In Europe, hospitals in both tax-funded and SHI-funded health systems are mostly publicly owned and operated by regional or municipal governments. In tax-funded health systems, most hospital-based physicians are civil servants, employed on a negotiated salary basis (often by a physician labor union), and subject to most of the usual advantages and disadvantages of being a public sector employee. There are somewhat more private hospitals in SHI-funded health systems. However, most larger hospitals are public institutions operated by local governments, and most hospital physicians (with the notable exception of the Netherlands, where they are private contractors organized in private group practices) are, like those in tax-funded systems, public sector employees. In most tax-funded European countries (but not continental SHI-funded countries), few specialist physicians have office-based practices, and in both tax- and SHI-funded systems, office-based specialists do not have admitting privileges to publicly operated hospitals.
Most public hospitals in both tax-funded and SHI-funded health systems are single free-standing institutions that can be classified into three broad categories by complexity of patients admitted and number of specialties available: (1) district hospitals (four specialties: internal medicine, general surgery, obstetrics, and psychiatry); (2) regional hospitals (20 specialties); and (3) university hospitals (>40 specialties). In addition, many countries have a number of small, 15- to 20-bed, freestanding, private (typically for-profit) clinics. Recently, some countries have begun to merge district and regional hospitals in an effort to improve the quality of care and create financial efficiencies (for example, Norway; planned for Finland starting in 2019). Institutional mergers can be difficult to negotiate among publicly operated hospitals, due to the role that these large institutions play as important care providers and as large employers in smaller cities and towns, especially given political and union concerns about maintaining current employment levels. In the United States, financial and reimbursement pressures triggered by the implementation of the 2010 ACA have generated a number of private sector hospital mergers into larger hospital groups.
In tax-funded health systems, publicly funded patients who are admitted for an elective procedure cannot choose their specialist physician (except private-pay patients in “pay beds” in NHS hospitals in England). Specialists are assigned by the clinic to a patient based on availability, with both junior and senior doctors placed in rotation.
Capital costs (buildings, large medical equipment) are publicly funded in all tax-funded systems and in most traditional SHI systems. For example, in Germany capital costs for all public hospitals are paid for by the regional governments. As a result, new capital investment is often allocated politically, according to location and political priorities. In Finland, local politicians in the 1980s would say that it “takes 10 years to build a hospital,” meaning that it took that long to become a political priority for the regional government that controlled capital expenditures. As a result, local politicians would regularly overbuild when they got their one opportunity to obtain new capital. Because capital was not depreciated on the operating budget, such investment was perceived to be “free.” As a result, new equipment often was not properly serviced or kept in use, as maintenance costs came from the operating budget, which was held by a different level political organization (municipalities in Finland).
Recently, efforts have been made to make public hospitals more responsible for their use of capital. In the Netherlands, public hospitals were shifted into private not-for-profit entities that are expected either to fund new capital from operating surplus or to borrow the funds from a bank with a viable business plan. In England, more than 100 hospitals have been built using the Public Finance Initiative (PFI) program, in which private developers build turn-key facilities (thus taking capital costs off the public borrowing limit), and then rent these facilities back to the NHS and/or the relevant NHS Foundation Trust.
In Singapore or South Korea, both of which are SHI funded, larger hospitals are publicly operated. However, there are a substantial number of smaller private clinics typically owned by specialist physicians. In the United States, the passage of the 2010 ACA has triggered the selling of many private specialist group practices to hospital groups, transforming previously independent practicing physicians into hospital employees.
Most primary health care in SHI-funded health systems, and also in an increasing number of tax-funded health systems (except in low-income areas of some large cities), is delivered by independent private general practitioners (GPs), working either individually or in small privately owned group practices. Recent changes in tax-funded health systems include Norway, where most primary care moved from municipally employed physicians to private-practice GPs in 2003, and Sweden, where, following a 2010 change in national reimbursement requirements, new privately owned not-for-profit and for-profit GP practices were established and now deliver 50% of all primary care visits. In Finland, where public primary health care centers used to provide most primary care visits, delays in getting public health center appointments have pushed up to 40% of all visits to a parallel occupational health system, as well as to publicly employed primary care physicians working privately in the afternoons, seeing patients who are partly reimbursed by Finland’s separate Social Insurance Institution (known as KELA).
