According to this guy privatisation increases efficiency in Swedish health
care. I have been looking for a critique of these reforms but can't find
any. Does anyone have URLs pointing to such a critique? I do know that the
re-introduction of copays has increased usage of the system byt he better
off compared to the less well off. Before copays there was little difference
It is interesting that at least some unions support the changes. Also,
the principle of universal coverage is not being challenged. What is
happening is that more and more the system is opening up as an outlet for
private capital and for profit health care and justified in terms of choice
and efficiency. The state is able to serve private capital without
challenging the principle of universal coverage.
Cheers, Ken Hanly
SWEDISH HEALTH-CARE REFORM:
FROM PUBLIC MONOPOLIES TO MARKET SERVICES
by Johan Hjertqvist*
For 500 years Sweden has been a uniform and centralized country. Today it is
on the road to pluralism and stronger regional governments. Often the leader
of new trends in Europe, Swedes are making it clear to their politicians
that they want public policies which cater better to individual needs and
preferences.
You can notice this change in the labour markets. Collective bargaining is
in retreat, and Manpower, a temporary-help agency, is now the second-largest
employer in Stockholm. In the education industry, privately operated schools
are doubling their market share every year (though from a low base), and
competitors who offer e-learning solutions for workplace education are
booming. Signs of change are also apparent in the health-care industry:
privatized hospitals, clinics and medical practices of all kinds; increasing
numbers of private insurance companies; Internet-based patient information
and a profusion of well documented opinions in favour of free choice,
competition and diversity.
Underlying this change of opinion is the success of public policy
experiments that have embraced the principles of competition and choice. In
1992-94, the Greater Council of Stockholm launched a number of competitive
initiatives whose success is now apparent. Competition in public
transportation in the metropolitan area has reduced taxpayer costs by 600
million SEK, or roughly 25 percent. In one blow, with competitive
contracting, the Greater Council reduced the yearly cost of ambulance
service in the Stockholm region by 15 percent. In all areas service quality
has increased noticeably.
The results in health care have been just as startling. For example,
privatized nursing homes have reduced costs by 20-30 percent. Or again, a
recent evaluation has shown that private medical specialists are more
efficient than their colleagues in public service. They focus on
"with-patient time", which results in more patient value. Publicly employed
doctors, in contrast, have more staff, spend more of their time on paperwork
and ask for 10-15 percent higher budgets to provide the same treatment
levels.
By 1994, when the centre-right regional coalition lost the election, 100
small and medium-size health-care contractors had been established, all of
which had previously worked within the public system. All except one remain
active. The change in government slowed, but did not stop, the process. In
1998, the centre-right grouping returned to power, and they picked up new
steam. They have wide public support in the urban areas, including that of
the largest health-care unions, and plan to turn most of primary care into
contracted services, an irreversible major step.
Right now, about another 100 health-care units are in the process of leaving
public ownership to become private companies. The Greater Council lends
significant support in the form of free training and start-up consultants.
In general, the new contractors run local health-care stations, GP group
practices, treatment centers for mothers and infants, laboratories and
psychiatric out-of-hospital clinics. When (and if) the Council completes
this transformation, private GPs and other contractors will deliver around
40 percent of all health-care services, and about 80 percent of all primary
health-care in the metropolitan area.
In 1999, a private company, Capio Ltd., bought one of Stockholm's largest
hospitals, the St. George, from the Greater Council. Since the early 1990s,
Capio has run a hospital in Gothenburg as well as X-ray clinics, laboratory
services and other "infrastructure". The St. George operates at a cost level
10-15 percent below its most efficient public counterpart in Stockholm, the
South Hospital. Compared with the average of public hospitals, the margin is
15-20 percent. According to Greater Council evaluations, the St. George is
well known for implementing new, efficient organizational structures and
treatments.
This success portends similar changes for the remaining six emergency
hospitals in the Stockholm region. Two have already been turned into
commercially viable, and thus saleable, corporations; two others are slated
to follow next year. The remaining three are candidates for marketization.
In other words, while the sale of all of Stockholm's hospitals seems
imminent, the strategy is to give the public hospitals a chance to prove
their efficiency before any new moves are made.
REFORM OR EVOLUTION?
Swedes still have strong egalitarian convictions. In particular, they
believe that good health care should be available to everyone, that incomes
must not decide the level or quality of treatment and that basic care should
be financed by public authorities. Indeed, good health care is considered
intrinsic to democracy. In Sweden, as in Canada, the deficiencies of the
American health-care system are frequently used to divert and confuse the
debate over reform. More and more, Swedes are looking for a more flexible
welfare state, but not the end of the welfare society.
Nevertheless, the Swedish system will continue to see reform. Or, more
correctly, changes. The word "reform" might suggest a well planned
transition, decreed by Parliament and managed by the civil service. But as
national politics drift away from traditional welfare-state thinking,
regional and local parliaments will gain more power, opening up a broader
pattern of experimentation. Mounting demand for services will be met
increasingly by insurance companies and private care-providers, particularly
in local markets in the major cities and more populated areas. Rather than a
top-down, nationwide series of reforms, we are witnessing an evolution, a
"bubbling up" of localized solutions, a decentralized and spontaneous
"marketization" of the sector.
