050913 GCC conference Systems reform breakout HEALTH SYSTEM

050913 GCC conference Systems reform breakout HEALTH SYSTEM REFORM – LESSONS AND EXAMPLES Dr. Nicolaus Henke INTERNATIONAL HEALTH LEADERSHIP PROGRAMME Cambridge March 15, 2006

050913 GCC conference Systems reform breakout OUR 2005/2006 EXPOSURE TO HEALTH REFORM System level and payer/ provider Payer/ provider Americas Europe Middle East Asia/ Australasia and Africa • Canada • Germany • U. K. • Norway • Portugal • Mauritania • Singapore • Bahrain • India • Egypt • Abu Dhabi • U. S. • Mexico • Ireland • Spain • Belgium • Sweden • KSA • Libya • South Korea • China • Japan 1

050913 GCC conference Systems reform breakout CHALLENGES 1 Government led systems generally unresponsive 2 Large quality variations in spite of growing amount of money inflows 3 Patients starting to act as consumers and demanding better services – but are unwilling to accept resulting tax burden Need to be specific about… -which policy / mechanisms that can unleash change - what good looks like in 5 years 4 Main elements of reform agreed at policy level – challenges in execution and engagement 2

011706 Team Update V 7 MANY REFORM PROGRAMS ARE BASED ON SEVEN UNDERLYING IDEAS 1 Improve public health status 3

011706 Team Update V 7 MANY REFORM PROGRAMS ARE BASED ON SEVEN UNDERLYING IDEAS 1 Improve public health status 2 Ensure financing access to care 4

011706 Team Update V 7 MANY REFORM PROGRAMS ARE BASED ON SEVEN UNDERLYING IDEAS 1 Improve public health status 2 Ensure financing access to care 3 Foster quality 5

011706 Team Update V 7 MANY REFORM PROGRAMS ARE BASED ON SEVEN UNDERLYING IDEAS 1 Improve public health status 2 Ensure financing access to care 3 Foster quality 4 Adjust capacity 6

011706 Team Update V 7 MANY REFORM PROGRAMS ARE BASED ON SEVEN UNDERLYING IDEAS 1 Improve public health status 2 Ensure financing access to care 3 Foster quality 4 Adjust capacity 5 Involve consumer 7

011706 Team Update V 7 MANY REFORM PROGRAMS ARE BASED ON SEVEN UNDERLYING IDEAS 1 Improve public health status 2 Ensure financing access to care 3 Foster quality 4 Adjust capacity 5 Involve consumer 6 Introduce competition 8

011706 Team Update V 7 MANY REFORM PROGRAMS ARE BASED ON SEVEN UNDERLYING IDEAS 1 Improve public health status 2 Ensure financing access to care 3 Foster quality 4 Adjust capacity 5 Involve consumer 6 Introduce competition 7 Adjust regulation and institutions / MOH 9

011706 Team Update V 7 MANY REFORM PROGRAMS ARE BASED ON SEVEN UNDERLYING IDEAS 1 Improve public health status 2 Ensure financing access to care 3 Foster quality 4 Adjust capacity 5 Involve consumer 6 Introduce competition 7 Adjust regulation and ministry 10

011706 Team Update V 7 … AND THREE WAYS TO DRIVE THROUGH EACH BUILD AWARENESS 1 Improve public health status 2 Ensure financing access to care 3 Foster quality 4 Adjust capacity 5 Involve consumer 6 Introduce competition 7 Adjust regulation and ministry 11

011706 Team Update V 7 … AND THREE WAYS TO DRIVE THROUGH EACH BUILD AWARENESS 1 Improve public health status 2 Ensure financing access to care 3 Foster quality 4 Adjust capacity 5 Involve consumer 6 Introduce competition 7 Adjust regulation and ministry SET INCENTIVES 12

