Slovenian Experience on Health Care Reform

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March 1999 (Volume 40, Number 2)

Slovenian Experience on Health Care Reform Mladen Markota, Igor Švab, Ksenija Saražin Klemenèiè, Tit Albreht Institute of Public Health of the Republic of Slovenia, Ljubljana, Slovenia The health care system in Slovenia has undergone significant changes since 1992. The objectives were primarily economic and not medical, since the level of medical services rendered has been fairly high and there were limited needs for improvements. Many changes, such as privatization, have not yet achieved their main objective – improved efficiency and quality. We have, however, observed many positive results, such as the awareness of medical staff that the quality of the national health care system should not be taken as granted but should be based and developed on extremely careful planning. Health care reform packages are being designed primarily to address one important problem: cost containment. An important part of the reform was moving the major part of the health care budget outside of the state budget to make it more transparent and controllable and its use more subject to its primary intention. Key words: health care; health expenditures; health insurance; health plan implementation; hospital costs; insurance, health; planning, health and welfare; resource allocation reform; Slovenia The health care system in Slovenia has undergone important changes over the past 8 years. In the spring of 1992, new health care legislation has been adopted, introducing a completely new system (1,2). Its main focal points were the introduction of a centralized national and voluntary health insurance, introduction of private practice in health care, and transfer of many administrative roles to the Medical and Pharmaceutical Chambers. The objectives were twofold. On one hand there was a political initiative to open the health care system to private initiative and a more diverse organizational approach; on the other hand there were economic reasons, such as cost-containment, multiple contributions (national insurance and voluntary insurance fees), and a mixed public and private health care system (3). Organization of the Health Care System Primary health care activities are performed at a local level, predominantly in community health care centers, which offer basic medical and dental services. Primary health services can also be offered in smaller health centers called ”health stations”. The funding of the primary care is done mainly through a contract between the providers and the National Health Insurance Institute. The criteria on which the contract is done are predominantly capitation and fee-for-service. Primary health care is under the jurisdiction of the local communities, which decide the health care policy at the local level. The local communities are also the owners of the institutions at the primary care level. Privatization of the primary care has started already in 1992, and more and more primary care physicians choose to work independently and have their own contract with the National Health Insurance Institute. The majority of professionals who have started independent work are dentists (some of them have decided on a purely out of pocket way of payment), followed by general practitioners (GP). The GPs work exclusively on a contract with the National Health Insurance Institute. Some of them have tried to raise their income by offering ”additional benefits” for their patients, which carry an extra charge (e.g., appointment system, single personal physician 24 hours a day etc.). Hospital activities take place on the secondary and tertiary level within hospitals located throughout Slovenia. Every health region maintains at least one general hospital and the whole country has 12 specialty hospitals. The hospitals are owned by the state. Institutes and clinics are tertiary level organizations performing advanced level treatment, as well as educational and research activities. The vast majority of them are located in Ljubljana, the capital of Slovenia (3). Before the Reform Until 1990, the health care system had been administered through a complex of self-management communities system, which was decentralized and coordinated only at the national level. There were discrepancies between the ideal conception of self-management and the realities of daily practice. As early as 1990, the first serious deficiencies of such system were noted. The first problem was the growing influence of politics and ideology over health care. Self-management communities started to

