How and why has health system spending grown and how does the system need to adapt to remain sustainable in the face of long term health conditions? Nicholas Mays London School of Hygiene and Tropical Medicine Affording Our Future Conference Wellington, 10-11 December, 2012
Outline Track and explanations for health and long term care spending increases Emerging international consensus on elements in sustainable response to rise of long term conditions focus on LTCs and assuming what matters is how spending is allocated and on what How NZ is placed Main elements in a sustainable response
Definition of sustainability Continuing to provide the range and type of services (outcomes) currently available (or better without incurring excessive levels of taxes and/or debt
How does NZ public & private health and long term care spending compare? Total health expenditure % GDP, 2010 20 18 16 6.9% public US 14 12 NZ UK 10 8 6 4 2 OECD Average AUS LUX 0 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 GDP per capita, USD, 2010
Long term care spending as % GDP, OECD, 2008 % of GDP public LTC expenditure private LTC expenditure 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1.4% 1.5% Portugal Czech Republic Slovak Republic Hungary Korea Poland Spain Australia United States Slovenia Austria Germany Luxembourg New Zealand OECD Canada Japan France Iceland Belgium Denmark Switzerland Finland Norway Netherlands Sweden
Growth in core Crown health spending has outstripped national income... Core Crown health expenditure per capita and GDP per capita (indexed real growth) % change since 1950 450% 400% Health:412% 350% 300% 250% 200% GDP: 144% 150% 100% 50% 0% 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
...but NZ is not alone in increasing health care spending Growth in total per capita health expenditure in OECD countries (1993-2008) Real annual growth rate in total health spending (%) 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Turkey Korea Ireland Poland Chile Slovenia Portugal Greece United Kingdom New Zealand OECD Belgium Spain Australia Czech Republic Finland Iceland Netherlands Hungary Sweden United States Austria Denmark France Japan Norway Canada Israel Mexico Germany Italy Switzerland
Why is health care spending increasing? Myths abound in this field Demographic change (population ageing) not the main contributor to health care costs, though more impact on long term care costs proximity to death is more important than ageing Non-demographic reasons are more important income growth technology widening scope to treat lower productivity growth than the rest of the economy (health care is labour-intensive, long term care even more so)
As with health care, population ageing is not the whole story for long term care spending LTC spending (% GDP) 4 3.5 3 NLD SWE 2.5 2 1.5 1 0.5 R² = 0.2383 KOR NZL SVK ISL FIN DNK CAN LUX CZESLO AUS USA POL HUN NOR CHE BEL AUT PRT ESP DEU 0 0% 1% 2% 3% 4% 5% 6% 7% FRA JPN Share of population aged 80+
Treasury s current projections of health and long term care spending % GDP 16% Projected core Crown health expenditure 14% 12% 11.1% 10% 8% 6% 6.9 % 4% 2% 0% 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017 2022 2027 2032 2037 2042 2047 2052 2057 History and Budget 2012 forecast Projection
... of which long term care spending is projected to grow from 1.3% (2010) to 2.3% (2060) of GDP % of GDP 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2007 2017 2027 2037 2047 2057 Older people & psycho-geriatric Older people, psycho-geriatric, & disability support
Projected change in composition of govt expenditure (excl. financing) 2010 21% Health Superannuation Education Other Non-NZS welfare 2060 31%
High level policy implications Focus on efficiency improvements in health care to offset necessary increase in labour costs in long term care where there is limited scope for efficiency gains Focus on maintaining active (fit) and healthy middle age and older people to minimise long term care needs
Challenge is also to adapt the system to a changing pattern of morbidity and constrained resources Increasing prevalence of people with LTCs, mostly non-communicable diseases diabetes, COPD, CVD, dementia, many cancers in part, a good news story (e.g. acute, lifethreatening conditions becoming chronic) Most people living with LTCs have >1
This has major implications for organising health and long term care Systems evolved to manage acute (e.g. infectious), life-threatening conditions care tended to be episodic, reactive, delivered by individual professionals emphasis on hospitals & doctor-led care organised around medical specialties patients were seen as passive rather than contributors to their own care Even systems with strong emphasis on LTCs suffer from variations in quality, weaknesses in coordination, unplanned hospital admissions
What do we know about high performing systems for people with LTCs? (Ham, 2010) 1. Universal coverage 2. Cost not a deterrent at point of use 3. Prevention emphasised, not just treatment 4. Emphasis on patient self-management 5. Priority to primary health care, especially multi-disciplinary, nurse-led teamwork
What do we know about high performing systems for people with LTCs? 6. Support is commensurate with clinical risk 7. Primary care teams can access specialist advice easily, day-to-day 8. ICT is used to enable diverse staff to work together and to support people at home 9. Care is coordinated across health & care for people with multiple conditions who are at greater risk of hospital admission
What do we know about high performing systems for people with LTCs? 10.Coherent strategy for 1-9 based on clinical leadership, measuring outcomes, aligned payment incentives and community support acting at all levels, not organisational integration
To what extent does NZ exhibit the features of a high performing system for people with LTCs? Some key prerequisites that NZ has universal, largely publicly funded, co pays limited, Vote Health covers health and long term care, almost everyone has a usual source of primary medical care Long engagement with many of the issues since 1980s Considerable scope for improvement though the system performs reasonably well comparatively wide variety of initiatives though questions of scale, scope, ambition & duration, and little or no evaluation Government has only recently emphasised systemic change in how services are delivered
To what extent does NZ exhibit the features of a high performing system for people with LTCs? Significant NZ weaknesses such as: GPs still depend on patient visit fees alongside public capitation so must emphasise responsiveness public funder has limited scope to encourage GPs preventive activities sharp divide between specialists & primary care with specialists still largely hospital-based and ICT lacking to link them very limited attention to the inter-relationship between health care and long term care, and scope for efficient substitution
Individuals with the highest long term care use tend to have relatively low hospital costs Georghiou et al (2012) Understanding patterns of health and social care at the end of life. London: Nuffield Trust
What (more) could be done at macro, meso & micro levels? 1. Long-term efforts to develop clinically integrated groups or networks some user choice between or within the groups/networks based on contractual & financial integration 2. Integrated health and long term (social) care teams 3. Innovative care coordination involving users themselves e.g. personal health &/or care budgets allowing choice and integration of services
Other necessary foci of continuing attention Altering payment systems to align with system goals, e.g. dis-incentivise unplanned & inappropriate hospital use encourage health maintenance (e.g. year of care payments) considering more use of P4P in 2 0 prevention Integrating health & long term care policy, funding and provision e.g. towards end of life
Other foci of continuing attention Activating and supporting people with LTCs to manage their lives as expert patients Encouraging an active, engaged old age
Further awkward considerations No single, simple, cost saving solutions Cost-effectiveness is plausible though difficult to prove definitively most initiatives studied for too short a time most take at least a decade to mature some attract commercial interest (e.g. telehealth & tele-care) The public may not be entirely comfortable with whole system change importance of showing the value of a more integrated system
Conclusions This is continuous, unspectacular, long-term work The changes needed are complex, multifaceted and need to act at all levels Requires persistent national leadership, absent until very recently Case for far more monitoring & external evaluation