011706 Team Update V 7 … AND THREE WAYS TO DRIVE THROUGH EACH BUILD AWARENESS 1 Improve public health status 2 Ensure financing access to care 3 Foster quality 4 Adjust capacity 5 Involve consumer 6 Introduce competition 7 Adjust regulation and ministry SET INCENTIVES MANDATED ACTIONS 13

011706 Team Update V 7 1 Improve public health status - Examples Awareness: - Educate public on diet, exercise, smoking, safe sex - Measure “Early Health” Incentives: Differential insurance premiums based on successful lifestyle changes Mandates: - Smoking ban - Vaccination campaigns - Require the use of automotive seat restraints and motorcycle helmets 14

050913 GCC conference Systems reform breakout WHAT THE EARLY HEALTH INDEX COULD LOOK LIKE Description • ‘Nominal’ Single index – Index – Financial Example Spend by disease stage (Diabetes example) 64% 35% ~0% ~1% Prev-Diagnosis. Treat- Compention ment lication • ‘Actual’ – DALY – Expectation of life lost – Healthy life expectancy at birth Life lost due to low investment in ‘Early Health’ US 15 years China 20 years Japan 5 years UK 15 years … • Major indicators are scored red, Traffic light system yellow or green US China Japan … Education Vaccination Diet In vivo Dx … 15

050913 GCC conference Systems reform breakout ‘STRAW MAN’- A SMALL NUMBER OF INTERVENTIONS DRIVE ‘EARLY HEALTH’ PERFORMANCE FOR MAJOR DISEASES Critical ‘Early Health’ interventions Causes of death Prevention Screening Diagnosis • Education • In vitro diagnostics • Education (e. g. , reduction in • Genotyping (? ) • In vivo diagnostics • In vitro diagnostics (e. g. , 1 HIV/AIDS 2 Resp. cancer* 3 COPD 4 Measles • Vaccination • Physician consultation 5 Road traffic accident • Education • – 6 Stomach cancer • Education (e. g. , reduction in • Endoscopy 7 Hypertensive heart disease • • Education • Diet • Endoscopy • Genotyping (? ) • Physician consultation • Genotyping (? ) • Physician consultation 8 Tuberculosis • Vaccination • In vitro diagnostics (e. g. , microbiology) • In vivo diagnostic smoking) smoking ? ) Diet • 9 Self inflicted 10 Ischemic Heart disease microbiology) In vivo diagnostic pathology) • Education • Physician consultation • Education (e. g. , reduce BP, • Physician consultation • In vitro diagnostics • Physician consultation • In vivo diagnostics (e. g. , reduce obesity, reduce cholesterol) * Trachea/Bronchus/Lung Cancer angiography) 16

011706 Team Update V 7 2 Ensure financing access to care - Educate about need to save - Tax incentives and employer contribution to insurance schemes - Mandated insurance or tax funded provision for all 17

Pages Hencke AI v 0. 1 MAURITANIA TESTS A MICRO-INSURANCE SCHEME FOR FULL PREGNANCY COVERAGE FOR $ 9 PER PREGNANCY 1 Payment of all costs included in the services pack 2 Respect of the standardised therapeutic procedures 3 Regular and secured purchase of medicines and consumables 4 Presence of qualified personnel at all instances of care 5 Availability of all technical means necessary to administer the care needed and covered

Pages Hencke AI v 0. 1 PRELIMINARY RESULTS IN NUMBERS: ENCOURAGING PARTICIPATION IN PREVENTIVE ACTIVITIES; STRONG REDUCTION OF MORTALITY Access to care With F-F obst. care Without F-F obst. care Number consultations / woman 2, 6 1, 7 Laboratory visits attendance 98% 31% Echography 81% 21% Childbirth's file made and maintained 100% 40% Attendance of standard pre- and postnatal consultations 83% 50% Maternal mortality (par 100 k/par naissance ou par femme) 103 747 *CME: Consultation prénatale **Consultations Pré-et Post-Natale) 19

