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Dr. Jürgen Wettke Dresden, April 28, 2004 Opportunities and Challenges Opportunities and Challenges Within the European and US Within the European and US Healthcare Systems Healthcare Systems IAAHS Colloquium 2004 IAAHS Colloquium 2004 1 DUS-051807-036-20040428-he
Key issue questions Why is there not more cross Why is there not more cross country knowledge sharing country knowledge sharing What can we learn from other What can we learn from other of reform ideas? of reform ideas? countries' successes and countries' successes and failures ? failures ? Is integrated care the solution Is integrated care the solution Are there untapped Are there untapped to more efficient healthcare? to more efficient healthcare? international opportunities international opportunities with implications for payors with implications for payors and providers? and providers? Will the increase in healthcare Will the increase in healthcare costs ever stop? costs ever stop? Source: McKinsey 2 DUS-051807-036-20040428-he
Key messages • While healthcare systems are all substantially different, they all face the same challenges • Major reforms have been implemented with varying success • Healthcare systems appear to be converging 3 DUS-051807-036-20040428-he
The Western European healthcare market amounts to 65% of the US healthcare market Percent, 2001, USD PPP US Western Europe 100% = 65% = USD 1,392 bn USD 900 bn 100 65 17 11 9 8 5 3 2 10 US Western Ger- France Italy UK Spain The Switzer- Others* Europe many Nether- land lands * Austria, Belgium, Denmark, Finland, Greece, Ireland, Luxembourg, Norway, Portugal, Sweden; for Austria, Belgium and Luxembourg data from 2000 Source: OECD Health Data 2003, McKinsey 4 DUS-051807-036-20040428-he
Although healthcare systems are different … US UK Sweden • Private systems (employer based • Tax-financed national • National healthcare system • Several patient co-payments healthcare system or individual), voluntary (NHS) (e.g., on Rx, inpatient care) • Government-sponsored programs • Gatekeeper system (elderly, poor, disabled) • Patient co-payments • Broad range of products, (e.g., on Rx, dental deductibles, and co-payments Germany services, glasses) dependent upon type of product • Almost complete insurance coverage • Income-related insurance premiums • Solidarity and subsidiarity principle Switzerland • Mandatory basic insurance Spain • Voluntary supplementary • Tax-financed national insurance healthcare system • Income-related insurance • Gatekeeper system • Free choice of physicians premiums • Patient co-payments Source: McKinsey 5 DUS-051807-036-20040428-he
… three basic models can be identified FUNDING SOURCES FOR HEALTHCARE SYSTEMS, 2001 Percent Bismarck – coverage Beveridge – coverage is Liberal – payor is compulsory and compulsory and contribu- and provider directly contributory tory through taxation competition Public 44 expenditure 56 on healthcare 63 75 76 76 82 85 Private 11 41 insurance* 28 4 14 14 2 33 1 Out-of-pocket 20 16 15 14 11 10 9 payments US Switzer- The Ger- France Italy Denmark Norway land** Nether- many lands Total health expenditure per capita USD PPP 4,887 3,248 2,626 2,808 2,561 2,212 2,503 3,012 * Including private social insurance and all other private funds ** 2000 Source: OECD 2003 6 DUS-051807-036-20040428-he
European healthcare systems share similar characteristics • Strong sense of social solidarity – Dominated by public payors – Comprehensive coverage • Preponderance of public and non-profit providers • Very "local markets" – limited cross-border exchange • Very fragmented provider landscape • Little influence of employers on public payors Source: McKinsey 7 DUS-051807-036-20040428-he
Challenges of healthcare systems (1/9) Germany • Sustainability of financing healthcare services • DRG introduction • Public sickness fund competition Source: McKinsey 8 DUS-051807-036-20040428-he
Challenges of healthcare systems (2/9) France • Structural change of the health insurance scheme • Introduction of reference price system and drug de-listing • Impact of 35-hour work week in hospitals, hospital reform Source: McKinsey 9 DUS-051807-036-20040428-he
Challenges of healthcare systems (3/9) Italy • Rising spend despite cost containment measures • Fragmented territorial coverage • Reorganization on a regional level Source: McKinsey 10 DUS-051807-036-20040428-he
