Study tour examines health care systems in Germany, Holland.
The German health care system, and to some degree that of Holland (Germany imposed its system on Holland during World War II), has been touted as one that may provide a "miracle cure." The German system has on its surface what appears to be the answers that everyone is seeking. However, individual segments of the American health care system must be compared with similar segments of the German system. What makes a system work is integration of the entire system within cultural norms. Any imposition of integral parts into the American system without the counterparts being imposed may put undue hardships on multiple sectors of our society. Important segments of health care delivery in the three countries warrant analysis.
Ninety percent of the population is covered by comprehensive health insurance funds - so-called "sickness funds." These funds have been in existence since being established by Chancellor Bismarck in 1883. Private insurance covers 9.5 percent of the population, and 0.5 percent, the very wealthy, pay for health care individually.
Historically and politically, Holland has defined health care as a social good. Of the 15 million inhabitants, 9 million are insured by "sickness funds" and 6 million are privately insured.
It is estimated that 35-40 million individuals are uninsured or underinsured. Emergency departments are used as overflow in city hospitals, and health departments absorb primary care in some uncovered areas. An individualistic system of health care benefits exists.
Although access is universal in Germany and Holland, waiting times for certain elective procedures is quite long in these two countries - 3 years for elective cataract surgery in Holland, and 6 weeks for elective angiography and 4 weeks for elective heart surgery in Germany.
Medication introduction is similar to that for the FDA in the United States. When a medication is approved, it may not be introduced to the general public until negotiations are completed and its funding implications are discussed in the yearly round of insurance fund-physician negotiations. There is a separate mechanism for immediate introduction of life-saving or emergency medications. Charges for the medications are regulated by the negotiation process. Pressure is exerted on the health care provider to use the least costly alternative.
The system is similar to that of Germany.
Medications can be administered as soon as they are approved by the FDA. Charges are free market-driven. Minor pressures are exerted for use of the least costly alternative.
Plant facilities and costly new technologies (MRIs, ultrasound scanners, cath labs, etc.) are determined by the central government in a yearly budget. The central allocation of these scarce resources results in maldistribution and shortages. A specific problem facing Germany is that at least $20 billion is needed to raise hospitals in East Germany to West Germany standards.
Hospitals finance their building and equipment purchases through a tariff-setting body of the government. If a new addition to a hospital is needed, it may take as long as 7 years to get approval.
There is a state jurisdictional procedure that limits some technological procurement in some areas. In other areas, it is still a free market system.
Finance (Funding Care)
The "sickness funds" are funded principally by equal contributions from employers and employees, with rates ranging from 8 to 16 percent of income. Monthly earnings above a set amount (approximately $3,000 per month) are not subject to this contribution. Above this amount, an individual can opt out to private insurance. Once private insurance is chosen, there can be no return to the sickness funds. Less than one percent of the population is uninsured. In 1989, Germany spent $1,232 per capita for health care.
Sixty percent of the Dutch population is covered by "sickness funds." Funding comes from 5.1 percent of the employee's gross income and 1.2 percent from employers. In addition, since 1989 there has been a contribution of 80 guilders per month per each working member of the family and 40 guilders per month per each child, with a maximum of two children being charged. Also, there is compulsory national insurance for all those of Dutch nationality, and for inhabitants of the Netherlands who are not Dutch, to cover exceptional medical illnesses. The funding for this Exceptional Medical Expenses Compensation Act is 7.3 percent of gross income, capped at a certain level of gross income.
American workers who are insured have employer-based insurance at variable rates. Benefits packages vary according to the policy. In 1989, per capita expenditures in the United States were $2,354.
Any care deemed appropriate by a patient's personal physician is funded by the "sickness funds." The patient has no restraints on seeking care, and the average number of visits per patient per year is 11. With this high access and no copayment or deductible, patient satisfaction is very high. There is no limitation or penalty for social care (alcoholics or venereal disease). Accident benefits are more liberal, and spa-type services are available (a month at a spa for rest). Patients are not aware of the cost for any of these services.
The "sickness funds" pay for hospital treatment of less than 365 days and for general outpatient medical care from a personal physician. Dental care is provided, but there is a copayment for dentures. The Exceptional Medical Expenses Compensation Act covers hospital care over 365 days, nursing home care, and nursing care for the mentally defective.