extend their influence to the organizational and professional structure. Health institutions were organized according to ideological and not managerial principles. The disintegration of the health institution to smaller units resulted in a vast increase in bureaucracy in health care. The number of bureaucrats employed by the health care system increased and the management of health centers in funds was slowly handed to non-medical professionals. The second deficiency of the system was that it became impossible to control the cost of the double track management and delivery of the health care system. Equity and equality in this system were theoretically assured through unrealistically broad rights of the insured, who were assured to almost any type of service without significant self-contributions. The population as a whole was entitled to almost any type of service without significant co-payment. That kind of management had brought Slovenian health care and health insurance system to the edge of collapse. After the free elections in 1990, the plan for restructuring the health care system was drawn up. As a first transition step, all partial community health care budgets were centralized to achieve better control. In this transition step, the health care budget became a part of the overall state budget, which allowed the government to use funds from different sources for different matters (e.g., health care funds could be used for education, etc.) (4). The Reform Slovenia proclaimed its independence in 1992, and in spring of 1992, the new health care legislation and new health insurance legislation were adopted, introducing a new system (1,2). The new legislation introduced the following main changes to the health care system: Introduction of a National Health Insurance Institute The old decentralized system was abandoned in 1990 because it did not manage to concentrate enough funds at the community level and was replaced by budget financing. Because the money for health was a part of the integral budget with no control, there were indications that money for health was also spent for other purposes (e.g., police, military, etc.). This resulted in a strike of medical professionals in 1991. Since then, money has been kept on a separate account. As a result of new legislation from 1992, health insurance office was established, which took over the management of these funds. The office was organized as a public institution that would manage the funds coming directly from the employers' and employees' contributions from salaries (2). In that period, Slovenian economy was facing a short but severe blow because of loss of ex-Yugoslav markets, and Slovenian health care was in severe financial difficulties. To overcome that situation, the national parliament consented to an increase in contributions for health care from the salaries that amounted to 18.5% of the gross salaries, employer and employee each paying half of that sum. That measure liquidated all losses and enabled the health care system to economize more freely in the next years. In that period, the rights of the insured remained unchanged. The contributions could be maintained high enough due to the increase in GDP, which in 1994 amounted to US$9,708 per capita at current prices. This enabled the health insurance office to propose a reduction in contribution rate that is now cumulatively at 12.7%. In 1996, 7.5% of GDP, similar to 1994, was devoted to health care, i.e., nearly US$700 per capita at current prices. The law retained the responsabilities of the government and parliament regarding rights and contributions for health insurance (3). They are delegated with the tasks of approving the plan of health care delivery and services, and the rates set for contributory insurance payments. A contract is negotiated yearly between the Ministry of Health, Health Insurance Office, and the Medical Chamber of Slovenia. Introduction of Voluntary and Compulsory Health Insurance Voluntary insurance was not possible in the previous system. Health care was supposed to be available to everyone, regardless of the cost, with a marginal co-payment in some instances. Under the new system, the basic set of health care services is provided by means of compulsory health insurance, related to a specific source of monetary contribution (2). The employer and employee finance compulsory health insurance, required by law for all citizens and permanent residents, on an equal basis. Employers also pay an additional premium to cover work-related injuries. Farmers pay health insurance based on the size of their estate and other income. Through the voluntary insurance, additional services (e.g., plastic surgery, some drugs, physical therapy) can be provided to the consumer. If the insuree does not pay the voluntary insurance premium, he will be charged a rate for almost all regular services based on actual cost. Only in some cases does insuree pay nothing (e.g., some diseases – cancer, communicable diseases, diabetes, and some age groups – children, students, low income groups, mother care related to pregnancy.) After the introduction of the voluntary insurance (2), the contribution paid to the funds through this source was minimal, but it gradually increases. Direct contributions by the population through voluntary insurance and fee-for-services are, according to the most recent figures of the national

health insurance, 11% of the total health expenditure. One of the goals defined in the health care strategy is that this percentage will increase to 15% by the year 2000 (2). Following the history of a socialistic type of national health service with full coverage, the concept of additional payment was especially difficult to adopt. Still, it should be stressed that even under the old system there was a concept of private funds. It was called participation (co-payment), where an individual had to contribute a small amount of money for medical services, especially in primary care (prescriptions, visits in the health center, etc.). This was a minor contribution amount, but it required a lot of paper work (3). Introduction of Independent Practice in Almost All Aspects of Health Care In the previous system independent practice was impossible. Physicians were all salaried employees, paid by the health institutions. Introduction of private practice in almost all aspects of health care is the second result of the adoption of the new legislation. Private practice can now be performed either against a contract with the National Health Insurance or for direct payment (2). So far, most physicians, majority of dentists and all pharmacists work on contract for direct payment, thus being financed through public funds. Among the ones that work predominantly on out-of-pocket payment, dentists and some specialists are the predominant group. The privatization process proceeds steadily and slowly. The process of getting a permission for independent working is defined by the Ministry of Health (1). Introduction of Medical Chamber The Medical Chamber was newly introduced after it has been abolished after the World War II. In socialism, the only organization of the medical profession was the Slovenian Medical Association, which was a voluntary organization with few competencies regarding health care (1). Medical Chamber of Slovenia is an independent professional organization of medical doctors and dentists. Membership is an obligation for all those that work as physicians or dentists in Slovenia and have a direct contact with patients. Membership fee is calculated as a percentage of a physician's salary and is currently at 1% of the net salary. The Medical Chamber of Slovenia protects and represents the interests of the medical profession, and helps to ensure correct behavior by issuing Code of Medical Ethics, maintaining a register of members, issuing, extending and revoking physician's licenses for independent work, managing the residency of the two year compulsory postgraduate training, organizing professional training, seminars, meetings and other types of professional medical development, and undertaking other tasks pursuant to legal regulations (1). Introduction of Personal Physician at Primary Care Level In former Yugoslavia, the population was assigned to the health center where they lived or to the health center where they worked. The personal link between doctor and patient was not accentuated and it was quite common that one person has had two or more ”personal doctors”: one in the health center where one lived and one in the health center where one worked. Since the payment was done according to other criteria than capitation, this was not considered to be an important issue. The introduction of personal physician has caused some problems at the primary care level especially in the area of child care and in the area of occupational medicine. In the previous system, children were automatically assigned to the health center and the doctor (usually a pediatrician) working there. This kind of organizational approach made community interventions easy, since the whole population was registered at a given health care facility. With the introduction of the personal physician system it became possible for parents to choose a different physician for their child (although they rarely did). This has caused strong opposition among the pediatricians. Long negotiations were necessary in order to make a compromise that would enable adequate preventive measures at the community care level without disrupting the personal doctor concept (3). Major Effects of the Reform Health Financing Perspective and Major Effects The National Health Insurance Institute has 10 district and 45 local branches. The Institute's mission is to ensure the effective collection and allocation of financial funds on the basis of solidarity, mutuality and justice. The wide range of patients rights used to generate permanent discrepancies between the economic potential of the society and the funds required for the implementation of health programs. Therefore, high quality health care system should not be taken as granted, but should be based and developed on extremely careful planning of resources and capabilities. The new legislation alleviated these discrepancies by the introduction of voluntary health insurance (2). Important area of cost pressure are drugs. There is a discrepancy between profit-oriented strategy of drug industry and the possibility of public funding of growing costs for drugs. Therefore,

