Hungary makes slow progress in health-system reform

droszler | 2004. augusztus 05 22:59:55 | közérdekü |
Private funds, which could rescue Hungary's ailing health-care system, have been slow to materialise

Hungary was one of 10 new countries to join the EU on May 1 this year. But despite well-meaning reforms aimed a bringing its health-care system up to the standard of those in established EU countries, progress towards this goal has been slow.

Coincident with EU accession, the Hungarian government approved a strategy to transform the distribution of health-care funding. Unfortunately, however, private funds--which were supposed to flood into the health sector following privatisation legislation passed last summer--have so far failed to materialise. The system is in immediate need of about Ft500 billion (US$2·4 billion) because, although the controversial bill allows private investment in state-owned hospitals, investors have been slow to take advantage of the new opportunities.

Hungary's per capita health spending runs at only 40% of the EU average and overprovision and rising costs remain a main feature of its health-care market. Budgetary regulations prevent hospitals from properly amortising their investments and equipment, and also limit their capacity to manage labour costs. The shortage of doctors in certain fields, their oversupply in others, and the duplication of services contribute further to rising expenses.

Necessary additional reform steps, such as the demolition of the monolithic state health-insurance system or the introduction of a new drug price subsidy scheme, are still to materialise. Government promises also include the introduction of a new nursing insurance system and additional wage hikes for health-care employees who still earn a fraction of the EU average and depend on the semi-illegal gratuities that patients pay for better service (see Lancet 2004; 363: 1776-77).

Meanwhile, with only a few elements of a long-term health-improvement strategy in place, Hungary ranks near the top of the lists for deaths due to cancer and cardiovascular disease. The causes are mostly related to lifestyle and diet factors, and funding for treatment and prevention is limited.


According to a 2003 study by the Methodology Institute of the State Audit Office, lack of funding is not the only reason for the slow health-system reform: the lack of a clear concept is to blame as well.

"Some of the fundamental concepts of transforming health care are lacking, while existing elements of the system's reform often point in the opposite direction", the study said.

Allowing private capital into medical service institutions is the key to modernising the system without huge transfers from the state.

In early May, the government approved a draft legislation, which would serve as the cornerstone of health-care reform by organising medical services and distributing funding in a more efficient and economical way. Based on the so-called controlled patient care model, the programme aims to provide all-inclusive health-care services from prevention through to post-treatment in a system that promotes cost-effectiveness by allocating a fixed sum per patient and allowing service providers to reinvest savings.

If it receives parliamentary approval, the new law will introduce privately owned organisations that will distribute funding from the National Health Insurance Fund (OEP). Currently, the OEP contracts directly with health-care providers. Under the new plan, Hungary's 10 million citizens would be divided into groups of about 300 000. Privately owned organisations would be responsible for making payments from the OEP's annual Ft1000 billion ($4·9 billion) budget for every member of a single group. High-risk cases would continue to be paid for from a separate fund.

"The system, the provider, doctors, and health-care employees will be interested in the end result and not the healing process itself", said health minister Mihaly Kokeny. "Patients benefit from the fact that the providers are guiding them through the system; providers benefit if they avoid unnecessary parallel check-ups and interventions, and focus on prevention."

Famous Hungarian physicians
Ignaz Semmelweis (1818-1865), a German-Hungarian physician who showed that the high rate of mortality in women after childbirth was attributable to infectious agents transmitted by unwashed hands.
Móricz Kohn Kaposi (1837-1902), a physician and dermatologist who first described a group of skin tumours occurring in men in their sixth and seventh decades. These lesions were later called Kaposi's sarcoma.
Béla Schick (1877-1967), a paediatrician and a pioneer in immunology. He studied scarlet fever, tuberculosis, and nutrition for infants, but gained international recognition for the Schick Test, which was used to determine susceptibility to diphtheria. He later coordinated a 5-year campaign to eradicate the disease
Michael (Mihály) Somogyi (1883-1971), a professor and chemist who developed the Somogyi test for the diagnosis of diabetes--a method of determining serum amylase in healthy and diabetic individuals. He is also credited with devising a test for acute pancreatitis.
Franz (Gabriel) Alexander (1891-1964) identified emotional tension as a significant cause of physical illness. He described three "elementary tendencies" (to take, to give, and to receive) the balance of which determine neurotic anxiety.
Albert Szent-Györgyi von Nagyrápolt (1893-1986) received the Nobel prize in 1937 for his discoveries in connection with vitamin C. He was the first person to isolate vitamin C, which he found in abundance in Hungarian paprika. He later worked on muscle research and discovered the muscle proteins actin and myosin.
George von Békésy (1899-1972) won the Nobel prize in 1961 for his discoveries concerning the physical mechanisms of stimulation within the cochlea.
Hans Hugo Bruno Selye (1907-1982) was an Austrian-Hungarian endocrinologist who described Selye's syndrome--the sum of all physiological changes that follow a prolonged exposure to intense stress. He was nominated for the Nobel prize 10 times.


