Financing of hospital care in FinlandUnto Häkkinen

Centre for Health and Social Economics

25.05.2010 Finland

Finland

Health care system in Finland

• Universal and equal availability

• Public financing – 8.2% of GDP (2007)– 75% public funding– also some 40% of private

services are reimbursed

Government – soft regulation /

information guidance

• Municipalities – responsible for providing

health services, social services and basic education

– 342 with population range from 580 000 to just 150

– 20 + 1 Central Hospital Districts (owned federations of municipalities)

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4

Hospital District

Population/Employer

Patient

State Municipality

NHI

Tax Tax

Subsidy

Reimburse

ment

Contributio

n Co-payment

Hospital districts (HD)

• Responsible for most of hospital care

• Managed and funded by municipalities

• Each municipality obligated to be a member of a HD

• Different contractual or negations mechanism between municipalities and HDs.

• The budget of each HD is based on the negotiations and is formally decided by a Council, whose members are appointed by each municipality

• The HD council approves the financial statements (such as payment methods and levels of payments (prices)) and makes decisions about major investments

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Financing of hospital districts

• The payments for municipalities are based on the total budget and the predicted use of services

• If the budget is exceeded, the municipalities must cover the deficit from their own revenues, usually by paying higher prices for services. In the case of budgetary surplus, the prices paid by municipalities can be lowered.

Major purpose of hospital pricing systems has been to cover the costs of production and to allocate hospital costs fairly between the municipalities financing the provision of services within a HD.

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Payment methods

• Each HD determines activity based payment methods used to reimburse its hospitals and they vary from district to district.

• The trend been consistently moving away from the bed-per-day price towards case-based prices.

• Presently 13 out of 21 HDs use DRG-based pricing. The principles and rules for DRG usage vary greatly between hospital districts because there are no national guidelines how to use it.

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International comparison

• Finnish hospitals are more efficient than hospitals in other Nordic countries.

• One possible explanation: the cost control by municipalities (financed by mainly by local taxes) is more effective that that of counties or governments

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Confidence limits for efficiency scores for non university hospitals in Nordic countries. Based on pooled DEA (CRS) 1999-2004

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9

1

Swedish hospitals2000 2002 2003 2004

Danish hospitals2002

Finnish hospitals1999 2000 2001 2002 2003 2004

Norwegian hospitals1999 2000 2001 2002 2003 2004

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Current Issues: A somewhat greater state involvement and monitoringEarlier

Softer regulation/information guidance, which relies on the assumption that the provision of information to municipalities, producers and professionals (doctors) will drive constructive behavioural or system change.

Since 2005

• Introduction of clinical guidelines for a wide range of treatments, aimed partly at bringing some convergence across Finland in rates of elective surgical procedures and in the setting of thresholds for admission to waiting lists for procedures.

• Introduction of a set of maximum waiting-time targets for non-urgent examinations and treatments at hospitals. Defined hospital treatments, including elective surgery, should be offered within 3-6 months

• Collection a fine if a hospital district does not meet the waiting-time targets

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Vertical integration

Since mid 1990s several local reforms have been conducted to ingrate the service production into single organization in 2008 about 10 % of population lived in areas where most of the primary and secondary care is provided by the same organisation.

Current initiative from the Ministry: greater integration of care between health centers and non university hospital districts (government bill 2010, implementation 2011).

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Scope and scale

Clear trend towards increasing size both producers (hospitals) and purchasers municipalities on voluntary basis:– Three hospitals into a one in capital area in 2007– In 2009: number of municipalities from 415 to 348

and now 342

Current initiative from the Ministry: The care of diseases requiring highly demanding treatment will be centralized more to 5 special responsibility hospital districts (government bill 2010, implementation 2011).

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Patient choice

• Current situation: patients do not have a freedom to choose between hospitals

• Current initiative from the Ministry: patient can choose (public) hospital from his own special responsibility hospital district, pop about 1 million (government bill 2010, implementation 2011).

