Cristina: good morning and thank you for taking your time to do this interview. If you… Guillem López Casasnovas: thank you very much for the invitation. It is a pleasure Cristina: of course. If you don’t mind, we would start with the questions straightaway and the first one would be that you describe in short how the Spanish National Health system is and how it works, how it is organized. Guillem López Casasnovas: yes, it is a system that comes from the Bismarck tradition, that we say, which means that is linked to the social security system and that over time has been evolving towards a system a welfare system more like the Beveridge system, as it is said in this field and there are two fundamentals facts: one is the 1978 Constitution, the Spanish Constitution and then the General Health Law from 1986 Between these two dates, there was a very important decentralization process towards the transfer of health competencies to the autonomous communities, which are our regions at the beginning of 1980 and the year 1981. It is a system then, that has evolved from a contributive tradition, only for contributors, only for employees and has been expanding its scope to self-employed Eh…nineteen hundred eighty something, the self-employed enter the system and later, with the General Health Law, not only cover contributors but citizens. Its last extensions were citizens of fact, of right, with papers, without papers and although there have been attempts to restrict something the universality of the system, this has been minor. Then, the system is based on a deployment of 17 autonomous communities A financing system that is integrated into the general one, that is what is the general financing of all the autonomous communities. Therefore, there is no specific financing only for health; there was in the beginning, but then it was decided to combine it with the rest of educational transfers and social services and other services Each autonomous community is organized within the general framework. This general framework is that of the General Health Law, which is a general law but is not an organic law, it is a regular law, an ordinary law, that then develops the Law of Cohesion and Quality, which, again is a law of principles that gives a general framework. The autonomous communities have a lot of room to organize their services and, based on the deployment of their health services, each, more or less ideology plays an important role. Because the organization…There are governments that historically, regional governments that have opted for a greater participation of the private sector, others have limited it to the non-profit sector and other communities that have followed a traditional model inherited from the previous era, that was public provision with public production. So, this is the general scheme, from there there we can go into many more nuances because each of these communities has its particular idiosyncrasy.
Cristina: of course and related to this and on a general level, what is the role of the public and also private insurance systems in the Healthcare System in Spain. Guillem López Casasnovas: yes, this is also a very interesting issue because in Spain, regarding the total healthcare expenditure in terms of GDP Gross domestic product may be reaching the figure of 7.4, which is almost the average of the OECD countries, especially if we adjust for the demographic structures that the country has what are the own specificities such as…the GDP ratio has to do with the wages and therefore the salaries are not equivalent and must be adjusted. If these adjustments are made for what we call purchasing power, purchasing power parity, in Anglo-Saxon terminology, the total health expenditure in terms of GDP is more or less what is expected within the OECD average and even the European Union. Then the composition has three quarters we would say approximately 5.6 of this 7.4, is 5.6, that is three quarters is public health expenditure and the rest is private health expenditure. Within this private health expenditure what weighs more is the direct payment out-of-pocket, out-of-pocket payment that basically has to do with medicines not covered or the co-payment that corresponds to them. Therefore, within this fourth part that forms the private health expenditure, a quarter again, is the part of private health insurance premiums. The important part is the out-of-pocket and the payment for premiums can be around a quarter, sometimes a third, because that depends on two things: obviously the evolution of income and the denominator, what happens in the overall health expenditure. And of this private health insurance, there is the insurance of reimbursement and then there is the insurance of indemni… indem … the one of free choice. The one, that… The one they call closed box means that you choose the private insurer, but the insurer gives you what the medical chart is. Then you can move, choose within that medical chart You pay an anticipated amount and it is therefore a model that we will say, it is managed by the insurance company itself, and then there is another part that would be… I am doing here the simile of quarters, a quarter, a quarter is the part of insurance, and inside this quarter there is a fourth part that is the reimbursement, which means that you go where you want, without medical chart restriction and submit your bills for reimbursement. Therefore, we would say that private health expenditure would be important, but health spending through private insurance does not correspond to what would be a normal standard within that from the other health systems of OECD countries. Here we must make a qualification which, which has to do with what is funding and what is the expenditure. If we look at it from the point of view of funding, the insurance system has an additional which is the funds that have to do with the public function, Mutual Funds catering for civil servants, the Judiciary and the Armed Forces they have the capacity to choose, a kind of voucher, which is