HEALTH COSTS
and reduce costs. Improving co-ordination between healthcare providers, helping patients navigate complicated systems, monitoring their progress from diagnosis through treatment to cure amid different providers, preventing unnecessary and expensive hospitalisation and premature use of specialists: all this can lead to efficiency gains. Co-ordination itself can be expensive, and may require major investments in
Health expenditure % GDP, selected countries, 2008 or latest available year 18 16 14 12 10 8 6 4
For many illnesses and health conditions, prevention is probably the best medicine. Yet, despite the proven cost-effectiveness of preventive measures such as vaccinations and campaigns to reduce obesity and smoking, prevention receives a low portion of total government resources. In fact, under one in every 20Â dollars spent in health systems goes to prevent disease and promote better health. This is hardly a healthy policy, particularly as so many costly illnesses, from diabetes to some cancers, can be prevented (see article by Franco Sassi). There are other fronts to tackle for longterm cost savings. Take the hospital sector, which accounts for around 40% of total health spending. Despite attempts to reduce costs in recent years, ample scope for savings remains through improved hospital management or by reducing the use of acute-care beds for rehabilitation treatments. Also, the growing prevalence of chronic diseases means that care for such patients should be shifted out of hospitals and into ambulatory or outpatient settings. Better allocation of resources will also play an important role in reducing healthcare
Private expenditure
costs in the long term. This may require some difficult decisions, such as whether to invest less in costly technologies that help only a few people, while shifting spending towards cheaper treatments that benefit larger groups. Improving the sharing of information can also help allocate resources more efficiently by avoiding duplication or treatments with little evidence of success, or focusing on those that have been tried and tested. This sounds simpler than it is and may require organisational change as well as investment in information technology (see article by Nicole Denjoy). Reforming health systems so that they reward performance, rather than the volume of activity, is a policy that is gaining traction in many countries because it can save money and improve health outcomes at the same time. Using financial incentives for hospitals, doctors and nurses, backed up by the likes of “league tables�, can encourage primary care providers to promote prevention and engage more with their patients in better treating chronic conditions. Performance requirements can apply to pharmaceuticals too. This is especially important because pharmaceutical spending still accounts for 17% of total health spending on average across OECD countries. Generic market shares range from 15% in Ireland to 75% in Poland, so some OECD countries could save a lot of
Mexico
Turkey
Estonia
Korea
Chile
Japan
Spain
Italy
Canada
Austria
Germany
Switzerland
France
Public expenditure
United Kingdom
management and information systems. In Norway, for example, one healthcare programme was able to achieve cost savings, in part, by improving the transition from hospitalisation to community care services, although this transition did require an up-front investment in the number of nursing staff.
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United States
There is plenty that must be done to ensure that health policies do not cost the earth
Source: OECD
funds quickly by encouraging greater use of generics, without harming access to or the quality of care. In the longer term, policymakers need to use reimbursement and pharmaceutical pricing policies to make sure that public money is spent wisely. There are great potential benefits for setting prices to reflect the benefits they deliver. In parallel, doctors need to be better informed about the relative costs and benefits of different therapeutic alternatives. In short, improving efficiency is more about improving management and investment policies than about cutting spending. In many cases, policymakers could get more for less from their health systems, but first they must heed a serious health warning: ill-informed cuts or heavy-handed management can waste public money and worsen performance. Thankfully, there are plenty of good practices in OECD countries which governments can learn from to get their reforms right. The message is that, even in these tough times, cutting health spending can be a false economy, though there is plenty that needs to be done to ensure that health policies do not cost the earth either. Visit www.oecd.org/health/ministerial
OECD Observer No 281 October 2010
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