drug lists have been introduced, causing some confusion and conflict among health care providers, financiers, and patients. Nevertheless, the Institute succeeded in shaping stable conditions for the implementation of health care programs. During the last years, the Institute succeeded in achieving the strategic goal of ensuring a stable share of public expenditure (compulsory health insurance funds) at the level of 86%. Closely bound up with the current cost pressure are issues arising from demographic trends, changes in the main causes of illness, increase in expectations and demands of citizens, and development of medicine and technology. Putting these issues into practice requires a large numbers of measures and new rules, such as limitation of patient's rights, higher insurance premium, priorities within health care programs, cost containment and invigorated financial-administrative supervision, etc. (5). Table 1. summarizes the major health financing effects of the health care reform. Table 1. Major effects of health care reform in Slovenia on financing of health care Table 2. The major effects of health care reform in Slovenia on health care users Users Perspective and Major Effects In former socialistic countries the role of individuals (also health care users) was neglected. In transition period – after the health care reform, it should be different. According to The Ljubljana Charter (6), health care users should have significant role in health care decision making i.e., ”the citizen's voice should be heard”. According to the above, the Institute of Public Health have prepared the study ”Evaluation of the Transition Period in Health Care – User's Perspective”. The purpose of the study is to investigate the effects of health care reforms on users and to give suggestions and recommendations to optimize health care. The transition period may have both positive effects (like more choice among health care providers and quality of services) and negative effects (like dissatisfaction with the accessibility of health care) on the position of users in health care. In 1998 the pilot study was conducted as a survey of 60 patients representing all age groups in the same proportion as the Slovenian population. The questionnaire consisted of 7 sections, referring to health status, utilization of health care services and experiences, values, and satisfactions with health care services, health care insurance, other information, and interviewer's observations. Most of the respondents found their health good (40.4%), fair (31.6%), or very good (14%). Most of the respondents were satisfied with health care in the country (72.2%), 5.6% were extremely satisfied, 18.5% dissatisfied, and 3.7% extremely dissatisfied. Most of the respondents think that recent changes in health care did not affect the delivery of health care (37%), 14.8% think that delivery of health care is now better, and 18.5% that it is worse. Most of the respondents had to wait at GP less than an hour (42%), 32% 1 to 2 hours, 11% waited more than 2 hours, and 14% did not wait. Most of the respondents waited for the specialist examination less than 6 months (40%), 17% waited more than 6 months, 10% waited less than a month, and 33.3% did not have to wait. During the visit to GP most of the respondents (33.3%) did not give any present to the physician (59%), presents were given by 10.1% and tipping by 1.8%. Considering the users perspective, Table 2. summarizes the major effects on users of health care reform. Concluding Remarks Slovenia is facing a transition of the system from socialism to a market oriented economy and like all socialist economies in European countries changes are introduced in the health care system. The reality has shown that the socialist and self-management ideals could not survive the pressures of the economic rules of cost-containment and that an adaptation towards market oriented health care needs to be done. However, in the case of Slovenia's health care reform the changes, although radical, were gradually introduced in order to maintain the social stability. One of the problems of introducing the change is that the population is still used to high level of cheap health services. Therefore the broad spectrum of rights still exist. It is still too early to speculate whether these changes will affect the basic characteristic of Slovenian health care system and health status of population. References 1 Zakon o zdravstveni dejavnosti. Uradni list Republike Slovenije 1992;(9):590-601. 2 Zakon o zdravstvenem varstvu in zdravstvenem zavarovanju. Uradni list Republike Slovenije 1992;

(9): 577-90. 3 Albreht T, Moènik Drnovšek V. Health care reform in Slovenia: Its reform – goals and perspectives. Bilten ekonomika, organizacija, informatika v zdravstvu 1994;10(7):7-9. 4 Health Care Plan for Slovenia till the year 2000. Second draft for the Parliamentary Discussion. Ljubljana: Ministry of Health; January 1996. 5 Košir T. Evaluation of the role of the primary health care centers after the adoption of the new health care legislation. In: Proceedings of the Symposium Dani primarne zdravstvene zaštite, Labin 1995. Labin: Dom zdravlja Labin; 1995. p. 35-44. 6 The Ljubljana Charter on Reforming Health Care. Copenhagen: WHO Regional Office for Europe; June 1996. Received: March 5, 1999 Accepted: April 20, 1999 Correspondence to: Mladen Markota Institute of Public Health of the Republic of Slovenia Trubarjeva 2 1000 Ljubljana, Slovenia [email protected]

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