050913 GCC conference Systems reform breakout 3 Foster quality Levers 1. Set standards 2. Provide incentives Ensure quality in a devolved system 3. Monitor and provide information 4. Assess, audit and enforce 5. Enable choice and competition through stronger payer function • Strengthen national registration process, credentialing and accreditation • • mechanisms Strengthen peer review and ongoing validation Introduce rigorous privileging at the provider level • Provide financial incentives for high quality care to primary and secondary • care providers Build quality indicators into Payment by Results • • • Use multiple levers to increase information available to patients Prioritise key indicators to measure outcomes and adherence to best practice Provide real-time standardised information through clear data protocols Make information freely available to commissioners, public and providers Build GP capabilities to monitor provider performance and analyse data • Make investigation and enforcement for quality failures faster and more • effective Strengthen consequence management for poor performers • Extend choice and patient ownership of care decisions (e. g. , treatments) • Strengthen payer skills, resources and systems to improve quality • Leverage payer purchasing power through joint commissioning (e. g. , consortia) • Standardise care pathways and adherence to high quality care through • • commissioning Strengthen existing quality incentives in contracts Create competitive commissioning market 20

050913 GCC conference Systems reform breakout DETAILED STANDARDS FOR CARE – FOR EXAMPLE JCAHO AND CMS Acute MI Heart failure Pneumonia Surgical infection prevention CMS JCAHO • • • Aspirin at arrival Aspirin prescribed at discharge ACE inhibitor for left ventricular systolic dysfunction Adult smoking cessation advice/counseling Beta blocker prescribed at discharge Beta blocker at arrival Mean time to thrombolysis Thrombolytic agent received with 30 minutes of hospital arrival Mean time to PCI received within 120 minutes of hospital arrival Inpatient mortality * *, ** • • Discharge instructions Left ventricular function assessment ACE inhibitor for left ventricular systolic dysfunction Adult smoking cessation advice/counseling • • * * * • • • Initial antibiotic received within 4 hours of hospital arrival Initial antibiotic received within 8 hours of arrival Antibiotic timing (Mean) Initial antibiotic selection for community acquired pneumonia (CAP) in immunocompetent patients Blood cultures performed with 24 hours prior to or after hospital arrival Blood culture performed before first antibiotic received in hospital Influenza vaccination Pneumococcal screening and/or vaccination Adult smoking cessation advice/counseling Oxygenation assessment * • • • Prophylactic antibiotic received with 1 hour prior to surgical incision Prophylactic antibiotic selection for surgical patients Prophylactic antibiotics discontinued within 24 hours after surgery end time * *JCAHO implementation with July 2004 discharges **CMS and JCAHO changing to 120 minutes with July 2004 discharges Source: JACHO; CMS; interviews; team analysis “I foresee JCAHO and CMS merging toward a common standard. We need leadership from a federal entity to ensure we don’t have disparate standard. ” – JCAHO Associate Director of Oryx “JCAHO and CMS have plans to work together to expand standards into areas like pain management, children’s asthma, and ICV care. We have no qualms about taking on metrics other organizations like Leapfrog have developed. ” – JCAHO Associate Director of Oryx 21

