A Global Comparison (Health Care and Disease Management)

Written by local health economics experts, each of the eight chapters in this timely handbook and ready reference describes the national healthcare system of a different industrialized country. In each case, the 4-5 specific policies with the highest impact on that respective country over the past 20-30 years are identified. In addition, the economic characteristics of each policy are described and, where possible, its success evaluated, discussing the current policy agenda. A final chapter summarizes and synthesizes the major points of the analysis. While the main focus is on economics, this guide is written in non-technical language for an audience of health policy decision makers or students of health policy, making it an invaluable contribution to the current debate surrounding the control of rising healthcare-related costs in the developed world. Cost Containment and Efficiency in National Health Systems: A Global Comparison 2 Contents 8 Preface 14 List of Contributors 16 1 Introduction and Summary 18 1.1 Introduction 18 1.2 Highlights of Each Country's Approach 18 1.3 How Are Cost Containment and Efficiency Related? 21 1.4 Strategies and Their Effects: A Cross-Country Analysis 22 1.5 Current Policy Agenda 29 References 31 2 Canada 32 2.1 Canada's Health Care System 32 2.1.1 Paying for Canadian Health Care 33 2.1.2 Delivering Health Care in Canada 36 2.1.3 Overall Expenditure Trends 36 2.1.4 Cost Control Strategies Employed 37 2.2 Supply-Side Measures 37 2.2.1 Capped Budgets 38 2.2.1.1 Hospitals 38 2.2.1.2 Physicians 39 2.2.1.3 Pharmaceuticals 40 2.2.2 Health Human Resource Limits 41 2.2.2.1 Physicians 41 2.2.2.2 Other Health Care Professionals 42 2.3 Organizational Reforms: Trade-Offs Between Competition and Cooperation 42 2.3.1 Cooperation: Regional Authorities 43 2.3.2 Cooperation: Primary Care Reform 43 2.3.3 Waiting Time Strategies 43 2.3.4 Competition 44 2.4 Demand-Side Measures 45 2.4.1 Technology Assessment/Appropriateness 45 2.4.2 Population Health 46 2.5 The Current Situation 46 References 48 3 England 58 3.1 Introduction 58 3.2 The Structural Characteristics of the NHS 59 3.3 The Efficiency Initiatives 62 3.3.1 The Internal Market 62 3.3.2 The National Institute for Health and Clinical Excellence 66 3.3.3 Performance Management 69 3.3.4 Patient Choice 72 3.4 Conclusions 73 References 75 4 Finland 80 4.1 Introduction 80 4.2 The Finnish Health Care System 81 4.2.1 Structure 81 4.2.2 Trends in Cost and Financing 83 4.3 Strategies for Municipal Health Services 85 4.3.1 Decentralization of Responsibilities 86 4.3.2 Governments Strategic Planning 88 4.3.3 Cost Containment at the Local Level 90 4.3.4 Increasing the Size of Municipalities 92 4.3.5 Evaluation of the Strategies 93 4.4 Cost Containment in Services Covered by NHI 97 4.4.1 The Finnish Pharmaceutical System 97 4.4.2 Cost-Containment Measures 99 4.4.2.1 Cost Sharing and Price Control 99 4.4.2.2 Generic Substitution 102 4.4.2.3 Other Measures 103 4.4.3 Evaluation of Strategies 103 4.4.3.1 Total Expenditure on Drugs 103 4.4.3.2 Development of Prices 106 4.4.3.3 The Effect of Generic Substitution 106 4.5 Lessons from Finland 107 References 109 5 Germany 114 5.1 A Review of the Major Structural and Operational Characteristics of the German Health Care System 114 5.1.1 Key Aspects of Sickness Funds and Providers of Health Care 116 5.1.2 Key Aspects on Financing of Health Care 118 5.2 Major Cost-Containment and Efficiency-Seeking Strategies 118 5.2.1 Global Budgets and Spending Caps 121 5.2.1.1 Pharmaceuticals 121 5.2.1.2 Ambulatory Care 124 5.2.1.3 Hospital Care 125 5.2.1.4 Financial and Other Performance Indicators of SHI Ambulatory Physician Practices and Hospitals 127 5.2.2 Cost Shifts to Private Households 130 5.2.3 Promoting Competition between Sickness Funds and Providers 131 5.2.4 Strengthening the Competencies of Joint Self-Government 136 5.2.5 Summarizing and Concluding Remarks on Cost Containment and Efciency Seeking Strategies 138 5.3 Report on the Current Situation 141 References 142 6 The Netherlands 148 6.1 Introduction 148 6.2 The Dutch Health Care System in Transition 149 6.2.1 The