1. Financing of Healthcare Sector in the Olomouc Region Václav Rýznar Regional Authority of Olomouc Region

2. Introduction Characteristics of the healthcare sector in the Olomouc Region History of healthcare financing in regions and the Czech Republic Financing of healthcare in the Czech Republic Financing of healthcare facilities Major issues within the system of healthcare financing in the Czech Republic Suggestions for possible solutions Conclusion Contents:

3. Area situated in central Moravia and parts of northern Moravia 5 267 sq kilometres representing 6.5 % of the overall size of the Czech Republic Structure 5 former districts - Jeseník, Olomouc, Prostějov, Přerov, and Šumperk together with the Zlín Region - the NUTS II – Central Moravia Cohesion Region Population 639 894 inhabitants (the 6th most populated region) representing 6.2% of the overall number of inhabitants in the country Introduction

4. Characteristics of the healthcare sector in the Olomouc Region Primary care in the Olomouc Region: 1 846 physicians (outpatient treatment) registered in the region (2007) Of this, there were: 368 dentists 299 general practitioners 141 paediatricians 76 gynaecologists 332 specialists In addition, there were 442 physicians working at outpatient wards in hospitals. There were on average 1 457 patients registered per 1 physician (compared with 1 588 in the Czech Republic). General practitioners offices reported over 3 million attendances. The average incapacity for work in 2007 was 6.4% citizens in the working age (4th in the country).

5. Acute residential treatment: all medical specializations available in 8 healthcare facilities established by various authorities: the average residential treatment time 7.1 days the cost of treatment in hospitals offering acute residential healthcare services - from CZK 2 407 per day to CZK 7 380 per day, with the average of CZK 4 183 per day. Number of acute beds in the Olomouc Region is higher than necessary or that the bed fund is insufficiently structured. Characteristics of the healthcare sector in the Olomouc Region a total of 3594 acute- treatment beds the Ministry of Health the Ministry of Defence private founders the Olomouc Region (3) The payments for acute residential treatment are provided under budgetary regime.

6. Table 1 - Acute residential treatment 2007 Number Bed utilization (days) Average treatment time Number of beds Number of patients Olomouc Region3 594128 423251,57,1 Jesenická nemocnice, spol. s r.o.1265 179218,55,3 Šumperská nemocnice a.s.52323 000 Olomouc University Hospital1 43344 1912427,9 Olomouc Military Hospital2305 531230,29,6 Nemocnice Šternberk, o.z.25010 343275,36,7 Nemocnice Prostějov, o.z.46917 428292,17,9 Nemocnice Přerov, o.z.31516 156262,25,1 Nemocnice Hranice, a.s.1446 979260,971,5 Characteristics of the healthcare sector in the Olomouc Region

7. Nursing, palliative hospice and long-term care hospital beds 847 nursing, palliative hospice and long-term care hospital beds 1890 after-care beds available (nursing, palliative, hospice and long-term care, as well as beds in Special treatment institutions) Payments in these facilities are provided as fixed fees per patient, bed and day. Characteristics of the healthcare sector in the Olomouc Region The region lacks 306 rehabilitation beds for after-care programmes. The number of palliative and oncology care is insufficient, owing to the increasing needs. It is necessary to provide specialized beds in the region for oncology patients and the ageing population of the Olomouc Region.

8. History of healthcare financing in regions and the Czech Republic Introduction: In 1951 - states full responsibility for the provision of healthcare services (Soviet Union model followed). Healthcare 100% financed from public taxes. In 1989 - reform of the Czech healthcare system (model of a general health insurance with compulsory participation) in 2007 - 249 state-owned healthcare facilities in the Czech Republic of the total number of 27 628 Currently 193 hospitals in the Czech Republic, of which 168 are non-state. The system was ineffective, wasteful and extensive. The responsibility shifted to 27 health insurance companies (controlled by the state to a great extent) clear trend towards privatization of healthcare providers

9. Financing of healthcare in the Czech Republic The Czech Republic spends 7.1% of its GDP on the healthcare system. Switzerland11.5% of GDP Germany11.1% of GDP Czech Republic 7.1% of GDP Russia5.6% of GDP Estonia5.3% of GDP Table 1 Comparison of GDP expenditure on healthcare systems in Europe: Table 2 The total budget of CZK 224 billion in 2007 was allocated as follows: Residential care50.8% Outpatient care21.7% Medicines on prescription 21.5% Medical products2.8% Spas, transportation, etc. 3.2% It corresponds to CZK 224 billion.

10. Table 3: Development of overall expenditure on healthcare: Financing of healthcare in the Czech Republic

11. The healthcare budget: The state pays for its insured persons (representing 58.5% of the population) approximately CZK 50 billion! The rest (CZK 150 billion) is paid by employees and employers, plus self- employed persons. Late indexation of the states contribution for its insured persons = the main cause leading to cyclically repeating financial deficits in the financing of the healthcare system. Financing of healthcare in the Czech Republic = 25% of the overall expenditure on healthcare = 1.4% of GDP = 5.7% of GDP Obvious disproportion in the generation of the budget of the healthcare system.

