APPAM/HSE/UMD conference, “Improving the Quality of Public Services” Moscow, 28/29 June

2001

Daniel SimonetAmerican University of Sharjah

Department of Management, Marketing and Public Administration

“The New Public Management Theory and the Reform of European Health Care Systems”

Key NPM characteristics

• Greater reliance on market forces for the provision of public services

• Opening up to competition and contracting out government services

• Decentralization of decisions within public services

• Splitting large bureaucracies into smaller, more manageable entities

• Networks and coalitions

• Shift in the perception of users: customers rather than recipients

• Emphasis on explicit standards of performance

Quasi-market reforms in the UK• Quasi -markets

– Not necessarily competing for a profit, nor private– Financing was retained by the State, but care delivery was provided by public and private

organizations• GP Fund holding system and District Health Authorities were in charge of "purchasing" care from their own or other authorities'

hospitals• Private Finance Initiatives (PFI) authorized the NHS to finance operations performed in private clinics

– Out of the 800,000 surgical operations carried out each year by the private sector, 90,000 are paid for by the NHS• Leasing

– Private consortia, via PFI, would develop, build and manage hospital infrastructures, excluding the medical department/service.

• Competition has yet to achieve its full potential – cooperation between providers to preserve stability; restrictions imposed by regulations;

private companies were allowed to hire up to 70% of their staff from the NHS

• In Italy, entrepreneurial model with small-scale autonomous medical units (or Aziende Sanitarie Locali, ASL)

• No such reform in France

Insurance Competition• Germany:

– Rise in the number of private insurers lead to greater competitiveness of public insurers– Rising concentration and increased bargaining power

• Mixed outcomes– competition between German insurers was limited to patients in good health

and with higher incomes• Other EU nations

– Italy: • private insurance / greater use of care providers

– In France• private insurers focus on reimbursing co-payments for services that are poorly

covered by the national insurance:– In the UK,

• fuelled by long waiting lists rather than government-enforced competition

The Quest for Greater Accountability• Activity-based payments rather than global budgeting for hospitals

– Italy and Germany• Diagnosis Related Groups

– France• ISA (Indicateur Synthétique d' Activité) scale• National Accreditation and Health Evaluation Agency

• UK– rise of an audit society (Lapsley, 2008).

• British Care Quality Commission (e.g. health care standards, efficiency and NHS “star ratings”; • Monitor to authorize and regulate NHS foundation trusts, • National Patient Safety Agency, • National Institute for Health and Clinical Excellence (NICE)

– However,fraud, geographic and economic disparities, delay and waiting lists, wastage and a culture “glossification”

Advocacy Coalitions and Networks of Care Providers• Patient associations, physician associations, and public monitoring bodies

– UK: • 572 Patient and Public Involvement Forums ; • Politically-motivated: higher patient participation ensures that the public does not equate more intense

competition with a deterioration of public services – Germany:

• Centre for the Quality of Medicine (representatives of the sickness funds, hospitals, doctors and patients)

• New modes of care delivery– Gatekeeping experiments

• only 5% of French citizens signed up for the program which was dropped two years later in France • a handful of voluntary programs in Germany

– networks of selected care providers (e.g. GPs and specialists) • Germany : Das Deutsche Gesundheitsnetz • France’s Réseaux de soins 300 networks

– Computerized patient medical files

• Italian health networks urban areas

Decentralization to increase patient responsiveness rather than contain costs

• Concern care delivery and implementation rather than on funding • Germany

– Seehofer reforms of the 1990s– Regions, or Landers, were not only in charge of funding but also responsible for hospital

investments and for managing hospitals economically

• Italy– 600 Local Medical Units or Unità Sanitarie Locali (USL) replaced by smaller district-level

medical units (Aziende Sanitarie Locali, ASL), in charge of health care planning, evaluation of local care providers’ effectiveness, and allocation of resources to hospitals.

– Greater hospital autonomy via the Aziende Ospedaliere

• France, – Regional Hospitalisation Agencies (Agences Régionales of Hospitalisation) monitored the

introduction of new technologies or drugs and fixed hospital budgets.– The 2007 hospital plan also attributed a greater role to regions

Extent and depth of reforms vary across countries• UK is seen an index case, still

– No privatization– Modest reforms compared to other sectors, (e.g. railways and postal services)

• Italy and France are lagging– Physicians perspectives often clashed with public managerialism– Physician groups are politically influential and benefit from popular support – Mayors oppose reforms that may lead to hospital closures since each medium-sized

city wants its own small hospital

• Greater acceptance Germany– There is a more legalistic tradition and a much stronger public and political

legitimacy of the state– Acceptance that changes are unavoidable, because they are legal and backed by

physician professional associations

When experiments contradict the theory….• NPM does not lead to lower costs

– Quasi-markets led to rising advertising costs of competing institutions, higher market transaction costs and upward pressure on wages, as care providers compete for physicians

• The NPM stipulates that smaller players and downsizing are needed : wrong!– in Germany, there are fewer but larger sickness funds– France, Italy, and the UK put the emphasis on creating larger/high-volume specialized

care centers

• NPM advocate decentralization, but decentralization is retreating in certain areas– The federal government planned to take on responsibility for pooling all social health

insurance contributions into a central health fund (Gesundheitsfonds)– In Italy, some responsibilities (e.g. immunization), have been reattributed to the

federal authorities

Why is the New Public Management so popular?

• It is not a monolith:– NPM translates into a series of discrete policies or reform tools

based on partly competing theories (e.g. management theory and economic organization theories).

• It is flexible– implementation varies across countries

• Superseded by a public-health model that aims for public values (e.g. equity, access to care) and population-based outcomes with organizational (e.g. networks) and funding changes (e.g. social security in France; a central health fund in Germany), designed to preserve such public values.