THE DEMOGRAPHIC TIME BOMB
What are the forces driving this evolution? Sweden leads the general
European trend towards aging populations. In the year 2020, four out of ten
Swedes will be over the age of 65. That means not only that demand for
health services and geriatric care will increase, but also that the
productive workforce and the tax base will shrink correspondingly. Rising
individual demand for greater choice, higher quality, more information and
second opinions will compound the challenge. This will push costs even
higher.
These trends are manifesting themselves in almost every developed country.
In other European countries - as is already the case in the United States -
people are putting such a high priority on being well and maintaining the
quality of their lives that they are becoming more willing to use their own
money for health care and services for seniors. They no longer trust
politicians to use tax money to satisfy their needs; they are sophisticated
enough to want to be in control themselves.
In post-war Sweden, tax increases made the welfare state work. Over the
longer term this trend proved unsustainable. To meet European Union
requirements and global competition during the coming years, Sweden has had
no choice but to reduce its high tax levels.
LIKELY TO SURVIVE?
Sweden's present health-care structure cannot meet the challenge of being
part of a lower-tax environment. Health-care consumers want a customer
focus, no waiting lists and highly motivated service providers. This type of
service is best delivered by small, independently operated enterprises,
particularly employee-owned firms.
Competition between these entrepreneurs, and between them and government
health-care units, will expose bad operating practices and neglected
opportunities. Allowing entrepreneurs to compete for public contracts will
create an environment conducive to improved problem solving, new approaches
and budget discipline. There is considerable experiential evidence that
competitive organizations tend to concentrate on customer satisfaction and
productivity. This entrepreneurial difference will give them an edge in
solving problems (like waiting lists) over public units, which operate in an
environment in which there is only a vague focus on outputs.
Many health-care procedures in Sweden involve the participation of the
country's overlapping bureaucracies. Responsibility for social welfare
services is spread among several regional and local authorities, which often
co-operate badly. However, people no longer accept being pushed back and
forth or enduring delays in treatment caused by administrative inertia.
Service entrepreneurs have the tools to solve these severe problems.
A TORPEDO
The Swedish health-care sector is suffering increasingly severe recruitment
difficulties, due to both low birth rates and a poor image as a place to
work. The system is harmed by weak leadership, low pay and the lack of
possibilities for advancement. Dramatic organizational changes are needed to
satisfy and motivate employees, especially young people who sympathize with
the ethos of public health care but find the working conditions
unattractive.
In Sweden, private health-care entrepreneurs generally tend to treat their
employees better. Many nurses have lost their illusions about public
employment and have started their own enterprises. They have benefitted from
public-private competition. Since private companies began competing with
public units, wages in the health-care sector have risen at three times the
earlier rate. Today, very few people - most notably including trade
unionists - believe that public monopolies pay higher salaries. Like a
torpedo launched out of the blue, competition has blown a hole in the hull
of the old system.
The National Union of Nurses, with 120, 000 members, actively supports
nurses who want to leave public employment and emulate the success of their
colleagues who started new careers as contractors in the early 90s. The
union runs a special company to promote new ideas and activities in this
field.
The chairwoman of the Union, Eva Fernvall, has become an articulate advocate
of radical change. "Let the market take over health care!" a headline has
quoted her as saying. She makes the case for more patient focus, flatter
organizational structures, stronger incentives for workers and increased
numbers of producers and employers. On November 25th, 1997 Dagens Nyheter,
Sweden's largest daily, published a discussion of ideas that Fernvall had
co-authored with other opinion leaders-including the chairmen or CEOs of the
National Union of Doctors, four other health-care unions, a large private
health-care company and the Union of Swedish Industry. She wrote the
following points:
"From different points of view we have come to the conclusion that a
completely different, more independent organization than the present one can
offer very large gains for Swedish welfare - a better function of health
care with the same or lower costs."
"Today, in many fields there are uncertain mechanisms for decision-making
within sometimes-conflicting hierarchies. The system suffers from petty
political interference. Operations therefore ought to be led by
professional, non-political management."
"Of course there would be enormous stimulus to those working within the
health care field to be valued for how they perform, where they themselves -
under independent conditions and professional responsibility - have at their
disposal methods to deliver good quality of health care."
"When it comes to organization, it cannot be very complicated for the
Greater Councils to get rid of most of the parts of the ownership of
hospitals and other health-care institutions. There are great numbers of new
owners ready to take over if price and condition are correct."
"Co-operation and confrontation between enlightened buyers and sellers can
be made a developing force in the system's details as well as its whole. In
today's society the old [health-care] model no longer works. Now there is a
need for flexibility, entrepreneurship and new channels to let loose the
complexity of demand and supply, held back for decades."
Since then, Fernvall has had occasion to repeat her message. "Health-care
pluralism" is today the official standpoint of the nurses' unions. She is
supported in her stand by most other health-care unions.