050913 GCC conference Systems reform breakout METRICS USED BY CMS/Premier Demonstration Project * Heart Attack (Acute Myocardial Infarction or AMI) • Aspirin at arrival • Aspirin at discharge • ACE Inhibitor for Left Ventricular Systolic Dysfunction • Beta Blocker at arrival • Beta Blocker at discharge • Thrombolytic received within 30 minutes of hospital arrival • PCI received within 120 minutes of hospital arrival • Smoking cessation advice/counselling • Inpatient mortality rate Coronary Artery Bypass Graft (CABG) • Aspirin at discharge • CABG using internal mammary artery • Prophylactic antibiotic 1 h prior to surgical incision • Prophylactic antibiotic selection for surgical patients • Prophylactic antibiotics discontinued within 24 hours after surgery • Inpatient mortality rate • Post operative haemorrhage or haematoma • Post operative physiologic and metabolic derangement Hip and Knee replacement • Prophylactic antibiotic 1 h prior to surgical incision • Prophylactic antibiotic selection for surgical patients • Prophylactic antibiotics discontinued within 24 hours after surgery • Post operative haemorrhage or haematoma • Post operative physiologic and metabolic derangement • Readmissions 30 days post discharge Community Acquired Pneumonia (CAP) • Oxygenation Assessment • Initial Antibiotic • Antibiotic timing • Pneumococcal screening / vaccination • Blood culture performed first antibiotic received in hospital • Smoking cessation advice/counselling • Influenza screening / vaccination Median quality scores improvements – year 1 90 93 Heart Failure (HF) • Assessment of Left Ventricular Function • ACE Inhibitor for Left Ventricular Systolic Dysfunction • Detailed discharge instructions • Adult smoking cessation advice/counselling 86 85 90 91 64 76 AMI CABG HF Hip & Knee 70 80 CAP *3 year pilot at consortium of nonprofit health systems including 270 hospitals and treating 400, 000 patients in the 5 conditions Source: CMS/Premier Demonstration Project; WSJ, 4 May 2005; CMS Press Release 3 May 2005 22

050913 GCC conference Systems reform breakout DIFFERENCES IN QUALITY BETWEEN PUBLICLY REPORTING AND NON-PUBLICLY REPORTING PLANS Measure * Public reporters, % • Adolescent immunisation status • (combo 1) Beta-blocker treatment after heart attack • Check-ups after delivery • Childhood immunisation status • • • (combo 1) Cholesterol management – Control (LDL <130) Cholesterol management – Screening Comprehensive diabetes care – Eye exams Comprehensive diabetes care – Hb. A 1 c testing Comprehensive diabetes care – Lipid control (LDL <130) Comprehensive diabetes care – Lipid profile • Timeliness of prenatal care *Selected averages for commercial (non-Medicare/Medicaid) providers Source: NCQA – The State of Health Care Quality, 2004 Non-public reporters, % Difference, % 19. 8 4. 5 9. 7 7. 4 13. 6 7. 6 10. 5 3. 5 5. 5 3. 1 9. 0 23

USE OF INFORMATION TO DRIVE QUALITY 050913 GCC conference Systems reform breakout U. K. EXAMPLE Reduction in mortality rates since data began to be published by a private company Mortality rate for open heart procedures in children under 1 % Individual hospital trusts A B C D E F Source: Aylin et al. British Medical Journal, October 2004 24

050913 GCC conference Systems reform breakout QUALITY MANAGEMENT IN PRIMARY CARE – NETHERLANDS IMPROVE QUALITY History of quality initiatives 1970 s Initiatives to introduce peer reviews and treatment guidelines 1980 s/90 s Dekker reforms introduce competition and focus on quality 1996 Law passed to enforce annual quality reviews Measures to ensure quality Peer reviews Treatment guidelines Quality monitoring Practice visits Key facts • Physicians take part in 6– 12 peer reviews per year • About 70 guidelines have been developed • Statistical analysis of treatment processes and outcomes • Video recordings of physicianpatient interaction • Goal is mainly to evaluate management processes • About 40% of all general practitioners take part 25

050913 GCC conference Systems reform breakout CHRONIC DISEASE MANAGEMENT SHOWS POTENTIAL Approach • Region’s patients stratified by risk group, creating 4 -5 pools, e. g. , – Diabetes – Respiratory – Frequent hospital use Example: North Bradford PCT Primary care center Diabetes GPs Respiratory GPs • GPs merged into primary care groups of up Nurse support to 10, with 2 each trained on 1 disease (e. g. , diabetes), networked with local specialist (to handle escalated cases), and given 24/7 nurse support Results • Each patient assigned exclusively to GP/nurse, located at the primary care center • System designed to reduce complications EXAMPLE Frequent flyers GPs Emergency admissions 25% 38%-73% 15%-70% Average length of stay 45% 90% 40%-50% and time spent in the hospital Source: PCT interviews; North Bradford PCT Performance Report, Sept. 2004; CDM Compendium, DH, 2004 26