The insured patient usually pays a deductible and a copayment. The average number of visits per patient per year is 4, although, in a federal hospital system, it could be as high as 7. There is no limitation on care for socially unacceptable behavior (alcohol, venereal disease). Social services and education programs attempt to prevent abuse of care by alcoholics etc. with little success. Accident benefits are more stringent, and there are no spa-type services readily available.
Health Care Expenditures as
Percentage of GNP
In 1991, Germany spent 8.1 percent of its GNP on health care; Holland spent 8.0 percent; and the United States spent 13.1 percent.
Administration of Physician
"Sickness funds" negotiate fee schedules for ambulatory services with physician medical associations. The physician associations and the insurance companies are paid a small percentage of a fixed fee. The physician associations do the billing and claims processing, and the insurance companies collect taxes from the employers and employees' wages. A simplified claims process and limited quality assessment ensures lower administrative costs. Total administrative costs are 5 percent. Physicians are reimbursed on the basis of number of patients seen and services rendered. Amount of reimbursement is determined by a relative value scale that is negotiated quarterly.
Personal physicians are paid under a capitation system for their nonprivate pay patients. They receive approximately 150 guilders per patient per year (each guilder represents about 60 U.S. cents). These physicians can have a maximum of 2,350 patients, but when they have more than 1,600 patients, they are reimbursed at a lower rate per patient. Specialists receive approximately 11,000 guilders per month.
There is an intricate system of checks and balances that ineffectively polices for potential fraud, upcoding, unbundling, and unnecessary procedures. There is also an excessive quality control function conducted at considerable cost. Estimates on administrative costs range from 15 to 22 percent.
Tort issues are of minimal consequence. Malpractice cases are arbitrated, and there are no contingency fees. Antitrust laws are not vigorously enforced. There are economic credentialing and price fixing. In the German court system, there is generous interpretation of claimants rights.
An arbitration system is used in determining payment in a malpractice case. There are no jury trials, and there is no contingency system. A settlement of 60,000 guilders is considered a very large settlement.
Malpractice litigation in the tort system is one of the major weaknesses of the American system. The legal costs of medicine (malpractice premiums, awards, and defensive medicine) are estimated in some studies to be as high as 30 percent of health care expenditures. Contingency fees paid to attorneys range from 20 to 40 percent of the total award. Antitrust can be as large a problem as tort reform.
The hallmark of cost containment in this arena is negotiations. Yearly, the hospital board and the insurance funds set the budget for all salaries, minor equipment, and supplies in each hospital. Twenty-five percent of operating profit accrues to the hospital. Similarly, a deficit results in a debit of 25 percent of the loss. There are no DRGs or precertification, resulting in longer hospital stays. Specialty physicians are employees of the hospital and are regarded as cost centers. Local politicians, along with hospital board members, determine the physician mix. Physician resources may be reallocated on the basis of affordability. Hospital-based personnel (physicians, nurses, administrators, etc.) account for 70 percent of hospital operating funds. Hospital beds and length of stay are at least twice those of the United States.
The "sickness funds" pay for hospital treatment totally less than 365 days on a fixed cost basis. The Exceptional Medical Illness Fund pays for hospitalization over 365 days, as well as for long-term and psychiatric care. Hospitals are paid 1,000 guilders per day for all patients and for all levels of care - the same in intensive care as in a general medical bed. The average length of stay in a Dutch hospital is 10 days.
Funding is derived from various sources and spent according to needs perceived by the hospital board in a market-driven system. More technology is available on aver"age in U.S. hospitals.
Specialists are employed by the hospital. All referrals are through local general practitioners who serve that hospital. There is an inpatient system that is hospital-based and an outpatient system through primary care offices. There is little continuity of care between the inpatient and outpatient arenas. Once a patient is referred to the hospital/specialist, there is a tendency for increased interspecialty referrals prior to discharge to the outpatient arena.
Choice of a general practitioner (GP) in a geographic area is unlimited but is restricted outside a geographic area. The number of specialists or Gps in a geographic area is determined by the needs of patients in that area. The Minister of Health for that area, with consultation with the hospital board, makes the decision. Specialist growth has been greater than GP growth, although GPs still account for more than 40 percent of physicians. There is specialist and GP unemployment that is funded through the social welfare system and not factored in as a health care cost. Various estimates reveal that somewhere between 6,000 and 10,000 physicians are unemployed. GPs belong to the sickness funds for financial viability. A capitated panel does not exceed 2,200 patients. Physicians are on call each night unless they are absent, in which case they are charged for a mandatory locum tenens.