• Not decided (or even thought) how the municipalities will pay hospitals

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Measuring productivity of hospital care: benchmarking project

• Joint venture - STAKES & hospital districts 1998-2006, 2007- part of routine statistical system (THL)

• Provides versatile data on – Utilisation– Costs– Productivity – From provider and regional perspective

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The hospital benchmarking system

• A data warehouse containing all patient contacts in hospital and inpatient primary care since 1998

• Output data is grouped using NordDRG, to cover the whole episode of care

• Combines cost data with output data (allowing for productivity comparisons)

• Gives a process view both from a regional and producer perspective

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Available indicators reported in the benchmarking system• Cost efficiency

• (productivity, unit costs, use of intermediate services)

• Use of services (age- and sex standardized)

• Rates for various types of services

• Process indicators

• (% of bed-days in specialized care/primary care)

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hospital x hospital y

A) Total

episode of care

hospital z

B) Producer

episode of care

visit1 visit2 DRG1 DRG3 visit3

District 1 District 2

DRG2

Patient's use of services in 3 different hospitals

Patientsuse of servicesin one hospital

hospital x hospital y

A) Total

episode of care

hospital z

B) Producer

episode of care

visit1 visit2 DRG1 DRG3 visit3

District 1 District 2

DRG2

Patient's use of services in 3 different hospitals

Patientsuse of servicesin one hospital

Calculating the total episode of care

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Measurement levels - Hospital care:Producer perspective

• Hospital district

• Hospital

• Speciality

• Patient group

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Hospital level productivity in 2008 - central hospitals

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

KAINUUN K

ESKUSSAIRAALA

ETELÄ-K

ARJALA

N KESKUSSAIR

AALA

SAVONLINNAN K

ESKUSSAIRAALA

KYMENLA

AKSON K

ESKUSSAIRAALA

SATAKUNNAN KESKUSSAIR

AALA

KANTA-HÄM

EEN KESKUSSAIR

AALA

SEINÄJO

EN KESKUSSAIR

AALA

KESKI-SUOM

EN KESKUSSAIR

AALA

VAASAN KESKUSSAIR

AALA /

CENTRALSJU

KHUSET I VASA

KESKI-PO

HJANM

AAN KESKUSSAIR

AALA

MIK

KELIN K

ESKUSSAIRAALA

LÄNSI-POHJA

N KESKUSSAIR

AALA

PÄIJÄT-H

ÄMEEN K

ESKUSSAIRAALA

LAPIN K

ESKUSSAIRAALA

POHJOIS

-KARJA

LAN KESKUSSAIR

AALA

Episodes

DRGs

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New developments in hospital bencmarking at disease level

• PERFECT = PERFormance, Effectiveness and Cost of Treatment episodes (since 2006)

• A comparative database that allows the treatments and their costs and outcomes to

be compared between hospitals , hospital districts and years

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Description of PERFECT-Project

BASIC REPORTS

THLHospital discharge register,Hospital productivity (Benchmarking) database

SOCIAL INSURANCE INSTITUTIONRegister on Health and Social Benefits

STATISTICS OF FINLANDCause-of-Death Register

OTHER REGISTERS Implant Register on Orthopaedic Endoprostheses,Hospitals patient registers

RESEARCH

PERFECT DATA BASE

FEEDBACK

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Content of basic reports http://www.thl.fi/fi_FI/web/fi/tutkimus/hankkeet/perfect

Levels Hospital Districts (responsible for providing specialist care in

Finland) based on the municipality of the patient) Hospitals (over 50 patients), based on patients treated in a

hospital

Indicators Basic information on patients such as number of patients,

age structure, co-morbidity (about 40 indicators) Process indicators describing length of stay, outpatient visits,

use of procedures, drugs, cost of care (about 140 indicators) . Indicators describing outcomes of patients (about 60

indicators)

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Current status of Perfect Acute myocardial infarction (regional level and hospital data available from the years 1998-2007) Bypass surgery and PTCA (regional and hospital level data under development from years 1998-2007) Hip Fracture (regional and hospital level data available from years 1999-2007) Hip and knee replacements (regional and hospital level data available from years 1998-2007) Very low birth weight infants (regional and hospital level data available from years 2000-2007) Schizophrenia (regional and hospital level data available from years 1995-2001 cohorts) Stroke (regional and hospital level data available from years 1999-2007)

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Conclusions

• Internationally: Finnish decentralised hospital system rather effective producing services, but not yet information on its performance in outcomes

• Great regional and hospital level differences in efficiency, cost and outcomes.

• New initiatives from government (patient choice) without considering how financing will be arranged

• Benchmarking of hospital efficiency and outcomes well developed. Originally initiated by researchers and afterward implemented together with producers (hospitals districts) using financial support from research funds. The information has been increasingly used in local and national decision making

•

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