050913 GCC conference Systems reform breakout CHRONIC DISEASE MANAGEMENT AND PRO-ACTIVE CASE MANAGEMENT Effects on existing treatment structures Disease 1 Congestive heart failure (CHF) Diabetes Asthma • Best practice medication • Expert patient programme • Peak flow monitoring COPD • Best practice medication • Expert patient programme • Peak flow monitoring 3 4 CHD/ Hypertension 6 High risk / older people / Frequent flyers GPs Nurse • Constant weight checks • More healthy nutrition • Best practice medication • Daily blood sugar checks • Expert patient programme • Best practice medication 2 5 Disease management interventions • Monitoring risk profile • Behaviour modification • Best practice medication • Identification of patients • Allocation of case manager • Regular monitoring and O/P A&E Emergency Admissions LOS 40 -90% 30% 25% 45% 38 -73% 90% 20% 70% ? ? % 15 -70% 40 -50% review • Pro-active assessment and treatment • Best practice medication Source: Mc. Kinsey analysis; Chronic disease management compendium, DH, 2004 27

011706 Team Update V 7 4 Adjust capacity - examples • Specialised players in US and UK • Home monitoring to support chronic disease management • Intermediate care in U. S. • Regional emergency care planning in England 28

SPECIALISATION IN HEART SURGERY – USA 050913 GCC conference Systems reform breakout IMPROVE QUALITY Increasing case load Number of heart surgeries 10, 500 Lower costs US$000 43 Higher quality – better survival rate, % 92 - 37% 82 27 137 U. S. average Source: Texas Heart Institute THI U. S. average 1 year THI 5 year 29

050913 GCC conference Systems reform breakout SYSTEM PATIENT FLOW (REGION WITH 3 MILLION PEOPLE) 24 x 7 service Blue light ambulance Acute Care • “A&E” • ITU • CCU • Inpatient care Paramedic Patient Telephone service Source: Team analysis Social care Outpatients Emergency care Diagnostics Community care (incl GPs) Intermediate care Key thrusts • Triage early • Avoid inappropriate hospitalisation • Provide scheduled care where possible Elective care 30

050913 GCC conference Systems reform breakout UTILIZATION CHANGES Underlying Activity Growth Activity redistribution to self care Activity redistribution to other Services (e. g. ECS) ALOS reduction Productivity (partially due to transfer to Intermediate care; likely to be less than full 30% identified in initiatives, as simpler cases will have been transferred out) * Based on 5 -year projections ** Based on national targets for diagnostics Source: Team analysis A+E 16% 0% -84% Inpatient spells 16% -8% -36% Outpatient Diagnostic Episodes 16% 117%* *0% -10% -60% -44% -2030% 31

050913 GCC conference Systems reform breakout IMPACT ON SITES Current Interim System (2 -3 yrs)** 9 7 -8 5 -7 6 5 -6 3 -4 Intermediate care 22* 22 17 -22 Emergency care 3 6 -18 20 Community care 390 300 -350 100 -200 Diagnostics Co-located with acute Acute care Elective care Sustainable System (5 yrs+) Co-located with Acute care/Emergency care *22 community hospitals, 12 of which are non-Trust sites. Many of these currently provide (sub)-residential care **Highly preliminary Source: Team analysis 32

