Experiences of Pay for Performance in the Danish Health Care Sector

1. Experiences of Pay for Performance in the Danish Health Care Sector Anne Frølich, MD, Senior ConsultantH:S Bispebjerg Hospital, University of Copenhagen Pay for Performance. Perspectives Around the Globe Annual Research Meeting 2006, Seattle

2. The Danish Population and Health CareSector • The population is 5.4 million people • Equal access to healthcare is fundamental • Access to hospital care and GPs is free • Free choice of hospital • GPs act as gatekeepers to hospitals • Co-payment for pharmaceuticals • Co-payment for dentist care Denmark

3. Health Care Budget Total budget for the Danish health care sector is 80 billion kr. (13 Billion US Dollars) representing 8.4% of the GDP 82% of the healthcare expenditure is covered by state and municipal taxes and 18% is out of pocket payment The budget is distributed as: Hospital 57% Primary care sector 20% Pharmaceuticals 6% Administration 1%

4. Structural Reform and New Health Act from 2007 From 14 Counties To Five Regions 275 Municipalities To 98 Municipalities 1 2 5 4 3

5. The New Health Act • Regions loose their taxation rights • Municipalities pay regions per hospitalisation (800 US$) and ambulatory care for their citizens • The law refer responsibility for rehabilitation and prevention from counties to municipalities • The law demand health contracts between regions and municipalities to ensure well- functioning corporation

6. Focus on Chronic conditions Recommendations for Improvement of Care in Chronic Conditions, National Board of Health, Year 2005 Prevalence rates of the most common chronic conditions COPD 200.000 4% Type 2 DM 200.000 4% CHF 200.000 4% Muscle- 200.000 4% Skeletal conditions Osteoporose 300.000 6%

7. “The Chronic Care Model” by Ed Wagner

8. “The Chronic Care Model” by Ed Wagner

9. Payment of Physicians • Hospital doctors (60%) work as salaried employees • GPs (23%) derive almost all of their income from contracting with the County. Their compensation is a mixture of fee for service (per consultation, examination, vaccination, etc.) and capitation, 2/3 fee for service, 1/3 capitation

10. New Covered Services in the Primary Care Sector • One-year follow-up in diabetes patients (type 1 and 2) including regularly controls, recording of diagnosis to IT system, ensure patients undergo recommended screenings Experiences from DM will be used to develop benefit models in other chronic conditions such a COPD, asthma, CHF, depression etc.

11. Continued – New Covered Services in the Primary Care Sector • Prevention consultations related to life style factors such as tobacco use, alcohol, Physical activity nutrition, and Other risk factors and integrated counselling • Home visits to frail elderly once a year • Screening for depression

12. Payment Mechanism in Hospitals Hospitals are financed from the counties through tax revue and from block grant from the state. The budgets has until recently been prospective global fixed budgets and has been effective tools for cost containment.

13. Schwitzerland Mean for 22 OECD countries UK France Denmark Healthcare Expenditures as Percentage of the GDP From 1970 to 2001

14. Hospitals Activity Based Financing (DRG) DRG rates were implemented in 2000 with the goal that during the next 5 years 20% or more of hospitals income should be linked to activity The aim was to increase production and competition between hospitals. In a survey from 2005 it was concluded that the productivity level in hospitals increased but at the same speedas in the earlier years

15. Transparency of Performance? • National Council for Quality Assurance initiated in 2005 – in the process of developing standards and performance measures • National Clinical Databases reporting regularly from 2004 in • Stroke • Femur Fractures • Pneumonia • Pulmonary Cancer • Schizophrenia • National Cancer Registry • National Patient Satisfaction Surveys