Decentralized governance of

the Danish health care system

Mads Bager Hoffmann

• A public health care system

• Equal and free access for all citizens

• 85 pct. is financed through general taxes

o 15 pct. is out of pocket payments

• Decentralized organization

THE DANISH HEALTH CARE SYSTEM

Expenditure on health and life expectancy

68

70

72

74

76

78

80

82

84

Sw

itzer

land

Italy

Icel

and

Aus

tralia

Isra

elN

ethe

rland

sA

ustri

aU

nite

d K

ingd

omG

reec

eP

ortu

gal

Finl

and

OEC

DD

enm

ark

Chi

leP

olan

dS

lova

k R

epub

licTu

rkey

Life expectancy, 2011

0.02.04.06.08.0

10.012.014.016.018.0

Uni

ted

Sta

tes

Sw

itzer

land

Can

ada

Dan

mar

kA

ustri

aP

ortu

gal

Spa

inIc

elan

dN

orw

ayFi

nlan

dS

love

nia

Isra

elC

zech

Rep

ublic

Kor

eaLu

xem

burg

Total expenditure on health as a share of GDP, 2011

POLITICAL & ADMINISTRATIVE LEVELS

• National level: One parliament and government / minister

• Regional level (executive): 5 regions / regional councils

• Local level (executive): 98 municipalities / municipal councils

Reform of the structure of local govenment in 2007:

• From 13 councils to 5 regions

• From 271 small municipalities and 13

NATIONAL RESPONSIBILITIES

Regulating, coordinating and advising functions of the decentralized

providers of health care services

• Determining national health policies

• Adopting legislation

• Setting overall framework of the economy

• General planning within the health sector

• Defining guidelines

• Performing control

REGIONAL RESPONSIBILITIES

• Hospital and psychiatric treatment

• Primary health care / public health care scheme

• General Practitioners (family doctors)

• Private practicing specialists

• Adults dental services

• Physiotherapy

MUNICIPAL RESPONSIBILITIES

• Preventive care and health promotion

• Rehabilitation outside hospital

• Treatment of alcohol and drug abuse

• Child nursing

• Child dental services and special dental care

• School health care

• Home nursing

SOMATIC HOSPITALS

1998 2011

Public somatic hospitals 79 53

Beds 19,700 18,303

Discharges 996,000 1,316,000

Average stay 5.8 4.8 (2009)

Out patient visits 4,900,000 7,036,000

FINANCING OF HEALTH CARE

STATE

MUNICIPALITIES

REGIONS

BLOCK GRANT

BLOCK GRANT (75 percent)

Activity related contribution (5 percent)

Co-financing (20 percent)

Collect direct taxes

Collects direct taxes

Municipalities

State

Hospitals

GP excl. medicine

Medicine grants

Regions

Municipalities (4,4 bill euro) State (0.2 bill euro)

Hospitals (9.9 bill euro) GP excl. Medicine (2.0 bill euro)

Medicine grants (0.9 bill euro)

FINANCING OF HEALTH CARE PUBLIC EXPENDITURE ON HEALTH

• Principle since 1970, municipalities and regions (decentralised

public services)

• ‘Equal partners’

• Combining budgetcontrol with local flexibility

• Avoid detailed regulations: risk of neglect of responsibility and

displacement of focus

BUDGET COORPORATION

Planned Realised

• Figure shows annual real growth in public health expenditure, 1993-2010

• Difficult to control public health expenditure across governments

PUBLIC HEALTH EXPENDITURE ACROSS GOVERNMENTS

Goals

• To support the credibility of the fiscal policies

• To strengthen the governance of public expenditures

• To make sure that overall costs do not exceed the passed budget

Content

• The overall expense ceilings are passed by parliament for a period of 4 years

• 3 separate expense ceilings for state, regions and municipalities

Sanctions

• Implemented if budget/actual costs exceeds agreed target

NEW BUDGET-LAW

STRENGTHS IN CONTROLLING HEALTH CARE COSTS

• General practitioners as gate keepers

• Municipal co-financing of regional health care

• Yearly budget-agreement between government and

regions

• Visitation guidelines

• Negotiations every year with regions and municipalities

• Fixed total level of spending, separate budgetceilings for service

and investments

• Policy targets to be met including a 2 pct. productivity target

• New analyses - e.g. on activity trends

• Output monitoring based on last years activity target as negotiated

• Key: delivering on ceilings and targets!

BUDGET AGREEMENTS

• Rewarding quantity, not quality

• Lack of priority

• Lack of exchange of knowledge and best practices

between regions

• The right to get diagnosed within a month

CHALLENGES IN CONTROLLING HEALTH CARE COSTS

Incentive structure in the health care sector

• More and better health at the same ressource level

• Right now the incentives are too focussed on quantity

• Stimulate coordination and continuity in treatment

within and between sectors in the health care system

• Map and spread best pratice

PRODUCTIVITY IN THE REGIONS

1.4

-3.2

4.2

5.6 5.3

1.4

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2007 2008 2009 2010 2011 2012

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Hovedstaden

Sjæ

lland

Syddanm

ark

Midtjylland

Nordjylland

Denm

ark in total

Annual growth in productivity in public hospitals, pct., 2007-2012 Productivity by region, 2012

• Transparency reform:

o Better care and quality, more value for money

o Transparency and better use of data

o Development of quality indicators

o Development of a patient related cost database

o Better use of indicators and data at local level

TRANSPARANCY REFORM – BETTER USE OF DATA

Improving the health of the population

Improving quality per

patient

Fewer costs per patient

Why? Better practice and knowledge sharing – what works? Relevant and better documentation Data should be shared and used – also across sectors

TRIPPLE AIM

Thank you for your attention!