All procedures and services are assigned a point value each year. The local sickness funds and the physician organization negotiate the relative value point scale. Total points generated by health care providers divided into the total fixed yearly outpatient health care allocation determines the monetary value of each point. Each year, the value of a service or procedure will vary according to the total points generated that year. There is a quarterly payment and up to a 6-month delay in reimbursement. Costly, ineffective auditing is done by the physician organization to identify high-cost providers. These physicians are counseled; money is recovered; and, at times, physicians are replaced by more cost-efficient physicians. Physician salaries have decreased from 6 times to 4 times those of the average wage earner. Germany has the highest density of physicians in the world (20 percent higher than in the United States).
Health care providers in the Netherlands consist of approximately 6,500 general practitioners or family doctors, 7,500 consulting physicians, and 9,700 physiotherapists (a category that combines podiatry, chiropractic, and traditional physical therapy). Payment for services rendered is on a capitation basis for personal physicians and salary for specialists. Specialists care for all hospital patients. An individual patient may move from one "sickness fund" to another every two years.
There is an overabundance of specialists and a major distribution problem. Some specialists are engaged in primary care functions. Physicians follow patients in a continuum of care in both the inpatient and outpatient arenas. Patients may choose physicians in any geographic area. Physician earnings are five times those of the average wage earner, and there is a more sophisticated quality control function of health care rendered than in the other two countries.
The delivery of health care in the United States, Germany, and Holland has significant differences but also certain similarities.
Access to health care in both Germany and Holland is universal and through general practitioners. Patients requiring more definitive care are referred to specialists located in hospitals. Waiting times for certain special procedures are considerably longer in Germany and Holland than in the United States but seem to be tolerated by the people in these two countries. Most hospital facilities lack the degree of technological sophistication exhibited in the United States. Hospital facilities are considerably older on average in Germany and Holland than in this country.
The German and Dutch people pay a substantially larger portion of their disposable income for health care, even though the United States spends a higher per capita rate. A simplified claims process system, fewer administrative layers, and better cost controls make the German system of payment to health care providers more efficient than in either the United States or Holland.
Tort issues, as they pertain to malpractice, are, for all intents and purposes, nonexistent in Holland and Germany, as malpractice cases are arbitrated in those two countries. Tort expenditures are a significant portion of the difference in per capita expense among Germany, Holland, and the United States.
Average length of hospital stay and number of hospital beds are both much higher in Germany and Holland than in the United States.
There is less continuity of care between outpatient and inpatient sectors in Germany and Holland, as all inpatient care is rendered by specialists in these countries. The U.S. system allows for continued care while providing ready access to an abundance of subspecialists at greater cost, but also with a perceived enhanced quality of care.
What all three countries have in common is a desire to better control the rising costs of delivering health care. The German health care system is presently under reform. Cuts are being made in expenses; patients will be asked to pay more; and there will be decreased amounts paid to hospitals, physicians, and dentists. Ninety percent of outpatient care given by general physicians will have a cap on fees as well as on the number of treatments and kinds of medicines for which there is reimbursement. As many health care services as possible will be shifted to outpatient facilities. All hospitals in Berlin by 1995 will be paid a case "lump sum" - similar to the DRG system used in this country. The number of acute care hospital beds will be reduced.
In Holland, there is a high volume of health care, and the present system has uncontrolled growth costs and is not market-oriented. Based on the Dekker Committee's recommendation, a new plan would provide universal and basic care for 95 percent of the population, with a "deluxe" segment for the remaining 5 percent. The purpose of this reorganization is to strengthen market forces and to promote competition and efficiency in the system. It is hoped that this new system could be implemented by the end of the century in Holland.
Donald H. Hofreuter, MD, FACPE, is Director, Medical Affairs, Wheeling Hospital, Wheeling, W.V. Edward M. Mendoza, MD, MBA, FACPE, is Chief Executive Officer, Augusta Medical Managers,Augusta, Ga.
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|Title Annotation:||A Comparison of Three Health Care Systems, part|
|Author:||Mendoza, Edward M.|
|Date:||Jul 1, 1993|
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