strictly financed with public resources, that is, the one who chooses it does not pay anything and can have private insurance. To give us an idea, of the current public force, 85% choose private insurance They can choose a public insurance system like the rest of the citizens or they can access the private system. So this is a fund that is added to the ordinary insurance that is paid by the user for their premiums. So we have in the private health insurance two parts, one that is the insurance that is complementary to the public, people who pay additionally a premium to have something more or something better than what the public system offers, and the part of substitute insurance, which is the part in which without the user paying anything, the fact of being a civil servant, armed forces or judicial power gives them the possibility of using private health insurance resources. Therefore, this is an expense for the part of private health insurance, but it is funding by the public side. The part, I repeat, substitute, that the user chooses without paying anything additional, while the normal situation for the rest of the population is a complementary expense, with an additional premium, that at this time does not have any tax deduction to have a complement to the public sector or what the user thinks that it is given at an unsatisfactory level. Cristina: sure, perfect. Very well. Now, to change the subject a little bit, we are going to focus on the regional healthcare systems and how are they organized in the different autonomous communities. Guillem López Casasnovas: Yes, eh, there is a kind of claim from some health providers that the Spanish system is very decentralized. There are 17 autonomous communities, with levels of … very different population thresholds We have from a region like La Rioja with 250000 inhabitants and a community like Andalusia of 8 million, and 8 million is much more population than many European Union states have. Therefore, we have from the start a claim that decentralization has become generalized without addressing the capacities, the thresholds of good management that a system would require. Because of course, when decentralized and given a population-based financing so many people have, so many resources I give you, you are assuming that there are no economies of scale, it costs the same to offer services in Castilla-La Mancha, in an aged and rural populations than in highly populated, highly populated communities. This, although the autonomic financing tries to qualify, and tries to ponder the financing by age groups, eh…well, generates a very serious mismatch between what is considered health cost needs and what is a system of sanitary expense that does not distinguish the reality of each community. Then, given the funding, each community has autonomy to organize their services, the normal thing is path dependence, what had been before is what there is now, especially in small communities where with only one big hospital they will not be able to change the structure of a service. However, in other communities and over time, since 1981, until 2002 when the transfer of competences to all communities was completed, there has been an evolution where a certain ideological imprint has been left of how an autonomous community wants to organize its services. There are not 17 different ideologies, to outline a little we would say there are 3, the area of Castilla La-Mancha, Extremadura, Andalusia, the communities more or less under socialist government are path dependence, what was before, public production, with public financing responsibility very little private insurance, very little incentive to the out-of-pocket additional expense. Then there are the historical communities such as Catalonia, Navarre, the Basque Country and a little bit also the Balearic Islands, which always set up their services based on concerts, contracting out. Contracting-out in Spain means that, although the financing is public and the responsibility is of the governments, they use other means, contracting out, contract services that are normally from civil society. The contracting out to which I am referring is usually a non-profit agreement. Mutualities are hired, organizations that belong to the church or simply non-profit organizations that belong to the municipalities are hired. Because to explain a little more this in detail, the reason for a big part of the concerts, what happened is that before the transfer, the insufficiency of the performance of the state in certain communities made the civil society, either through mutualities, either through the city councils themselves or from the provincial councils, they would offer public services, supplying what the state did not do in direct administration in direct management. Then, when the transfer happened, instead of closing these hospitals that already existed, municipal, church, the red cross, etc. They signed a stable agreement and they complement their own-transferred resources. For example, in Catalonia we have 67 hospitals, 67 in terms of beds, 55% are concerted beds, out of the public system. Why? because when the transfer occurred, state’s own hospitals in Catalonia were only 5, there were very few, they were the big ones, but with those alone the population was not covered. This is the case of the contracting-out. And then there are the new experiences, that are much more daring that are basically the Community of Madrid and the Valencian Community that have been governed rather by, by right-wing governments, which have opted for public-private partnership agreements. These are no longer concerts, they are concessions. The difference between a concert and a concession is that a concert is for the short-term the insufficiency of one’s own means makes you hire an outsider but not a concession. The concession implies that the private one, puts financing, risks, invests, and in exchange for that, during a stable period, 15-20 years, 12 they are given the concession, the possibility of managing in