12. Except for the Czech Republic, only Cuba reports a similar ratio in the financing of its healthcare system. Financing of healthcare in the Czech Republic low financial contribution of the population in the healthcare system money wasting and misusing of healthcare services gradual increase in the populations contribution in the healthcare = sensitive political issue in 2008, fees introduced for the dispensing of medicines in pharmacies, together with regulatory fees for an appointment with a physician and for one day of hospital treatment the ratio of the healthcare budget to GDP is stable X 88% of the expenditure on the healthcare system (2007) 12% the expenditure on the healthcare system (2007) patients contributions have been increasing very slowly

13. In the Olomouc Region, the hospitals run by the regional authority were transformed into a single joint-stock company and the healthcare services were leased to a company managing 18 other healthcare facilities. Financing of healthcare in the Czech Republic January 2001 - regions established in the Czech Republic 1 January 2003: The indebted district and regional hospitals were transformed from the state to the new regional authorities, in the form of subsidized organizations. hospitals are not economically tied with the national budget but with regional budgets the problem of debts generated by hospitals has been transferred from the state to regions and municipalities other possibilities of managing hospitals and transformation of hospitals into commercial corporations X

14. Financing of healthcare facilities There were 26 health insurance companies established - obliged under the valid law to sign an agreement with each existing and newly established healthcare facility The performance system led to a depletion of finances from the public health insurance system and was one of the causes leading to the bankruptcy of 17 health insurance companies In 1989 experts began looking for ways to finance the healthcare sector new establishment was inexperienced a chaotic system No limits imposed on the newly established residential treatment facilities, diagnosis centres (laboratories, CT centres, ultrasound centres) and on investment plans either. Payments were based on the actual performance. This was a sort of a ZERO-SUM GAME Role of state (chaotic steps)

15. Major issues within the system of healthcare financing in the Czech Republic 1. Medicines and drug policy CZK 3-5 billion 2. Influence of pharmaceutical companies on physicians decisions regarding the prescription of certain medicines, physicians invitations to conferences abroad – not calculated 3. False recipes – CZK 380 million 4. Action by the categorization committee – competition among the suppliers of medicines is suppressed, not calculated 5. Medical products and the influence of pharmaceutical companies on the decisions of physicians towards the use of specific materials. Estimated CZK 3-5 billion 6. Investments into instrumentation, imbalanced equipment of regions – not calculated 7. Construction investments, imbalanced construction, failure to use capacities – not calculated 8. Hospitals – redundant residential care, redundant number of acute beds and long treatment periods – CZK 7 billion 9. Physicians corruption, ineffective setup of the system of sickness benefits, supporting high sickness figures – CZK 2.4 billion

16. 10. Operations, bribery with the aim of gaining preference for operations – not calculated 11. Diagnostics and ineffective use of expensive diagnostics even where cheaper methods are reasonable – CZK 1.5 billion 12. Prescription of medicines and high rate of consultations with general practitioners, often associated with the prescription of over the counter medicines – CZK 6 billion 13. Failure to consider new treatment methods, spa vouchers, obsolete indication list offering spa treatment even where new treatment procedures do not require this – CZK 450 million 14. Significant losses are also caused by the redundant capacities of beds for residential treatment and high number of consultations with physicians. 15. Political corruption and lack of competence, non-transparent selection of candidates for management positions.– not calculated – likely to reach billions of CZK 16. Doubtful legislation, laws not coherent, implementation of laws associated with high expenses – not calculated. 17. Public contracts, failure to respect valid legislation, often circumvention and violation of the public procurement laws – CZK 3.9 billion Major issues within the system of healthcare financing in the Czech Republic Total loss in the system of public health insurance and sickness insurance – CZK 29.13 billion

17. Health insurance companies responsible for the network of healthcare facilities Combination of health insurance and social security Regular indexation of the states payments for state insured persons Higher personal involvement in ones health condition – increasing the contribution to at least 20% more effective inspection system serving health insurance companies The state and regional authorities should only play a methodical, inspection and penalizing role Better equipment with IT technologies Clear definition of standards Solidarity of the healthy with the sick Increasing the retirement age new technologies, medicines and medical procedures Possibility of commercial supplementary insurance 1. System measures: Suggestions for possible solutions

18. 2. Structure related measures: Suggestions for possible solutions Reduction in the number of acute beds Reduction of the treatment period Emphasis on outpatient treatment

19. 3. Payments: Suggestions for possible solutions Specialists: performance system the examination and treatment should require prior recommendation by a general practitioner (with prescription limitation according to the national average, and with unlimited availability of gynaecologists, dentists and opticians) general practitioners - capitation allowance (with a prescription limitation according to the national average) Budget system for facilities offering acute residential treatment, with regular indexation of incomes and the possibility of entering into contracts with health insurance companies for the introduction of new examination procedures.

20. Conclusion mentioned problems + low salaries of hospital staffs + the worst demographic expectations in Europe general understanding of the need to introduce a reform of the healthcare system in the Czech Republic probably no ideal solution as regards the financing of healthcare primarily seeking reserves (savings) within the system increasing the income in the form of indexation of the payments for state insured persons increasing the retirement age It is necessary to increase peoples personal involvement in ones health condition

21. Thank you for your attention! Contact details: Václav Rýznar Departmental Manager of the Health Care Department Olomouc Region Authority Jeremenkova 42a 779 11 Olomouc Phone: +420 585 508 858 Email: v.ryznar@kr-olomoucky.czv.ryznar@kr-olomoucky.cz www.kr-olomoucky.cz