Dutch Health Care System: a Short Description 150 6.2.1.1 The Origin of the System 150 6.2.1.2 The Three Compartments 150 6.2.2 Rationale for and Steps Towards the New System 153 6.2.2.1 Reasons for Change 153 6.2.2.2 Towards a New System 154 6.2.3 The Second Compartment as of 2006 155 6.3 Cost Containment Through the Years 156 6.3.1 Price Regulation, Budgeting and Supply Restrictions 157 6.3.1.1 Supply-Side Regulation 157 6.3.1.2 Towards a Demand-Driven System 158 6.3.2 Waiting Lists 159 6.3.3 Policies to Contain Pharmaceutical Expenditure 160 6.3.3.1 Introducing Reference Pricing 161 6.3.3.2 Prescribing More Generics 162 6.3.3.3 Role of Health Insurers 162 6.3.3.4 Hospital Drugs 163 6.3.4 Demand Reduction 164 6.3.4.1 Traditional Ways of Cost-Sharing 164 6.3.4.2 The No-Claim Rebate 165 6.3.5 Limiting the Basic Benets Package 166 6.3.5.1 Criteria for Dening the Basic Package 166 6.3.5.2 Cost-Effectiveness as an Important Criterion 167 6.3.5.3 Combining Efciency and Equity 168 6.4 Future Challenges 169 References 170 7 Japan 174 7.1 Health Care Expenditure Trends in Japan 174 7.1.1 Rapid Economic Growth Period 174 7.1.2 Stable Economic Growth Period 175 7.1.3 Economic Stagnation Period 176 7.2 Health Care System in Japan 176 7.2.1 Health and Health Care Indicators 176 7.2.2 Characteristics of the Health Care System 177 7.3 Cost-Containment Strategy in Japan 179 7.3.1 Cost-Containment Strategies 179 7.3.2 Budget Ceiling 180 7.3.3 Fee-Schedule Revision 181 7.3.4 Pharmaceutical Price Changes 183 7.3.5 Fixed Payment 183 7.3.6 Payments by Households 184 7.3.7 Public Budget Shifting 186 7.3.8 Supply-Side Regulation 186 7.3.9 Summary 188 7.4 Recent Trends and Future Challenges 188 7.4.1 Incremental Reform with Modication 189 7.4.2 Unrealized Scenario for Market-Oriented Health Care 189 7.4.3 Muddling Through 195 7.4.4 Future Challenges 195 References 196 8 New Zealand 200 8.1 Introduction 200 8.2 Overview of the NZ System 203 8.3 Global Budgets 204 8.4 The Quasi-Market Reforms 206 8.5 Management of Pharmaceutical Expenditure 208 8.6 Priority Setting 211 8.6.1 Identifying Core Services 211 8.6.2 Clinical Guidelines 213 8.6.3 Use of Principles in Guiding Purchasing Decisions 213 8.6.4 Health Technology Assessment 214 8.6.5 Conclusion 215 8.7 Management of Waiting Lists 215 8.8 Current Agenda 217 8.9 Conclusions 220 References 220 9 Sweden 224 9.1 Introduction 224 9.2 Paying for Performance: DRG-Based Payments to Hospitals 227 9.2.1 Incentives for Cost Containment 230 9.2.2 Development After the Mid 1990s 231 9.3 Reference Pricing and Generic Substitution 232 9.4 Health Technology Assessment (HTA) 236 9.4.1 Success or Failure? 238 9.4.2 How Can the Situation be Improved? 239 9.5 The Current Situation 241 References 243 Index 246 Cost Containment and Efficiency in National Health Systems: A Global Comparison......Page 2 Contents......Page 8 Preface......Page 14 List of Contributors......Page 16 1.2 Highlights of Each Country's Approach......Page 18 1.3 How Are Cost Containment and Efficiency Related?......Page 21 1.4 Strategies and Their Effects: A Cross-Country Analysis......Page 22 1.5 Current Policy Agenda......Page 29 References......Page 31 2.1 Canada's Health Care System......Page 32 2.1.1 Paying for Canadian Health Care......Page 33 2.1.3 Overall Expenditure Trends......Page 36 2.2 Supply-Side Measures......Page 37 2.2.1.1 Hospitals......Page 38 2.2.1.2 Physicians......Page 39 2.2.1.3 Pharmaceuticals......Page 40 2.2.2.1 Physicians......Page 41 2.3 Organizational Reforms: Trade-Offs Between Competition and Cooperation......Page 42 2.3.3 Waiting Time Strategies......Page 43 2.3.4 Competition......Page 44 2.4.1 Technology Assessment/Appropriateness......Page 45 2.5 The Current Situation......Page 46 References......Page 48 3.1 Introduction......Page 58 3.2 The Structural Characteristics of the NHS......Page 59 3.3.1 The Internal Market......Page 62 3.3.2 The National Institute for Health and Clinical Excellence......Page 66 3.3.3 Performance Management......Page 69 3.3.4 Patient Choice......Page 72 3.4 Conclusions......Page 73 References......Page 75 4.1 Introduction......Page 80 4.2.1 Structure......Page 81 4.2.2 Trends in