that area where they have invested, services. That in some cases are exclusively medical services and and some cases are simply peripheral Parking services, day hotel services and other similar things that are related… except the hands of doctors. In other situations, they have opted for everything, hands of doctors, clinical apparatus and everything that is part of the hospital environment. This is the basic variety of how the autonomous communities …more socialist ideology, the historical nationalist path dependency and the liberal one, more, more right-wing has influenced the organization of these territories. Cristina: Okay, great so much detailed. And how would the financing model of the regional health systems be, I imagine there would be differences depending on what… In fact, there is a big difference in terms of the Basque Country and Navarra, which are two autonomous communities that have separate financing from the rest. It is called a financing that for historical reasons is arranged. Which means, that these communities collect all taxes, and pay, have an agreement with the state, a quota in exchange for, a fee in exchange for the services that the state continues to do in its territory. That is, first collect and then transfer. For the rest of the communities, the system is the other way around. The state collects and it is the state that transfers. So what the state does is as if it were the father, patron of all these regional entities estimates their needs and according to the needs that it estimates it assigns a transfer. This transfer is based on some parameters that have to do with population adjusted for age. And, in the same was as it does for the health transfer weighing by age groups, and the elderly with a higher value, in education is the other way around. When it comes to transferring spending in education what is weighted is demographic structure by the part of the population of school age. But all this comes together. It is transferred to the communities with aliquots, twelfths, it is estimated what the need will be and the state will consign these resources Part of the resources may be susceptible to addition by the community itself. An autonomous community can exercise some, some of its fiscal responsibility by collecting more or with a surcharge, a surcharge on some of the taxes, for example, in the case of the personal income tax. At the time, there was also the possibility of adding a few cents on the price of gas to better finance the health system that was applied by whoever community wanted. These surcharges and these additional revenues, some of them, have been questioned by the European Union. The 0.24 euro cents per liter of gas destined to better finance healthcare was eliminated by the European Union because it was argued that this hindered the movement of goods and altered the price of gas. But, in any case, an autonomous community can always do something else, which is to prioritize healthcare instead of prioritizing some other service. Therefore, this effect now occurs, that one thing is the transfer that the state makes to the autonomous communities and another is the expense that the community actually makes. This expense will depend on what it is transferred, but also on what you add, because you exercise fiscal responsibility, surcharge on personal income tax, in Spain there are 4 or 5 communities that do it Catalonia is one of them but most of the communities try to escape from this fiscal responsibility and / or they can also prioritize healthcare to the detriment of other services, be it the regional police, be it the local public televisions, etc. Thus, there is no connection between the transfer and the expense. And, from here, there are many nuances of how each community distributes that expense, which part goes to salaries of professionals, because there is quite some freedom. There are communities that have better time flexibilities than others, allowing compatibility for the public sector and the private sector, others that pay more, but demand exclusive dedication. Thus, there are changes. And others that are very involved in primary funding and other than Cristina: excuse me, in primary funding, what do you mean? Guillem López-Casasnovas: to primary care. Cristina: Ah! Okay While in hospitals, there are communities that have large hospitals, that are monographic, that have a high level, a very specialized level and that play an innovation and research league almost at European level. Because Spain, in general, and having said everything I have said so far, has a health system which, according to the few resources they put at its disposal, stands out. not only in life expectancy, that we already know that cannot always be attributed to the health resources but also by its innovation and research. And in that aspect, a big part of the health system, especially in Catalonia and something in Madrid plays the Champions League of healthcare excellence. Cristina: very well, then to continue and to make it clear, there is a part of the funding that comes exclusively from the autonomous communities, however, in general we could say that the big… the biggest part of the financing comes from the state, right? Guillem López-Casasnovas: Yes