050913 GCC conference Systems reform breakout STEPDOWN SERVICES CAN SUBSTANTIALLY REDUCE LENGTH OF STAY IN ACUTE CENTRES INCREASE CAPACITY Stroke Joint Fractured Replaceneck of ment femur Total Comparison Kaiser—NHS • • • NHS OBDs per 100’ 000 population >65 yrs, 000 s 22. 3 ALOS in NHS, days 27 ALOS in Kaiser, days 4. 26 OBDs with Kaiser ALOS, 000 s 3. 5 8. 2 12 4. 3 2. 9 8. 4 27 4. 9 1. 5 OBDs saved per 100’ 000 population >65 yrs, 000 s 18. 8 5. 3 6. 9 38. 9 Total OBDs, 000 s 55. 5 38. 3 34. 0 Current ALOS, days 17. 7 13. 5 20 0– 393 ~4* 12. 5 33. 0 0– 225 ~4 11. 3 27. 0 0– 515 ~2 3. 4 31. 6 Current LOS range, days Best practice ALOS, days OBDs if applied best practice, 000 s OBDs save, 000 s comparison suggests there is much scope to reduce LOS in hospitals 38. 9 30. 7 Benchmarking Beds and Herts SHA (1. 5 m population) • • Kaiser 34. 0 • Top 3 conditions • 12. 5 91. 6 account for 40% of potential shift from acute sector to intermediate Extrapolates to 3 m bed days in England *Stroke: 4 days acute, then rehab, Joint replacement 2 days acute then rehab, fractured neck of femur 2 days acute then rehabilitation in intermediate care Source: Hospital bed utilisation in the NHS, Kaiser Permanente and the US Medicare programme. Ham et al. BMJ 2003; 327: 1257 -60, Bedfordshire and Hertfordshire SHA 33

011706 Team Update V 7 5 Involve consumer • Urban sickness funds in China • Differentiate offering to consumer segments • Consumer information in Norway 34

FOUR MAIN DRIVERS OF Increasing responsibilities • Rolling back of healthcare systems (increased rationing and co-payment) • Requirement for active decision making • Product innovation from insurers/providers health-care needs • Aging CONSUMERISM population • Increased prevalenc e and burden of disease • Greater focus on wellness and prevention • Broader Increasing definition and ofrights disease expectations • Growing demand for efficient, convenient, and personalize d services (from and beyond health care) • Greater clarity of treatment outcomes • More power 050913 GCC conference Systems reform breakout Advanced technology and more information • Better access to health information • More treatment options • Advancing medical and information technology • Growing innovation in private sector 35

050913 GCC conference Systems reform breakout GOVERNMENT RESPONDING TO SOCIAL PRESSURE Government needs to improve healthcare to address foreign investors’: • Concerns about lost productivity • Concerns about having to pick up the slack Government increasingly concerned by violent protests “Mass incidents”* in China Thousands 10 11 12 15 1993 94 95 96 97 9 25 98 32 99 58 40 45 50 00 01 02 2003 • Government launched “Harmonious Society” campaign, November 2004 – Intended to “enable all people to share the social wealth created in reform and development” – Includes increased investments in healthcare and other social infrastructure • In healthcare, is seeking to increase “Basic Urban” insurance cover from 130 to ~450 MM • Is also piloting rural insurance scheme, though at very low coverage levels *Police definition Source: Ministry of Public Security statistics; People’s Daily 36

MULTI-TIER CONSUMER MARKET IS EMERGING Premium Mass market Coastal rural Other 050913 GCC conference Systems reform breakout Insurance coverage Lives 2003 Lives 2015 • Private insurance • Urban Scheme ~25 MM ~100 MM • Urban scheme deductible ~105 MM ~350 MM 10% average salary (U. S. $700/yr in Shanghai); • Co-pay ~40% (outpatient), 1020% (inpatient), depending on region and service • Rural scheme with U. S. $75 ~15 MM ~50 MM • Rural scheme or out of ~1, 150 MM ~900 MM deductible, 80% co-pays • Private cover to reduce out-ofpocket expense pocket • Without private insurance • Low, very cost-sensitive demand ILLUSTRATIVE Basis of industry growth projections Most insurance products have high deductibles and co-pays, leading to continued suppressed demand *Projection assumes premium and coastal urban segments grow at private insurance premium CAGR (13% 2003 -2010); all Premium have Urban Basic insurance; Government achieves goal of insuring 450 MM urban population; Chinese population grows to ~1, 380 MM Source: MOH 2003 National Health Services Survey; Asian Demographics; literature survey; team analysis 37