The Hungarian Hospital Association and the Hungarian Doctors' Chamber are opposed to the plan, which, they say, would result in deteriorating standards and increasing costs. Moreover, it fails to address a fundamental issue in Hungarian health care--inadequate funding.

In 2003, the government spent Ft600 billion ($2·9 billion) on health care, but over the next decade the sector is estimated to need an an investment of about Ft1500 billion ($7·3 billion).

According to the government programme, health-care spending will rise by Ft150 billion ($0·7 billion) each year from 2003. But the cost-saving measures introduced in April to reduce the budget deficit curtailed the 2004 budget of the Ministry of Health, Social, and Family Affairs by Ft6·7 billion ($33 million), while the entire health-care sector will receive Ft16·7 billion ($82 million) less. As a result, the government is relying on the increasing participation of private investors.

The number of privately owned health-care providers in Hungary currently exceeds 11 000. Since 1998, the proportion of private health-care contractors financed by the OEP has risen from 7·5% to over 16%.

Private investors can already operate basic health-care services. Hungary's 6000 general practitioners are entitled to buy and trade their practices and have access to a preferential loan to do so. Meanwhile, the overwhelming majority of the country's 160 hospitals are still owned by municipalities or state-run universities, and receive a sparse monthly allowance from the OEP to cover their operating costs.

A bill on hospital privatisation passed in June, 2003, allows the current owners of hospitals and special care units to sell a maximum 49% stake in their institutions. Investors must complete the buyout in the form of a capital injection of cash.

But unlike an earlier act, passed 2 years previously by the former government, the bill allows the new owners to operate hospitals as for-profit enterprises.

However, the 2003 bill has come up against staunch opposition: several political parties and medical industry bodies have protested against the bill, accusing the government of selling-out hospitals to foreign investors and risking health-care workers' jobs. Although the privatisation process can continue based on the regulations of the Healthcare Act, the Constitutional Court nullified the privatisation bill due to a procedural flaw last December, and the non-parliamentary left-wing Workers' Party initiated a referendum against hospital privatisation.

Legal hurdles aside, it will take a while until private investors begin to pour their money into the ailing health-care system. So far, only two municipalities--the local government of Kiskunhalas, southern Hungary, and Körmend, western Hungary--have decided to privatise the medical institutions they own. The companies taking over the hospitals' management promise more professional medical services, while the local governments hope to reduce costs and have the necessary developments undertaken by the investor.

Kattintson a képere !


Istvan Gyorfi, the government commissioner in charge of health-care reform, said it could take up to 12 months for hospitals to be transformed into private enterprises. In the meantime, the Health Ministry has established an emergency fund for hospitals in financial trouble.

But according to a privatisation expert, the number of privately owned hospitals in Hungary is not likely to increase substantially while uncertainty over health-care reform prevails.

"The current situation is so uncertain that I don't think many serious investors would want to come here", says economist Peter Mihalyi, a professor at Budapest's Central European University.

Earlier, several private health-care providers and some of the country's top medical equipment manufacturers and traders indicated their interest in investing in medical institutions but they have yet to make public their targets for privatisation.

For now, providing a western-style alternative to state health-care institutions remains the job of private clinics that serve a limited circle of wealthy clients. Most of these clinics work on a fee-for-service basis or offer health plans that companies can buy for their employees.

Currently, there is no comprehensive private health insurance available to Hungarians; health insurance is provided solely by the state through social security contributions. While supplementary health insurance is available to cover "luxury items", such as a private room, proper private health care in Hungary will materialise only with the introduction of comprehensive private insurance.

Although the government has vowed to introduce a two-tier insurance system by 2006 and break the OEP's monopoly on the insurance market, this reform is nowhere in sight.

Health statistics for Hungary
Total population 9 923 000
GDP per capita (Intl $, 2001) 13 473
Total health expenditure per capita (Intl $, 2001) 914
Total health expenditure as % of GDP (Intl $, 2001) 6·8
Life expectancy at birth, male (years) 68·4
Life expectancy at birth, female (years) 76·8
Child mortality per 1000, male 10
Child mortality per 1000, female 8
Adult mortality per 1000, male 256
Adult mortality per 1000, female 112
Physicians per 100 000 357
Nurses per 100 000 385
Midwives per 100 000 18·6


Late last year, the government declared that it intends to steer the health-insurance system the way of voluntary savings. Health minister Kokeny said the government intends to establish an organised framework in which citizens voluntarily save for the expenses not fully covered by state health insurance. He said tax rebates would be offered for savings on health care, and that the supplementary system could begin in 2004.

Industry players generally predict that in the future, the state will provide about 70% of health-care funding, while private investors will cover 30%. But investors say that the state health-insurance system must be willing to accept private ventures as partners.