Cost and Financing......Page 83 4.3 Strategies for Municipal Health Services......Page 85 4.3.1 Decentralization of Responsibilities......Page 86 4.3.2 Governments Strategic Planning......Page 88 4.3.3 Cost Containment at the Local Level......Page 90 4.3.4 Increasing the Size of Municipalities......Page 92 4.3.5 Evaluation of the Strategies......Page 93 4.4.1 The Finnish Pharmaceutical System......Page 97 4.4.2.1 Cost Sharing and Price Control......Page 99 4.4.2.2 Generic Substitution......Page 102 4.4.3.1 Total Expenditure on Drugs......Page 103 4.4.3.3 The Effect of Generic Substitution......Page 106 4.5 Lessons from Finland......Page 107 References......Page 109 5.1 A Review of the Major Structural and Operational Characteristics of the German Health Care System......Page 114 5.1.1 Key Aspects of Sickness Funds and Providers of Health Care......Page 116 5.2 Major Cost-Containment and Efficiency-Seeking Strategies......Page 118 5.2.1.1 Pharmaceuticals......Page 121 5.2.1.2 Ambulatory Care......Page 124 5.2.1.3 Hospital Care......Page 125 5.2.1.4 Financial and Other Performance Indicators of SHI Ambulatory Physician Practices and Hospitals......Page 127 5.2.2 Cost Shifts to Private Households......Page 130 5.2.3 Promoting Competition between Sickness Funds and Providers......Page 131 5.2.4 Strengthening the Competencies of Joint Self-Government......Page 136 5.2.5 Summarizing and Concluding Remarks on Cost Containment and Efciency Seeking Strategies......Page 138 5.3 Report on the Current Situation......Page 141 References......Page 142 6.1 Introduction......Page 148 6.2 The Dutch Health Care System in Transition......Page 149 6.2.1.2 The Three Compartments......Page 150 6.2.2.1 Reasons for Change......Page 153 6.2.2.2 Towards a New System......Page 154 6.2.3 The Second Compartment as of 2006......Page 155 6.3 Cost Containment Through the Years......Page 156 6.3.1.1 Supply-Side Regulation......Page 157 6.3.1.2 Towards a Demand-Driven System......Page 158 6.3.2 Waiting Lists......Page 159 6.3.3 Policies to Contain Pharmaceutical Expenditure......Page 160 6.3.3.1 Introducing Reference Pricing......Page 161 6.3.3.3 Role of Health Insurers......Page 162 6.3.3.4 Hospital Drugs......Page 163 6.3.4.1 Traditional Ways of Cost-Sharing......Page 164 6.3.4.2 The No-Claim Rebate......Page 165 6.3.5.1 Criteria for Dening the Basic Package......Page 166 6.3.5.2 Cost-Effectiveness as an Important Criterion......Page 167 6.3.5.3 Combining Efciency and Equity......Page 168 6.4 Future Challenges......Page 169 References......Page 170 7.1.1 Rapid Economic Growth Period......Page 174 7.1.2 Stable Economic Growth Period......Page 175 7.2.1 Health and Health Care Indicators......Page 176 7.2.2 Characteristics of the Health Care System......Page 177 7.3.1 Cost-Containment Strategies......Page 179 7.3.2 Budget Ceiling......Page 180 7.3.3 Fee-Schedule Revision......Page 181 7.3.5 Fixed Payment......Page 183 7.3.6 Payments by Households......Page 184 7.3.8 Supply-Side Regulation......Page 186 7.4 Recent Trends and Future Challenges......Page 188 7.4.2 Unrealized Scenario for Market-Oriented Health Care......Page 189 7.4.4 Future Challenges......Page 195 References......Page 196 8.1 Introduction......Page 200 8.2 Overview of the NZ System......Page 203 8.3 Global Budgets......Page 204 8.4 The Quasi-Market Reforms......Page 206 8.5 Management of Pharmaceutical Expenditure......Page 208 8.6.1 Identifying Core Services......Page 211 8.6.3 Use of Principles in Guiding Purchasing Decisions......Page 213 8.6.4 Health Technology Assessment......Page 214 8.7 Management of Waiting Lists......Page 215 8.8 Current Agenda......Page 217 References......Page 220 9.1 Introduction......Page 224 9.2 Paying for Performance: DRG-Based Payments to Hospitals......Page 227 9.2.1 Incentives for Cost Containment......Page 230 9.2.2 Development After the Mid 1990s......Page 231 9.3 Reference Pricing and Generic Substitution......Page 232 9.4 Health Technology Assessment (HTA)......Page 236 9.4.1 Success or Failure?......Page 238 9.4.2 How Can the Situation be Improved?......Page 239 9.5 The Current Situation......Page 241 References......Page 243 Index......Page 246