Challenges of healthcare systems (4/9) Portugal • Rising public sector hospital debt • Increasing role for private payors • Cost containment measures in public sector Source: McKinsey 11 DUS-051807-036-20040428-he
Challenges of healthcare systems (5/9) Spain • Financial and managerial responsibility of autonomous regions • Rising spend despite cost containment Source: McKinsey 12 DUS-051807-036-20040428-he
Challenges of healthcare systems (6/9) Scandinavia • Budget deficits • Hospital performance • Short supply of healthcare personnel Source: McKinsey 13 DUS-051807-036-20040428-he
Challenges of healthcare systems (7/9) Switzerland • High per capita premiums • Payor competition and revision of KVG* • Hospital financing, hospital benchmarking * Krankenversicherungsgesetz (Health Insurance Act) Source: McKinsey 14 DUS-051807-036-20040428-he
Challenges of healthcare systems (8/9) UK • Funding up, very tough targets for NHS • Various opportunities for private players to enter Source: McKinsey 15 DUS-051807-036-20040428-he
Challenges of healthcare systems (9/9) US • Medicare Modernization Act (MMA) – recently passed reform with 300 provisions and profound impact on many stakeholders, as well as on patient care and access • Rising healthcare costs and aggressive cost shifting • Aging population and increasing consumerism Source: McKinsey 16 DUS-051807-036-20040428-he
European countries and the US are facing many of the same challenges Healthcare costs are • How can we sustain the healthcare increasing significantly finance system, given the demo- more quickly than GDP graphics and increasing costs of medical care? Large quality gaps despite growing amount of money • How do we attain higher quality inflow for lower costs? Patients beginning to act as • Does privatization automatically consumers and are deman- ding more and better mean loss of social solidarity? services Source: McKinsey 17 DUS-051807-036-20040428-he
Costs are increasing significantly more quickly than GDP REAL ANNUAL PER CAPITA GROWTH RATES (1990 - 2003) Percent Europe* US If current healthcare spending growth continues … • By 2010, the average European* Pharmaceutical 4.5** 6.0 healthcare spending per capita will expenditure be USD PPP 2,966*** compared to the current average of Healthcare USD PPP 2,199 2.4 3.2 spending • And the average US healthcare spending per capita will be USD PPP 6,322*** compared to the current average of GDP 1.9 1.7 USD PPP 4,887 * Average for 15 European countries (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Spain, Sweden, UK), unweighted data, partly calculated by using extrapolated data ** Without Austria and Spain *** Extrapolated by using data from 1990 to 2001 Source: OECD 2003, McKinsey 18 DUS-051807-036-20040428-he
EXAMPLE GERMANY Large quality gaps within states … Diabetes More than 300% mortality rate* difference in Percent probability of Thuringia 200 death from diabetes (Thuringia vs. Also note: North Rhine- 150 Baden- no clear correlation Westphalia) Wurttemberg between spending and outcome German 100 average Saxony Hamburg Berlin North Rhine-Westphalia 50 5.0 7.5 10.0 Diabetes pharmaceutical spending** EUR per inhabitant More than 100% difference between * Indexed, 100% = German average Hamburg and Saxony ** Adjusted value Source: "Benchmarking von Arzneimittelausgaben“, McKinsey analysis 19 DUS-051807-036-20040428-he
… and also across countries Mortality rate from breast cancer 3 Infant mortality (2001) Deaths per 100,000 live births (2000), percent US 1 690 Italy 4 39 UK 550 Germany 5 36 France 460 +86% France 4 30 +44% Germany 450 Luxembourg 26 Italy 430 Finland 23 Spain 390 European US 22 482 average 2 1 2000 2 Average for 15 European countries (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Spain, Sweden, UK), unweighted data 3 Number of deaths from breast cancer divided by number of new cases in the same year 4 Extrapolated data for the number of deaths among females by using data from 1990 to 1999 5 Extrapolated data for the number of new cases by using data from 1990 to 1998 Source: OECD 2003; Cancer Facts & Figures 2000, American Cancer Society; Statistisches Jahrbuch 2002, StaBu; McKinsey analysis 20 DUS-051807-036-20040428-he
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