Cristina: perfect Guillem López-Casasnovas: we are saying that this additional financing is the difference between transfer, resources that come from the center and spending, can be 5-10%. We are talking about very marginal things. Cristina: perfect, great. And the budget for the regional system, you have mentioned it briefly before but how is it determined for each autonomous community and who is involved in the process? Guillem López-Casasnovas: When an autonomous community receives this transfer, the Regional Minister of Economy and Finance calls the different spending departments to make their proposals, the budget project is discussed. An autonomous community can know how much it gets to the regional Ministry of Economy and Finance in terms of healthcare budget but this does not mean that this amount is is likely to be appropriate for the department and spend it on their own. Therefore, the first filter, after regional financing is the one made by the Regional Ministry of Economy and Finance with the different expenditure departments, because even, for example, in Catalonia there are programs that are socio-sanitary, that affect several ministries. So, you can take a spending item, for example, in the third age or in dependency. Cristina: yes and articulate it so that two different departments, one of health and another of social welfare, have to be coordinated. These adjustments take place in the Regional Ministry of Economy and Finance. Then the ministries with their resources usually, receive … I mean, everything they spend is going to have a certification that is going to be intervened by an official of the autonomous community, an inspector will look at the expenses that the Regional Ministry is making, paying employees, buying consumables, or whatever and these bills are paid by the treasury of the autonomous community. It is not money that goes to the health department and there they spend it, but to the extent that all the health councils spend, being intervened, supervised by the regional administration, they will be reimbursed by the only treasury that is the one located in Economy and Finance. So, these department resources, health ministries, are usually articulated through regional services. We have a regional health ministry for example, in Catalonia, the Ministry of Health and then we have the Catalan health service. The difference is, in the Ministry of Health we have the politics, Cristina : yes in the, in the, in the Catalan health service as in the Madrid health service, as in the service of the Balearic Islands, because all have separate, almost all, Valencia does not have it separated between what is the Ministry of Health, meaning the politics and what is the management of the catalog of benefits, how we buy when there is contracting-out, how the regional health service is understood, not the politics, the regional health service with the concessions. There is an entity between the Ministry of Health and the one who does the work, the provider. These are the regional health services that are between the political department and the most professional element of services, be it a hospital, or an outpatient clinic, etc. Cristina: Okay, and then one step beyond this question, how would the budget be distributed to each hospital? Guillem López-Casasnovas: Yes, here again, there are changes, political differences, ideological let’s say it that way. The most normal thing is incrementalist budgeting. What you spent last year, I can discuss the increase in margins. This year for the whole of the autonomous community the transfer that comes from the state has grown by 2.5, then we are saying that am going to give you a 2.5 plus Cristina: Okay Guillem López-Casasnovas: If you need more, you have to explain it to me because I will have to take it from someone else or I will have to add a surcharge. Therefore, it is not a budget that we would call zero base. You do not start from scratch, it’s historical with margins. Then there are other communities that have tried to introduce elements that are linked, that link, that try to link financing with the activity. It is a kind of activity-based financing. So, this has to do with how much activity you have, how many DRGs, how many outpatient views. And depending on how many visits I put a rate for each of these visits and I give you a notional, a theoretical budget. Anything that escapes this, you have to explain to me. Cristina: okay Guillem López-Casasnovas: Therefore, it is no longer that you have to reproduce the global macroeconomic increase that comes from the transfer, but you have committed yourself to financing activity. Activity funding has pros and cons. If you have a waiting list, financing activity can be an incentive for you to do more activity but if you do not have an important waiting list what you can promote doing is, the worse a system is organized, and the more … less control of diabetics and more times they go to the hospital and to the emergency room, the incentive would be perverse because you would be encouraging the activity, when the objective of a public health system is not to encourage the activity, but the epidemiologically necessary one at a reasonable cost. Therefore, some communities have introduced payment per activity. This payment per activity has a reference that is the severity of what you attend, the complexity of the patients. And here, many communities are using, although with limitations, the DRGs, the diagnosis related groups. On this subject there is a lot of controversy, now 20 years ago. Cristina: yes, if you want, we will talk about it later on Guillem López-Casasnovas: okay Cristina: there are other questions about it later on, if that is ok with you Guillem López-Casasnovas: Ok, so, the hospitals funding based on activity has begun in some autonomous communities and now the debate is how to collect the severity and how to collect the specialization of each of the hospitals or outpatient centers in the system Cristina: but is it more common assigning the budget based on the budget from the previous years than this one that you have just mentioned, right? Guillem López-Casasnovas: yes, in activity, the topic of activity appears whenever there is a concert, . Because when you hire you do not hire the whole building, you hire the resources, the inputs that are in that building. Or when you have a concession, you have to say what population is going to be served, how are you going to control flows when a population moves from one jurisdiction to another I mean, the subject of the activity appears when we leave the traditional model of path dependence and the incrementalist budget Cristina: perfect, and within this budget for hospitals, are there compartments of the budget, exclusively dedicated to drugs, medical devices, procedures