In England, most primary care physicians are private GPs who are contractors to the NHS, working either independently or in small group practices. These private GPs own their own practices, which they can sell when they retire. However, as part of the original agreement establishing the NHS in 1948 (which most physicians strongly opposed), private GPs also receive a national government pension upon retirement. In the inner cities in England, there are some larger primary health clinics.
In 2001, England’s private primary care doctors were organized into geographically based Primary Care Trusts (PCTs). These PCTs were allocated 80% of the total NHS budget to contract for elective hospital services required by their patients with both NHS hospital trusts as well as private hospitals. In 2013, PCTs were restructured into Clinical Commissioning Groups with similar contracting responsibilities.
In 2004, the Quality Outcomes Framework (QOF) was introduced as a quality of care–tied approach to providing additional income for NHS GPs. This regulatory mechanism in 2010 set 134 different standards for best practice primary care in four main domains: 86 clinical, 36 organizational, 4 preventive service, and 3 patient experience. GPs income grew on average by 25% through the introduction of the QOF, with general practices averaging 96% of possible QOF points. Total spending on QOF in 2014 in England consumed 15% of all primary care expenditures.
In Central European countries like Poland and Estonia that were formerly within the Soviet Bloc, primary care provision had to be newly established after independence was regained in 1991, since first-line care in the former Semashko model was provided in specialist polyclinics. Primary care doctors rapidly emerged as almost entirely private for-profit GPs working on contract from the national SHI fund. Private GPs in most Central European countries now are paid on a per-visit basis, in an amount set by the national SHI fund. This arrangement was heavily influenced by the structure of primary care in Germany’s SHI-based health system.
In Asian countries such as Singapore, South Korea, and Japan, most primary care is provided by private for-profit GPs working independently or in small group practices. Private GPs are reimbursed at a set per-service fee by the national SHI fund(s).
Developed countries have varying policies regarding access to individual preventive services. Health systems in most countries provide vaccinations and mammography as part of funded health care services. In the United States, most insured individuals—and in Canada, most covered residents—automatically receive an annual physical exam including full blood profiles. In Norway and Denmark, adult physical exams are provided only upon special request by the individual, and in Sweden adult physical exams are provided only to pregnant women. In Sweden, adults who wish to know their cholesterol or PSA levels have begun to purchase blood tests out-of-pocket from private laboratories. Lack of physical exams and accompanying blood profiles may contribute to lower health care expenditures in the Nordic region.
Access to Elective Specialist Care
Approximately half of all European health care systems have a gatekeeping system that requires referrals from primary care physicians to book specialist visits (for publicly paid visits). In most tax-funded health systems (although not in most SHI systems), there are substantial waiting times, typically several months or more, for elective specialist appointments and high-tech diagnostic procedures, especially for cancer and other elective surgical or high-demand services. In England, a patient who requires a further consultation with a second specialist typically has to return to their primary care physician for a second referral, and then has to wait in the regular patient queue for that second appointment. In Finland, middle class families purchase separate private health insurance for their children to enable them to skip the long waiting times for primary and secondary pediatric health care services. More than 400,000 Finnish children have privately purchased policies.
There is also substantial waiting time for radiologic imaging services in most tax-funded systems. In Malta, the tax-funded health system’s recent efforts to prioritize elective MRI investigations have succeeded in reducing waiting times from 18 months to 4 months. In both Alberta and British Columbia Provinces in Canada, waiting time in 2016 for a publicly funded elective MRI is approximately 6 months, whereas privately paid MRIs are available in both provinces within 1 week.
