PROVISION OF HOSPITAL TREATMENT (Advisory opinion)
PRESS RELEASE
The Antitrust Authority has submitted a report to parliament and the government, under Section 21 of the Antitrust Act, regarding the anti-competitive effects of several aspects of the healthcare reform introduced by Legislative Decree No. 502 of 30 December 1992 (as subsequently amended and complemented), and by the decisions taken to implement it, mainly by the regional government authorities. The Authority has identified possible anti-competitive provisions in the recent enabling Act delegating the government to rationalise the National Health Service (NHS) and to consolidate the legislation governing the organisation and operation of the NHS which was enacted by the Chamber of Deputies on 26 May 1998.
The Authority had received numerous complaints -B from private clinics, pathology laboratories, individual doctors and patients -- of anti-competitive practices in the provision of hospital care and pathology laboratory services. More specifically, the reports refers to the following: a) the restriction imposed on access to the healthcare services provided under the NHS as a result of the healthcare policies being implemented by the regional governments to implement the NHS reform Act and the resultant limited choice of treatment available to the public (infringing the principles enshrined in Decree Law 502/92); b) the fact that the Local Health Boards (ASLs) have the twin function of being both the customer/payer of healthcare services given to patients and the service-provider, thereby giving rise to a possible conflict of interests in relation to programming expenditure and ensuring competition between the service-providers.
The main purpose of the NHS reform, in its simplest terms, was to contain expenditure and to place all the eligible healthcare providers on the same footing, independently of whether they were public or private, and was based on the principle that patients should be allowed to freely choose the healthcare providers.
Since it is in the transition phase at the present time, it is impossible to make any final judgement of the outcome of the 1992 reform, but it does appear that at the national level the aim of containing expenditure has been achieved, as evidenced from the reduction in NHS expenditure as a proportion of GDP. However, this is not the case in every individual Region.
Conversely, the aim of placing all healthcare providers on the same footing and the principle of free choice seem to be threatened by the different decisions adopted by different Regions. Some have adopted the criterion of pure discretion not to say arbitrariness, when deciding who is eligible to provide healthcare services on behalf of and at the expense of the NHS. These problems still remain unresolved even after the submission of the enabling Bill for the reorganisation of the NHS that was enacted by the Chamber of Deputies on 26 May 1998 confirming the Regional governments' discretionary powers regarding healthcare services market access.
Carefully examination of the implementation of the 1992 reform in the various Regions reveals that different criteria and principles have been used by different Regions. A comparative assessment of the principles underlying the healthcare policies drafted by certain Regions shows an irreconcilable alternative between the two fundamental principles of the reform: the need to contain expenditure and the right of users to freely choose their healthcare service-providers.
In other words there seem to be two alternative systems for implementing the NHS reform, depending to varying degrees on the healthcare policies adopted by different regions: 1) one system based upon the freedom of the accredited parties to provide healthcare services under the NHS (introduced, for example, in the Lombardy Region), and 2) another system based upon the planning of healthcare services (introduced, for example, in the Veneto Region).
The first system appears to introduce competition between the service-providers' facilities and offer freedom of patient choice, because the number of providers on the market coincides with the number of accredited structures thereby reducing the planning and programming function of the Local Health Boards.
The main constraint imposed by this system seems to be the fact that healthcare expenditure depends on demand alone, with the result that it becomes difficult to achieve the goal of containing healthcare expenditure. Furthermore, the increase in the number of potential service-providers pushes up costs, and not only financial costs, mainly because of the contracting-in of a larger number of healthcare providers by the Local Health Boards.
The second system is based upon regulating the service and on programming at the regional level. In this case it is the regional government which negotiates activity plans and volumes of services with the ASLs, hospitals and other healthcare facilities every year, turning to private service providers only in marginal instances, to meet needs which the facilities operating under the NHS are unable to provide.
This latter system gives pride of place to the expenditure constraint, which limits the free choice of users to turn to the structures which the regional governments authorise to operate under the NHS. Furthermore, by programming the services that can be provided subject to expenditure ceilings, which are laid down for each entity operating within the NHS, competition between the healthcare service providers is restricted, and there are fewer incentives for them to enhance the efficiency and quality levels of the services they provide.
Regardless of the choices made by the different Regions the fact that the ASLs are service-providers and service purchasers/payers restricts the freedom of choice of the public and the containment of expediture. The main duty of the ASLs - to meet the healthcare requirements of the local community by guaranteeing standard levels of care - is performed both directly, as a result of producing and providing the services themselves, and indirectly, by acquiring these services from a system of external service-providers that are accredited for this purpose and are remunerated according to a tariff scale.
The combination of the two functions - as providers and payers of the healthcare services - increases the anti-competitive effects because of the way in which it operates in practice, resulting in an overall inefficient allocation of public resources. Since every ASL receives - each year - a predetermined expenditure budget on the basis of the tariffs set out for the services provided during the previous year, the service-provider is encouraged to label the healthcare services provided in such a way as to obtain the highest remuneration for each type of service provided, for example, by calling a routine service an extraordinary service.
This encourages the ASLs to use their own services as privileged suppliers, only using other service-providers marginally, and then only to meet needs which they are incapable of catering for directly.
The Authority envisages the following possible remedies: (i) the structural separation between the ASL'Section duties as a healthcare service-provider and the ASL as a service acquirer/payer; (ii) introducing a system of accreditation and/or agreements that will make it possible for services to be provided under the NHS based on fair, objective and transparent criteria; and (iii) setting up specific "remuneration reduction mechanisms".
With reference to the first point, to guarantee the principle that the patient has a right of choice, consistently with compliance with market rules, a separation to be drawn between the supplier and the payer of the services, to guarantee real independence between the supplier of the healthcare services and the entity refunding the costs of its services. This separation would make it possible to implement a mechanism under which healthcare services are provided by the public or private structures able to offer them while guaranteeing the best possible cost:service quality ratio.
On the second point, accreditation and/or agreements based on fair, objective and transparent criteria as a means of enabling eligible structures to provide healthcare services would make it possible to select present and potential operators that are able to offer specific services more efficiently. There would also have to be adequate control over the adequacy of the prescribed services provided, possibly by the entity paying for them.
With regard to the third issue, namely, the need to contain the supply of services, this can be achieved by introducing appropriate schemes to lower the remuneration of the tariffs as has been done in certain Regions. Under this mechanism, the regional authorities would refund the healthcare service-providers for each service at its full price (the maximum tariff) until the total number of services provided within the Region reaches a given ceiling. But if the number of services exceeds that ceiling, the region would not refund the full price but a lower price, equal to a proportion of the full price according to a specific coefficient.
The Authority believes that these procedures make it necessary to separate (a) programming, (b) service provision and (c) payment, and to have three separate entities, each one performing one function. The general concern to contain expenditure and guarantee adequate health protection, which the 1992 NHS reform set out to achieve by laying down the principles of free choice on the part of the public and equal opportunities of access to the market of accredited structures, seems to be more properly achievable consistently with these principles, by sharply separating these roles.
This being so, programming should be the responsibility of the regional government. The provision of the services should be the responsibility of the healthcare structures, whether public or private, accredited by the Region. Payment for the services provided, coupled with the authority to supervise and ascertain the adequacy of the services provided by the accredited entities, should be the responsibility of the ASLs.
Rome, 7 July 1998