like dialysis? Or is it more open, flexible? Guillem López-Casasnovas: again, there are differences. When you finance by activity, obviously you have to identify these programs, programs that have to do with hospital dispensing medications, or oxygen therapy programs, or that of home oxygen therapy or dialysis or transport, ambulances… Eh, if it is contracting-out, it is concessioned, these issues arise. If you do not contract, what you dedicate to outpatient, ambulatory, transport, etc. It’s all like the global budget, what happened last year more or less. Cristina: yes ok, so, it wouldn’t be like, if I have x amount of money for drugs, I have to spend it all on drugs because I cannot spend it… Guillem López-Casasnovas: no Cristina: …somewhere else Guillem López-Casasnovas: in drugs, this is a very interesting topic, because in general, in Spain, in ambulatory care, everything that is not explicitly allowed in the vademecum is prohibited, you cannot do it. In the hospital setting, it is the other way around, everything that is not explicitly forbidden is allowed. With this, the, the thrust of new therapies, first by its complexity, focuses on hospitals, and second because in hospitals there is a higher decision autonomy than in outpatient clinics, in primary care. In primary care, control is much more rigid and is general for all outpatient clinics. However, in hospitals there is room for managers to interpret whether it is better to opt for one dispensing system or another. So, here are two possibilities, one that the hospital pharmacy service is very strong, and they establish protocols And at other times, the hospital pharmacy service is not as strong, and it is the heads of service of the different specialties that decide the guidelines that they have to follow in the hospital dispensation system. And this has a difficult control, for the following reason, that let’s see if I can explain. What the regional health service knows about hospital dispensation are the prescriptions. How much a drug has been prescribed. But they do not know the unit cost that has been paid for the medication. The regional health service knows the theoretical price of that medicine, but since the managers, the heads of the service, have autonomy of decision, they can negotiate rebates, discounts with the industry, the theoretical price and the real cost of a drug can be very different therefore, when we talk about the expense of hospital dispensing drugs, it is the prescription that is correct because it is very specific, multiplied by the theoretical price. What does it mean, that this spending that we see growing at double digits in Spain in almost all communities may not be real because that price overestimates, exaggerates to some degree what the managers, who have negotiated this price, have really paid for The only exception at the moment is the Basque Country which negotiates all the medicines directly, with the joint purchase. A hospital does not have the capacity to negotiate the medicines that it are going to prescribe. If there is a discount, if there is a rebate, it is appropriated by the Basque health service. This has good things and bad things, the good thing that the monopsonist, the buyer, the sole buyer, in principle … but this forces each hospital to do the same when there is due to uncertainty, for different reasons, what English people call the appraisal of economic evaluation there may be characteristics that mark differences, therefore there are service managers who do not like what the regional health service buys from them and do not use it as the regional service thinks This in economics is what we call the incentives that have to do with the allocative efficiency, to have the global vision, are better placed in the regional service in the whole But the productive efficiency of the one who has to do it in the specific case may have its objective not aligned with that of the regional service, with the central service and there may be a dissociation here. This is discussed in almost all communities on whether the purchase is joint or not. Andalucia tries to make the joint purchase, the auctions of medicines, ehh but it does not get too much the objective because who negotiates better is the one who will have to pay the fee. If the one who pays the fee for the medication, it is the hospital itself. Because the medicine, this expense is within the set of hospital spending the hospital is going to do everything in its hand to negotiate discounts or getting what the English call, a bundling, a basket, agreements with suppliers that exceed the drug in particular. It can be a group of several medicines, there can be cross-subsidization between them, so that taking a specific medicine a specific year, a specific price, may not do justice to the reality of what is being spent in hospital pharmacy. Cristina: and this, may not be happening that much in the case of medical devices, because in this situation there has to be a tender, and Guillem López-Casasnovas: yes in the purchase of medical devices for example in oxygen therapy. Oxygen therapy is a general tender that is done by the regional service and is distributed to the market, or for example with dialysis, in dialysis, most of the hospitals do not want to do dialysis, they take it out, they hire it Therefore, this hiring instead of being done by each hospital on its own, it is done by the regional service as a whole and then in communities that are more innovative, what you see is that in these tenders, money follows choice I mean, wherever the patient decides to get dialysis, that center is the one that gets the funding instead of accrediting centers and sending patients to these centers that would have their budgets guaranteed, what is done is a budget that depends on those centers being chosen by the people who want to dialyze. And this flow control of those who have chosen center A and how many have chosen center B is directly taken by the regional health service, not the hospital and it is paid directly.