All public hospitals ending 2008 without losses

• Abstract
• Purpose of health policy or idea
• Characteristics of this policy
• Political and economic background
• Purpose and process analysis
• Expected outcome
• References

Abstract

After many years of problems and significant difficulties in coping with year-to-year losses, all public hospitals in Slovenia managed to end the fiscal year 2008 (identical with the calendar year) without losses. Surprisingly enough, not only did such a turn from the past occur, but it also happened that even 'chronically ill' hospitals managed to pull out a successful financial year. We are trying to present some of the reasons for this occurrence and assumptions and outlooks for the future.

Purpose of health policy or idea

The main reason for this surprisingly good outcome lies in the economic situation in Slovenia for most of 2008. Industrial and overall economic activity were strong and employment was high. This in turn yielded significant inflows of health insurance contributions to the Health Insurance Institute of Slovenia (HIIS, the main financier of statutory health insurance). In many ways, this was the economic backbone of the incredibly positive financial performance of Slovenian hospitals.

One of the contextual reasons for this 'new' situation is in the cost containment strategies launched over the last few years and including the recent introduction of an Australian model of DRGs. This system allowed for different incentives for the hospital sector. Secondly, a very important reason lies in the decision of health policy makers to start coping with the waiting lists, which again favoured the hospital sector and caused further shifts both in financing as well as in human resources (especially physicians) in favour of hospitals. Thirdly, the concept of 'additional' funds of the Health Insurance Institute of Slovenia, which are awarded to providers in the course of each fiscal year, again favours mostly hospitals.

Main points

Main objectives

In 2008 a new salary system was adopted for the entire public sector. That included all health care providers employed in the public sector. Consequently, pay rises were also included and they were significant especially for physicians and nurses, but also for other professionals. Due to the characteristics of the new system and the valuation of workloads and burdens, hospital staff received particularly higher increases in salaries (up to 20%). This had to be reflected in the provision of funding by the Health Insurance Institute of Slovenia. In total, as additional funds, the HIIS allocated 133 million EUR to hospitals due to the new salary system. Additionally, 15.6 million were allocated for the reduction of waiting lists, approximately 2 million for non-acute hospital treatments and almost 5 million for specialty training of young physicians.

Type of incentives

The incentives described were financial and they were in the form of direct allocation of funds from statutory health insurance.

Groups affected

Hospitals in Slovenia, Ministry of Health, Health Insurance Institute of Slovenia

Degree of Innovation	traditional		innovative
Degree of Controversy	consensual		highly controversial
Structural or Systemic Impact	marginal		fundamental
Public Visibility	very low		very high
Transferability	strongly system-dependent		system-neutral

Securing additional money flow for hospitals is a common measure of health policy in order to show efforts in enhancing certain services, very often those facing access and delivery problem issues.

Political and economic background

Also in the previous years, the policy of allocating additional financial resources to priority areas in health care was common and it occurred in most years to the extent that was possible given the available financial resources. In 2007 and 2008 the economic situation was favourable also in view of some additional planned expenses, principally for the resolution of accumulated waiting lists (especially in surgical departments) and also for the stabilisation of salaries in the public sector. Additionally, the HIIS had a solid positive inflow of contributions from salaries due to high employment and to the high industrial output, reflected also in the significant GDP growth rates (between 4 and 6%).

Complies with

Larger contributions to statutory health insurance due to higher growth of employment and of GDP.

Purpose and process analysis

Current Process Stages

	Idea	Pilot	Policy Paper	Legislation	Implementation	Evaluation	Change
Implemented in this survey?

Origins of health policy idea

Reduction of waiting lists and reform of the salary system in the public sector were the key priorities of the outgoing government in 2008. They were seen as top political issues and also insufficiently resolved. As such they received the relevant support also in the decision making process within the HIIS, in whose assembly (the highest decisionmaking body) representatives of the government have an important role. The HIIS was quite weary of generosity regarding salaries and they were warning that their forecasts showed that it would be difficult to maintain such increases through the next 4 years. Even without these increases the HIIS forecasted rising financial pressures on their stability. The salary increases of 2008 and the first two instalments of 2009 were carried out as planned since salaries of employees in the public sector enjoy a very high level of legal protection and they can be legally enforced rather easily.

The HIIS has then transferred 133 million EUR for the salary increases and 15.6 million EUR for the reduction of waiting lists. The total amount of additional funding, mostly dedicated to hospital treatments reached 180 million EUR.

Initiators of idea/main actors

• Government

Stakeholder positions

Generally, the HIIS was opposed to the salary increases because of the long term impact they would have on the sustainability of compulsory health insurance finances. Representatives of the professional associations - chambers were obviously in favour of the increases but also supported additional funding for hospitals.

On the other hand, the HIIS was faced with a high flow of additional contributions mostly arising from the high employment rates and GDP growth. HIIS decided, based on the priorities adopted by the MoH and the Health Council as the main advisory body to the MoH, to promote hospital care and resolution of waiting lists for hospital and outpatient specialist care (the latter mostly delivered by hospitals also).

Actors and positions

Government
Hospitals	very supportive		strongly opposed
Health Insurance Institute of Slovenia	very supportive		strongly opposed
Professional associations - chambers	very supportive		strongly opposed

Actors and influence

Government
Hospitals	very strong		none
Health Insurance Institute of Slovenia	very strong		none
Professional associations - chambers	very strong		none

Positions and Influences at a glance

Dimensions of evaluation

Process

Results of evaluation

Hospitals concluded the year 2008 with significant surpluses, based on the transfers received from the HIIS in late 2008. These were still based on the retrospective economical industrial performance in the country, but the first signs of the crisis had already become evident. These transfers were effective only in November and December. Apart for their use in the salary increase process, these additional funds mostly could not be used for the increased output through enhancement of health services delivery. Ironically, based on the fiscal and tax regulations, all hospitals who declared significant surpluses at the end of the year were obliged to pay income tax on the surpluses thus gained.

Expected outcome

Surpluses in hospitals occurred as a lucky meeting of several positive factors, ranging from the quickly growing economy to priorities in the health system, mostly triggered by the MoH and its advisory bodies and the new salary system. Given this background, it is expected that in the future surpluses are unlikely to be of that magnitude.

Impact of this policy

Quality of Health Care Services	marginal		fundamental
Level of Equity	system less equitable		system more equitable
Cost Efficiency	very low		very high

References

Sources of Information

1. Rules of the compulsory health insurance. 2003;30 (in Slovene).

2. Health Insurance Institute of Slovenia. The HIIS business report for the year 2008. Ljubljana, February 2009.

3. Declaration of incomes and of obligations, per region for the entire public health care sector.

Author/s and/or contributors to this survey

Albreht, Tit

Suggested citation for this online article

Albreht, Tit. "All public hospitals ending 2008 without losses". Health Policy Monitor, April 2009. Available at http://www.hpm.org/survey/si/a13/3