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Slovenian healthcare reform and the prospects for innovation - an “outsider's perspective Dr Meir Pugatch, 15 Nov 2008 Fundamentals of Innovation in Health • Concerns both products and services • Relevant to the Macro level as much as it is to the Micro level (i.e. National Innovation Strategies are also very important) • Generates greater value: physical, social and economic • Rooted in market forces and incentives (Gov plays a role but the market leads the way…) • Long term benefits outweigh short term costs (though at times immediate short terms benefits are also visible) Healthcare Reforms in the CEE Region • Dramatic change since 1989 – Post soviet era • Healthcare reforms are part of sweeping and far reaching changes (including flat taxes, reformed pension systems, school vouchers, etc) • Healthcare systems were transformed from a “command and control style” (Semashko system) - owned by the state, subject to central planning, and managed by similar objectives and methods of operation – to a more pragmatic “performance oriented” and open models. • However, healthcare reforms in CEE countries are far from complete and are still underway……… Common Challenges in CEE • Medical institutions are still largely shielded from the need to implement modern management techniques and improve operational performance • The provider side is still strongly concentrated and controlled by the Gov, with a large emphasis on clinical centres and a relative neglect of GP surgeries and other ways of providing routine treatment for simpler cases • Still a shortage of data on medical outcomes at the clinical level. Such data is needed to properly evaluate providers’ performance and quality of service in general • There is still some general hesitation (and at times resentment) to further develop solutions that are based on public-private partnerships (i.e. with the market) Some Shared Objectives in CEE • Search for a sustainable financing model • Increasing access to medicines (sometimes this is focused too much on controlling costs and increasing the penetration of generics) • Restructuring the role and relationship of different actors in the health system • Empowering patients • Establishing competition between service providers Healthcare Reform in Slovenia - Milestones • 1889 - first Sick Fund is established in Ljubljana (emulating the German model of social insurance - Bismarck model) • 1918 - 1945 - establishment of a regional social hygiene institute for prevention, primary care centres and a central institute for hygiene and medicine • 1945 - 1991 - gradual shift from the Social Insurance model to a State owned and managed healthcare system. Universal insurance is adopted (1974) and healthcare is provided via regional centres (to our present day….) • 1991 Slovenia becomes and independent state – and leads significant reforms in Healthcare…… Some Key Milestones of Healthcare Reforms • Introducing Compulsory health insurance (Law on Health Care and Health Insurance 1992) – wide coverage of services • Introduction of Voluntary (supplementary) health insurance (1993) By 2002 1.4 million people had taken out voluntary insurance (out of total population of 2 million) • Some decentralization of the health care system – also moving towards the privatization of health care delivery ( private clinics of physicians) • New regulatory frameworks for medical technologies, including pharmaceuticals (such as the Law on Medicinal Products and Medical Devices adopted in 1999) • As of 2000 greater focus on Improving quality and transparency and evidence based measurements Regulations of Pharmaceuticals – Zoom in • Reference pricing system (85% of the average of a “basket” of countries – Germany, France and Italy, 96% for innovative drugs) • Health Insurance Institute (HII) responsible for the reimbursement of drugs based on a “positive drug list” (fully reimbursed) “intermediate drug list” (partially reimbursed) and “negative drug list” (mostly OTCs) • Health Technology Assessment (HTA) for the purpose of evaluating the economic value of a medicine is still nascent • Increased tendency towards the monitoring of prescribing patterns and practices of physicians • Government would like to encourage the use of Generics (45% of the market are branded generics) • Direct to Consumer Information – not yet permitted Implications on the Future of Innovation Positive • Greater tendency to work with the private sector in order to create a financially sustainable healthcare model (supplementary insurance, privatisation) • Focus on transparency and quality assessment • Shift towards evidence-based practices and effective performance, including in the planning of health budgets • Emphasis on capacity building and greater professionalisation of the healthcare system • More focus on patients’ needs and on long term goals (prevention….) Implications on the Future of Innovation Negative • Still a highly centralised system (not yet capitalising on the advantages of decentralisation and privatisation) • True competition between providers is still lacking (private sector not fully utilised – hospitals, etc) • Tendency towards cost containment of prices and preference towards generics can deter the creation of a stronger pharmaceutical R&D base • Operational management of the healthcare system at all levels still remain a challenge (though it has improved, such as via a training programme for non-clinical managers was launched in 2002) Healthcare Reform - future focus… Creating a unified hospital system in Slovenia; Determination of the public health interest and proposals for healthcare priorities; Categorisation of hospitals; Allocation of tasks between the public and private healthcare sectors on the basis of concessions; Organisational standards for staff working in public healthcare institutions; Development of a system of healthcare financing that focuses on healthcare insurance holders; Allocation of resources between levels; budget guidelines; Investments in public healthcare institutions Indicators of efficiency and success of the healthcare system, healthcare institutions and management; Provision of uniform complaints procedures within the healthcare system, including the institute of a human rights ombudsman for the healthcare system. Health Government Expenditure (% of share (% of total GDP) health expenditure) Composition of private spending (Out-of-pocket to voluntary insurance) Composition of public spending (social insurance to tax funding ) Czech Republic 7.1 89 98 : 02 90 : 10 Hungary 7.8 71 96 : 04 90 : 10 Poland 6.2 69 98 : 02 84 : 16 Romania 5.5 70 86 : 14 82 : 18 Slovenia 8.5 72 53 : 47 93 : 07 Source WHO Statistics (2008), SN 2008