Looked at from the aspect of nurses' salaries, the Fernvall arguments are
based on solid ground. Between 1995 and 1999, publicly employed nurses
increased their salaries by 26 percent, second only to civil engineers. This
gain is three times greater than what was won during the previous period,
when private alternatives were still weak. The trigger turned out to be the
individual competence factor: employers now have the freedom to reward
initiative and responsibility. This development becomes possible only when
increasing numbers of employers compete for nurses and other staff.
During the old greater council monopoly, very little happened. It turned out
to be impossible to raise salaries through central negotiations, Fernvall
said in an interview earlier this year. How you performed was of no
significance. A wider salary range for differing skill levels is the key.
Today, she maintains, the 20 percent spread between the highest and lowest
nurses' pay is still far too narrow. It must, she writes grow to at least 50
percent to promote individual competence.
It's clear that competition from the independent contractors has
simultaneously bid up nurses' wages across the system and raised the quality
of care. This explains the attraction markets exert on Sweden's health-care
unions even though they are opposed by virtually every union in the field in
most Western countries.
SWEDEN 2010
Sweden's future health-care system is developing fast. Many do not like the
new the new arrangements or the side effects of the emerging
welfare-services market, but a growing number of people will not be
satisfied with anything less.
The trend is towards ongoing reform of the old system, rather than towards a
complete rebuilding from the ground up. There will be no "grand master plan"
imposed by Parliament. Instead, there will be a large number of small- or
medium-scale changes in shifting tempo dispersed around the country. I
suggest that the transition will run along the following lines in two
distinct regions:
1. Urban Areas
Policies and solutions will become less homogeneous. In the bigger urban
areas, income, education and political trends will favor provider pluralism
and - incrementally - additional financing (private insurance).
Hospitals now owned by the regional authorities will turn into publicly
traded companies; this measure will increase productivity and budget
control.
Private providers will expand as successive sectors (e.g., nursing homes,
public dentistry) are forced to compete.
Public and private producers will build alliances. International companies
will enter the market and operate hospitals that were once publicly owned.
2. Rural Areas
In more traditionalist parts of the country, generally those with sparser,
older and less well educated populations, you will not see much change.
The regional and local governments will hesitate to contract out services.
These areas will also attract fewer entrepreneurs (who, of course, prefer
environments where competition is welcomed).
Patients will still be willing to stand in line for treatment.
The aggressive consumer will have hardly any impact on the northern parts of
Sweden.
PATIENT VOUCHERS IN A DECENTRALIZED MARKETPLACE
Efficiency will rapidly become the single most important driving factor. Not
from a narrow budget perspective, but from a value-for-money and
quality-of-life viewpoint, "How can I best use my (tax) money to improve my
health and quality of life?" will become an increasingly common question
among young people as private pension funds and other savings grow at high
rates.
The political system will lose much of its power (not without controversy,
of course). Fewer citizens, as sophisticated consumers, will trust elected
bodies to solve the problems of the individual through collective measures.
With better education and higher levels of "social competence", people will
feel comfortable creating their own solutions within the publicly financed
system.
The ever more apparent potential for dramatic improvements will keep up the
pressure for change. The combination of pharmaceutical and technological
advancements is already opening new possibilities every day. It's doubtful
that the system will withstand the pressure for better, albeit more costly,
service by saying "no" to individual needs. When patients ask for the latest
treatment, the financial aspect will become crucial.
In ten years' time, basic health care will still be financed by taxes, but
many services will be for sale in the out-of-pocket or private insurance
markets. Regional authorities will be responsible for most of the hospitals,
but private contractors will operate from within these facilities.
In large parts of the country, primary health care will be privately owned
and operated but publicly paid for through "patient vouchers". In general,
networking will be the predominant approach; i.e., combinations of public
and private suppliers will be seen in many fields.
Throughout Sweden, the focus will center on customer satisfaction in a
system that measures and guarantees quality outputs, including
evidence-based routines and best-practice treatments. Working conditions
within the care services will improve noticeably, thanks to stronger owners,
better management, expanding career opportunities and the efforts of manpowe
r companies.
Care will no longer be looked upon as a basically political question, but as
a matter between well-informed consumers and their partners in the
healthcare field.
*Johan Hjertqvist has successively been entrepreneur, consultant, deputy
mayor of the city of Tyreso, author and research director on the reform of
social services in Sweden. He took part in the creation of a Nordic body
tasked with implementing modern health care in the Baltic States. He acts as
adviser to the Greater Stockholm Council on the health system and is
director of "Health in transition", a four-year pilot project whose
objective is to describe and analyze the operation of a competitive market
within the public system. In addition, he is currently writing a book about
how the combination of new consumer values and scientific progress will
change the meaning of health care.
----- Original Message -----
From: "Michael Perelman" <[EMAIL PROTECTED]>
To: <[EMAIL PROTECTED]>
Sent: Thursday, June 13, 2002 5:23 PM
Subject: [PEN-L:26871] Re: Costly privatizing of firefighting
> Does anybody know of any examples where privatization has created any
> efficiencies other than attacking wages and working conditions? Does
> anyone know of any case where it has not increased overhead and
> administrative bloat?
> --
> Michael Perelman
> Economics Department
> California State University
> Chico, CA 95929
>
> Tel. 530-898-5321
> E-Mail [EMAIL PROTECTED]
>
