Scandal prone Czech health care system gets mixed evaluation

The Czech health care sector is a frequent target of criticism from those inside looking out, those passing through, and those on the outside looking in. Scandals are fairly frequent, money for the service and praise from health care consumers often seem in short supply. We atempt to gauge the health of the sector and work out whether it is giving good value for money.

Andrej Babiš, photo: Filip Jandourek

Finance Minister Andrej Babiš has frequently described the Czech health sector as ‘a black hole’ as he struggles to get his head round the flows of money between the state, hospitals, regions, and health insurance companies and the end service delivered to patients. What the minister describes as his new hobby is certainly likely to take up much of his spare time.

In theory, the basic structure of the system is not so complicated. Most hospitals outside Prague and other big cities are in the hands of regional authorities. The health insurers, VZP, is by far the biggest but there are around half a dozen others, collect contributions from citizens, and the state sets down the guidelines for who pays who for what and tops up the empty coffers if need be. The private health sector is fairly insignificant.

But as a somewhat befuddled Mr. Babiš has found out, practice does not always conform to the theory. Scandals about the regional management of health services, hospital purchases of equipment, the contracts drawn up health insurers and health cover offered are frequent material for the Czech media.

This week alone the findings of an in depth audit into the State Institute for Drug Control, which licenses drugs and sets out what pharmaceutical products can be offered, were released. It found top managers spent recklessly on expensive office furniture and facilities, staff numbers rocketed, and a whole raft of past contracts were suspect. Health Minister Svatopluk Němeček says criminal proceedings could be launched against the former director. Minister Němeček, a former head of Ostrava Hospital, has himself come under media fire for spending tens of millions more than he should for special surgical equipment.

But the picture is not wholly negative. There have been attempts to cost acute hospital services so that managers have an idea how much it should be costing for types of operations and after care. Health economist Milan Prášil at Prague’s Charles University has been leading the field in this benchmarking. The results have allowed him to identify what he describes as reserves, areas where potential savings could be found.

Photo: Filip Jandourek

“We have established a list of average costs, let’s say per minute on operating theatre, per day on a normal bed, per day on an intensive care unit (ICU). And, just for your information, one minute on operating theatre is 100 to 200 Czech crowns, one day on ICU is about 7000 crowns, but it can be much more than 7,000 depending on the type of ICU unit. So if you can imagine that you have 100 patients per year, some with special therapy, and every patient is on average one or two days longer on ICU than average, then in this single disease group you can see reserves as high as millions of crowns and this is very easy to trace down and calculate.”

According to Prášil, the savings can be quite substantial, although it is often up to local politicians and hospital managers to show the determination to push them through and there could be other factors, such as the desire to keep a supply of local hospital beds and services, that prevent them doing so. “It can be as high as millions of Czech crowns per one middle sized hospital which means it could be hundreds of millions per group of regional hospitals. And, of course, on the level of the whole country, you can speak about a billion for example.”

In one case for example, a local hospital had its services dispersed in buildings far apart. The children’s ward was a long way from the operation theater so it had the habit of keeping children after tonsil operations on the intensive care unit because of the risk of severe, sometimes fatal, blood loss that can occur. Keeping children on the ICU ward was a really expensive option. A cheaper alternative was to create a special reserve of beds for all departments near the theatre which all patients could use.

Prášil says the type of benchmarking he performed has now been taken up as a matter of course by the biggest health insurance company, VZP, and its rivals. But in spite of this, he says that there is still a tendency for consultants and other staff to sometimes deliberately overestimate operations or the complexity of care needed to treat some patients. Hospitals are then billed for extra work which is not performed. Such so-called gold plating is a major problem costing the Czech sector tens if not hundreds of billions of crowns, he adds.

Photo: Khalil Baalbaki

Overall though, the health expert believes Czechs should not be complaining too much, although it might them feel better. “I think that the Czechs are getting pretty much fair value for their money because I don’t think that the Czech Republic is a catastrophe in terms of hospital inefficiency and not even mentioning the issue of quality of care. We definitely have reserves. We definitely have opportunities to increase value for money. On the other hand, I do not perceive the situation as tragic, not at all. You know, if you look at Czech health care and make an international comparison it does not seem that the Czech Republic is lagging behind the rest of Europe. On the other hand it does not mean that we should not look for inefficiencies and push the system for more efficiency. ”

Czech spending on health care is well below the average for developed countries at just under 2000 US dollars a head in 2011, around a quarter of the amount spent per capita in the US. It accounted then for 7.5 percent of Gross Domestic Product as compared with the OECD average of 9.3 percent.

Milan Prášil again: “We don’t have such an amount of private spending on health care, not just compared with Germany but compared with all the other neighbouring countries. I suppose that according to international methodology, we probably have the lowest amount of personal spending by our citizens on health care. So if you take account of these aspects, I suppose that we do pretty well.”

Turning away from hospitals to the health insurers and they have not had the best image over recent years. Billions indeed appear to have been thrown into a black hole in the bid to create a computerized data system and individual health cards with data chips by the VZP insurer. The so called IZIP scandal appears to have so far only benefitted those who got the lucrative contract to develop the system. And top positions within VZP have clearly come as political favours.

Pavel Hroboň is by training a doctor, was head of strategy for VZP from 2002-2005, and is a former deputy minister of health. He is now a partner in the Prague-based Advance Healthcare Management Institute which offers course in health care management. “I think there is a very deep problem with legal form and corporate culture, not just with VZP but with almost all Czech health insurers. They have a special legal form which simply does not give the management enough responsibility and enough power and this is true for all insurers. Their performance obviously differs according to who is a member of the management, but it is true for all of them. VZP in addition is burdened by the fact that its board is full of politicians so it is a more politically driven organization than a performance driven organization.”

Pavel Hroboň, photo: archive of Ministry of Health

One mooted solution to some of the Czech health insurers problems is a merger of the companies, but Hroboň sees that as more of a step backwards than forwards. Mr Hroboň again: “I don’t see any reason why mergers of most insurers should happen. The minimum size of insurer is about 50,000. There is another question and that is that the Czech Republic does not have a clear vision of what the health insurers should do. I mentioned the traditional role and a new role for health insurers. If we were to stick with the traditional role, which is collecting money and sending it to providers, it’s true that we don’t need more than one insurer. But if we are to move to the modern role, which we will have to do sooner or later because efficiency and quality of modern health care requires it, then we should allow the health insurers more responsibility, more power, and we should increase the competition between them.”

Mr. Hroboň says the Czech Republic is stuck in the middle at the moment between a monopoly and fully competitive health insurance system. But, according to him, the lesson of health care systems is more developed countries is that there should be a move to more competition. Although reluctant to cite examples for the country to follow, he nonetheless cites the Netherlands as a possible role model for the future.