MEDICAL EXPENSE EXAMPLE: BROKEN FINGER RMB (US$1 = 8. 3 RMB) 050913 GCC conference Systems reform breakout 1, 319. 0 96. 6 Cost of treatment Excluded services Deductible 80% Co-pay Reimbursement 38

050913 GCC conference Systems reform breakout Psychological burden of health concerns WE SEE SIX DISTINCT ATTITUDINAL SEGMENTS WHICH ARE GOOD PREDICTORS AND PROXIES FOR BEHAVIOUR High “Receiver” 17% “Depender” 14% “Anxious Seeker” 14% “Avoider” 18% Low “Stoic” 16% Low While distinct segments exist, patient behavior varies widely within each segment “Proactive” 21% High Desire for health-care proactivity Sources: 1, 500 telephone interviews evenly distributed in Germany, U. K. , Italy in March 2001; Mc. Kinsey analysis 39

40

INVOLVE CONSUMER TO DRIVE HOSPITAL QUALITY How it works • Free choice of hospital (since January 2001) • Patients free to call toll free number or visit website to find shortest waiting times and book treatment (since May 2003) • Hospital outcome ratings and rankings of service level by hospital on internet (since September 2003) • Patient is guaranteed treatment within a certain time period by law Source: www. sykehusvalg. net; Mc. Kinsey 41

011706 Team Update V 7 6 Introduce competition Building blocks Hypotheses based on experiences so far • Leads to new ideas and new dynamics (better services, more Competition between payors Contestabilty for hospitals and doctors efficient medical cost management) • Example: Germany, U. S. • May impede chronic disease management and add overhead cost • Drives through improvements in efficiency and quality of care as well as responsiveness to patient needs • Examples: Foundation Trusts in England, regional budgets and contracting (e. g. , Norway, Italy, Germany) • Need to make the choosing process meaningful and data transparent to avoid competition on meaningless parameters – in reality choice does not mean patients choosing hospitals, but doctors choosing doctors with very limited factual information • Regulatory framework critical for overall success, two key roles Independent regulation – Consumer protection / quality watchdog – Financial, governance and market rules and behaviours of players 42

050913 GCC conference Systems reform breakout NHS IN ENGLAND IS BUYING IN DIAGNOSTIC AND SURGERY CAPACITY FROM THE PRIVATE SECTOR INCREASE CAPACITY 43

050913 GCC conference Systems reform breakout SETTING UP OF FOUNDATION TRUSTS IN ENGLAND New freedoms bestowed on hospitals Potential ways of improving services • Able to borrow money on capital markets • Companies with P&L, in charge of revenues and costs • No more directives from DH (previously over one per day) • Investment in new facilities • Full profit and loss accountability • Able to develop strategic partnerships • Able to develop new services • Innovating to develop patient services • Focus on efficiency and cost effectiveness – keeping the savings 44

050913 GCC conference Systems reform breakout 7 Adjust regulation and institutions / MOH Country Germany United Kingdom Ministry of Health Dept. of Health Ministry of Health Professional organisations Healthcare Commission; SHAs National Board of Health Payors Public and private insurers Primary Care Trusts Ministry of Health Service provision Private & public hospitals; private physicians Public hospitals Role Singapore Policy Ministry of Health Regulation Norway Qatar and Abu Dhabi have already moved functions from ministries to authorities; the UAE federal government is following Although hospitals can be public sector, increasing trend to operational independence of hospitals 45