This issue of waiting times in tax-funded health systems reflects a combination of growing demand (including increasing clinical indications), financial constraints, and insufficient capacity, including inadequate physician working hours. In the 1980s, when several surgical procedures for the elderly became more routine practice (e.g., hip replacement, coronary artery bypass graft, corneal lens implantation), the waiting list problem worsened. It had been mitigated somewhat by the early 2000s, only to return as a growing policy challenge once public sector financial resources became constrained after 2008. Timely cancer diagnosis and care have been a particularly sensitive issue, with tax-funded systems often taking several months for a patient to see an oncologist and then months more to begin treatment. In Sweden, a newspaper journalist set off a political storm in 2013 when he wrote extensively about women patients in one large county council (Malmo) who had to wait 47 days to receive the results from their breast cancer biopsy.
In response to patient anger in the early 2000s, a number of tax-funded health care systems introduced maximum waiting times for elective hospital procedures. (Most Western European SHI systems do not have long waiting times or treatment guarantees.) These maximum waiting times typically include initial primary care visits as well as specialist evaluations and treatment. In Denmark, a patient has the right to go to a different Danish public hospital for care after waiting 30 days without treatment. In Sweden, under the 2005 “waiting time guarantee,” an untreated patient’s local county council is required to pay for care in another county’s hospital after 180 days. Beginning in 1997, the European Union Court of Justice has slowly expanded the right of all EU citizens to travel to another EU country to receive “timely” care, with their home country health system required to pay for that care.
LTC (consisting of residential and home-based services) consumes a relatively small but increasing proportion of gross domestic product (GDP) in developed countries. In Sweden, LTC consumes 3.6% of GDP, mostly from public funds, whereas in Switzerland LTC services consume 2.1% of GDP, with only 0.8% of GDP coming from public funding. In the United States, total LTC expenditures represent 1.0% of total GDP, with 0.6% of GDP representing public funds, mostly from state-based Medicaid programs, which typically spend about 40% of their total funding on nursing home services. (Note that these figures do not include emergency, inpatient, or outpatient hospital costs generated by elderly patients.)
Since nursing home care is far more expensive than home care (nursing home care requiring the provision of housing, food, and around-the-clock care providers), government policymakers seek to keep the elderly and the chronically ill out of nursing homes for as long as feasible. Moreover, in developed countries like Sweden and Norway, some 70% of all home care services come from informal caregivers: spouses, children (typically daughters), neighbors, and friends. While some SHI systems (e.g., Germany) make available cash payments for LTC that can be used to compensate informal caregivers, most policymakers work hard to not monetize what is a large amount of essentially free care. Indeed, they actively seek to encourage those providing these services to continue to do so as long as possible, trying to postpone caregiver burnout by providing support services such as free respite care, special call-in lines for caregiving advice, pension points toward retirement for the informal caregiver (Nordic countries), and free day-care center services.
In most tax-funded and SHI-funded European countries, home care services are organized at the municipal government level. In tax-funded systems, these services are also delivered mostly by municipal employees, working according to union-negotiated protocols. In some European SHI systems, and recently in tax-funded Sweden and Finland, private companies also provide home care services on contract to municipal governments. In combination with national legislation, these municipal systems also provide important support for informal caregivers, since the financial costs of caring for adults in their own home are substantially less than providing housing, food, and caregiver support in publicly funded homes for the aged or in nursing homes.
A high proportion of nursing homes in European tax-funded and SHI-funded health systems are publicly owned facilities operated by municipal governments; in some instances in SHI-funded systems (Israel, Netherlands), they are operated by private not-for-profit organizations. Recently, in some tax-funded systems (e.g., Sweden), private for-profit chains have begun to open nursing homes that are funded on a contract basis with local municipal governments. Costs for nursing home care can be expensive: in Norway, the cost per patient is often over $100,000 per year in a publicly funded home, with the patient responsible for paying up to 80% depending on the family’s economic status. In Sweden, patients living in publicly funded nursing homes in Stockholm County pay a relatively small official fee, but they also pay room rent and up to 2706 Swedish Krona (SEK) per month (about $350 USD) for food out of their pensions.