According to Ivan Herczku, general director and co-owner of the Telki Private Hospital, Hungary's only full-scale private inpatient service provider, in an ideal financing structure, the OEP would cover 50% of the costs of treatment at privately owned hospitals, private health insurers would pay 25%, and the rest would be financed by voluntary health funds.

In Hungary, specialist doctors earn about Ft120 000 ($580) per month, not including the unofficial gratuities that patients pay to obtain better service. However, they can earn ten times as much as this abroad. Responding to this situation, in 2002, the government raised the wages of all public employees--including doctors and nurses--by an average 50%.

Although the move affected 150 000 people, low wages continue to prompt Hungarian doctors and nurses to seek work abroad. According to the Hungarian Doctors' Chamber (MOK), there are many employment opportunities abroad for Hungarian medical professionals, and the country's EU entry will accelerate their exodus. A recent survey found that two-thirds of medical students are considering work in other EU countries.

But the health ministry sees no signs of a massive migration yet, said ministry spokeswoman Judit Toth. Since May 1, only 13 doctors have applied for the paperwork necessary to work in other EU countries, she added.

But money is not the only issue: doctors can also expect to find much better working conditions abroad. A 2002 survey by the government commissioner for civil rights found that hospital workers are often forced to work 16, 24, and even 32-hour shifts, which is technically unconstitutional. If hospitals adhered to labour regulations, which state that doctors should do only 300 hours' overtime per year, hospitals would need to employ 50% more doctors than they do currently, according to MOK.

Meanwhile, the 48-hour per week working time limit that came into force with EU accession is creating extra difficulties for hospitals and clinics, which have about 1500 job vacancies. According to a recent study by the National Healthcare Council, two-thirds of doctors will retire during the next 5 years, further aggravating the already critical staffing problem in the health-care sector. Even if all the 700 annual medical school graduates took jobs as doctors in Hungary over the next 5 years, 66% of the new jobs would remain unfilled, the study found.

Meanwhile, hospitals' tight payroll budgets will require staff cuts. But paradoxically, a health ministry decree defining the minimum medical standard requires new employees to be hired, warned Zoltan Ajkay, chairman of the Hungarian Hospital Association. According to Ajkay, most hospitals face a shortage of nurses and those in rural areas also need more doctors.

Medical areas with the the highest vacancy rates include anaesthesiology, cardiology, radiology, and pathology.

Meanwhile, the widespread practice of tipping has become a subject of public debate. The 2003 national health survey found that one in four citizens had paid gratitude money in the hope of better service. Last year, this sum totalled Ft28·7 billion ($140 million). A recent survey by polling firm Tarki found that more than 50% of people consider gratuities to be necessary as they are afraid they will not receive quality treatment otherwise.

The health ministry aims to address the problem through a programme that would clearly define which medical services are available for a fee. For example, patients would pay doctors if they treat them outside normal working hours, while treatment by an on-duty doctor would remain free.

Another area of long-standing controversy is the drug subsidy system, which does not comply with the EU's transparency directive.While the state has been attemping to keep its rising drug expenses at bay for the past decade, pharmaceutical companies argue that the subsidy budget is not keeping pace with increasing drug consumption.

In the latest twist, the government recently imposed a 180-day, 15% price reduction on over 10 000 medicines that are produced or distributed by the 138 companies that rejected an earlier ultimatum by the government to voluntarily cut prices by 15%.

The measure aims to make up for the estimated Ft40-60 billion ($195-292 million) shortfall in the Ft239 billion ($1·1 billion) budget allocated to the National Health Insurance Fund for subsidising drugs, but the government is seeking to introduce final regulated prices on subsidised products.

The health minister justified the price freeze by saying that maintaining the current subsidy system would lead to its collapse. In 2002, the state spent 36·6% more than planned on subsidising drugs, while in 2003, spending exceeded the budgeted amount by 15·7%.

The government's aim is to decrease the burden on the consumer, Kokeny said, adding that pharmaceutical companies should decrease their promotional activity to make up for their losses.

The measure has led to a rare collaboration between drug market players, who were outraged by the decision, saying it limits free market competition. All industry organisations decided to turn to the Constitutional Court, and some are also seeking compensation for their losses.

Drug manufacturers warned that the regulated prices will not only have a negative effect on the companies in the pharmacutical sector, but also on consumers. The price cut could prompt companies to withdraw cheaper medicines that are sold at a lower profit margin.

The health ministry promised to establish a transparent subsidy system that conformed to EU regulations by the end of the 180-day period. Elements of the planned new system include giving preference to cheaper generic products and strictly regulating the promotion of subsidised drugs.

In the long run, the ministry is planning to limit rising expenditure with measures that include using incentives to influence doctors' prescription practices, reforming the system of providing free medicines for certain social groups, and strengthening social security monitoring systems.

Agnes Csonka

forrás: www.thelancet.com

The Lancet; Jun 12, 2004; 363, 9425; Research Library
pg. 1957


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