050913 GCC conference Systems reform breakout 2 ROLES: ECONOMIC REGULATION AND CONSUMER PROTECTION TO REGULATE EX-STATE RUN INDUSTRIES (UK EXAMPLE) Healthcare Economic regulation FTs Non-FTs IS • Set conditions for market entry and exit • Monitor and disclose financial performance n/a • Manage financial instability n/a • Achieve sustainable profits for providers • Manage competition Housing Mail Gas & electricity* Economic regulator Water Rail Government Quality and safety regulator(s) n/a n/a Communication* n/a n/a Consumer protection • Ensure affordable enduser pricing • Set quality standards • Monitor quality • Encourage choice and innovation • Promote safety of public • Manage externalities (e. g. , environmental impact) n/a n/a *Reflects network/distribution segment of market vs. other market segments (e. g. , broadcasting, gas metering) Source: Interviews with regulators 46

050913 GCC conference Systems reform breakout SHOULD MINISTRY AND HEALTH SERVICE BE SEPARATE? Minister of Health DRAFT Health Service Executive Cancer Standards and quality (CMO) Strategy and Policy co-ord Diabetes … Investigations & Inquiries SHAs Planning and capability development Social Care & Public Health Provider development NHS Finance, Strategy & Planning NHS IT implementation Other Care (Drugs, Mental health, Dental) NHS workforce DH Finance NHS communications Primary Care Secondary Care DH IT policy and standards DH HR policy and standardds DH communications Source: Team analysis 47

050913 GCC conference Systems reform breakout DRAWING IT TOGETHER – EXAMPLE OF A DIAGNOSTIC 1. Increase pooling 2. Fix financing 3. Improve service delivery 4. Improve access for the poor/ rural 5. Increase levels of education Issue Action • Poor exposed to health shocks as a • Launch package • Shift OOP spending into pools • Subsidise poor/ fund for non-risk result of high level of out of pocket spend • System appears to be accumulating • • While physical access is not an issue, service, drug & quality staff availability is • 94% of nurses have only secondary • • 6. Refocus organisations debt System unable to make most effective use of resources Poor responsiveness of system, notably hospitals, to patient needs – Centrally driven – hospitals have little flexibility on staff & budget • • level of education Medical schools are expanding imperilling standards Weakest doctors are allocated to positions with least oversight/ training Mo. HP currently sprawls across all roles Suboptimal performance • • • events (i. e. , primary care, ? old age? ) Fix Patient Treatment at the Expense of the State Fix Health Insurance Organisation Rationalise services Fix clinic/ hospital management through increased autonomy and building capabilities – Devolve (some) resource flexibility (staff, budget) Focus on defined basic package Increase incentives to work in rural areas (clinicians & management) Reform takleef (existing allocation mechanism) Step up post-high school nurse training Increase oversight/ training for rural doctors • Institute independent quality • assessment/ accreditation Simplify organisational structure 48

050913 GCC conference Systems reform breakout EXAMPLE OF A PROGRAM – ENGLAND 1999 -2008 Steps 1) Create capacity 1999 -2004 • Set targets • Abandon 4 regional HQ and health authorities, create 28 SHAs and 300 PCTs under • Triple nominal spend over 10 years to meet targets 2) Create plural market 2004 -2008 • Aggressive new access targets • Choice • Plurality of supply (FT, ISTC) • Incentives – PBR, Consultant contract, GP contract 49

050913 GCC conference Systems reform breakout WAITING TIMES Inpatient waiting times in England (March 00 – September 05) Number of patients waiting for admission > 6 months > 9 months > 12 months > 15 months -00 ep-00 ar-01 ep-01 ar-02 ep-02 ar-03 ep-03 ar-04 ep-04 ar-05 ep-05 M M M S S S Mar 50

050913 GCC conference Systems reform breakout KEY OBSERVATIONS AND TAKEAWAYS • Seven ideas underlying most system reforms • Incentives matter, including how payers pay and how provider contestability is enabled • Information matters • Balance of mandates vs incentives vs information is important • Involving the consumer will be critical • Sequencing and capability building is one of the biggest challenges • Success may be driven by – A very clear view of what system success looks like in 3 -5 years (results) – Focus on executing on 2 -3 key policies to get there, and evolving them over time 51