In 2012, in an effort to reduce demand for expensive hospital and nursing home services, Norway and Denmark both began a number of elderly care reforms that shifted service delivery as well as funding responsibilities to municipal governments. Among innovations in Norway, municipalities are required to establish a municipal acute bed unit (MAU) to treat stable elderly patients and provide observation beds for evaluation. Partial funding for these units is provided by the four regional health care administrations. Some municipalities have also embedded primary care units inside their regional hospital to arrange discharge and to coordinate care for the chronically ill elderly. Norwegian municipalities are also responsible through their contracted (mostly private) primary care physicians to implement the National Pathways Program, which established treatment protocols for cross-sector conditions such as diabetes and cardiovascular conditions.
A differently configured structural innovation to better integrate LTC for the chronically ill elderly with clinical individual health services has been to consolidate both social and health care services within the same public administrative organization. In proposed 2019 health reforms in Finland, as well as a pilot decentralization program in England for 2.8 million people in Greater Manchester, social and health care programs are to be administered by a single responsible agency.
In the SHI-funded system in the Netherlands, almost 7% of the population live in a residential home. National government legislation revised the structure of nursing home funding and care in 2015. Three acts restructured the separate public LTC SHI fund, which requires mandatory payments by 100% of Dutch adults, and introduced delivery-related reforms that reduced the number and overall cost of nursing home patients paid for by the fund. Determination of eligibility for public payment for nursing home care is now made by an independent national assessment body (the Centre for Needs Assessment). Moreover, municipal governments now play a stronger role in funding and delivering home care services. The reforms created social care teams that hold “kitchen table talks” to steer the elderly first toward seeking care from family, neighbors, churches, and other local community organizations before they qualify for publicly paid in-home care. In 2012, some 1.5 million people (12% of total population) provided informal care to ill or disabled persons, averaging 22 hours per week of care per person.
Home care recipients in the Netherlands can choose to set up a “personal budget,” using their public funding allocation to select their preferred individual care personnel (either publicly employed or publicly approved private providers). This arrangement also enables these home care recipients to determine the particular mix of services they want, as well as to augment the allocated public funds with personal funds. A number of innovative not-for-profit nursing homes have been created to provide additional services to elderly living in their neighborhood (primary care home visits), as well as terminal hospice care (e.g., the Saffier De Residentie Groep residences in The Haag).
In the United States, nursing home and home care are funded and delivered in a variety of different ways. For individuals who have minimal financial assets, nursing home costs are paid by a joint federal-regional (state) welfare program called Medicaid. Most state government Medicaid programs pay out more than 40% of their total budget for nursing home care. In the past, Medicaid did not pay for home care services. However, some states have programs with private for-profit and not-for-profit providers that provide home care as a way to forestall the need for the more expensive nursing home care.
Many private individuals take out private LTC insurance, typically from commercial insurance companies. These policies require individuals to make premium payments for years in advance (often 20 or more) before the individual learns whether they will, in fact, require home or nursing home care. Some private insurers have also raised premiums after individuals have paid in for many years and canceled policies if the new higher rate is not affordable. The 2010 ACA contained a new public LTC insurance program. However, the program was designed to be voluntary, and U.S. Department of Health and Human Services administrators decided not to implement that portion of the law.
In addition to the tax-funded Medicaid program, and privately purchased LTC insurance, many middle-class families pay for care from savings, by selling the elderly person’s home, or by direct contribution from children and other family members. Expenses can reach more than $60,000 per year depending on the location of a facility and who operates it.
Nursing home care in the United States is provided by a wide mix of private not-for-profit and for-profit providers, ranging from church-owned single-site homes to large stock market–listed companies. Many of these homes are purpose-built as assisted-living residences. There also are special units and facilities designed to care for the memory impaired. Home care services are delivered by a mix of private and not-for-profit and for-profit providers.
In Japan, a national LTC insurance fund was introduced in 2000. Although the new fund applies uniformly across the country, the program is administered by municipal governments and the premium level differs across municipalities, with an average monthly premium of 3000 yen (about $30 USD). In South Korea, an SHI fund for LTC is funded by mandatory contributions of 4.78% of a person’s regular national health insurance contribution, with an additional 20% of total LTC expenditures provided by national government funds. The client copayment for home care is set at 15% of expenses and at 20% for residential care.