Financing

The 2007 financial and economic crisis has affected the European healthcare systems in various ways. In the report “The Crisis, Hospitals and Healthcare” published in April 2011, several HOPE members mentioned investment being postponed or even abandoned. In “Out of pocket payment in healthcare systems in the European Union” published in 2015, HOPE tried to understand to what extent healthcare systems (and more precisely hospital care) in European countries are financed by out-of-pocket payments and the share collectively covered or not in a context of crisis. HOPE decided to collect existing information on capital investment and to complement it by producing a questionnaire to collect not only figures but also capital investment procedures in hospital and healthcare services. The answers are presented in the report “Capital investments in hospitals and healthcare services” published in 2018.

Financing is not a new item for HOPE. Since its origin, several publications have been produced and many events have been organised around this topic. The purpose was and still is fostering the comparison of the financing of healthcare systems within the EU Member States.

The first documents published have been: “Strategy, Tactics and cost of Health Care Provisions” in 1976, “Methods of Cost Containment in Hospitals” in 1978 and “Cost Containment and Clinical Budgeting in Europe” in July 1988. In 1998, HOPE released “Trends in Hospital Financing” and in 1999 settled a conference in Berlin in collaboration with the German Hospital Federation (DKG). Financing is also at the heart of several other issues and was discussed during an event co-organised in Paris in January 2005 with the International Association of Mutual Benefit Societies (AIM) entitled “Private or Public Hospitals? Which choice for health insurance tomorrow”. The topic was also addressed  in the publication of 2003 “Health as a Growth Factor a Comparative Analysis“, as well as in “Waiting Lists and Waiting Times in Health Care – Managing Demand and Supply” of 2001.

 

Value-added tax

Hospital and medical care activities are among the activities in the public interest exempted from value-added tax (VAT).
In October 2013, the European Commission launched a public consultation on the review of existing VAT legislation on public bodies and tax exemptions in the public interest. With this consultation, the Commission seeked stakeholders’ input on several reform options, some of them which might have major consequences for hospitals.

HOPE replied to the public consultation advocating the necessity to maintain the current exemption for hospital, medical care and closely related activities contained in the current VAT Directive 2006/112/EC. This is crucial in order to keep hospital and healthcare services affordable and accessible for patients. HOPE also expressed its views on several reform options put forward by the European Commission and which could have a major impact on the financing of hospital and healthcare services, ultimately affecting citizens benefiting from them. Read HOPE reply.

HOPE continues to monitor further developments on this issue and actions that might be taken by the European Commission following the consultation’s results.

 

Diagnoses Related Groups

Comparative information on health care systems has certainly improved in the last years. The Organisation for Economic Cooperation and Development (OECD), the World Health Organisation (WHO), the European Observatory on Health Systems and Policies and the European Commission worked a lot on it. HOPE tried to fill with its resources some gaps of knowledge in the field of financing. One of these is the use of Diagnoses Related Groups (DRGs) and more precisely the financial use of DRGs. In 2006, HOPE has found an opportunity to structure a first comprehensive study aimed at understanding and describing the use of the DRG system in Europe. Results were based on a questionnaire and provided HOPE members with comparative elements on the topic. With almost all EU countries answering the questionnaire, diversity is certainly the most obvious result of this work.

Determinants of diversity can be found in the classical distinction “tax based system/insurance system” but it is worth emphasizing upon the importance of decentralisation of European healthcare systems. The different level of investment in resources to develop DRGs and the political will behind it are major factors explaining this. Besides this complexity it is also clear that differences are increasing, making communication between systems more difficult. However, a common denominator is that the role of DRGs is never limited to financing. It becomes clear that in general the first goal of its introduction was transparency and that the financial use arrived second. Learn more in HOPE report “DRGs as a financing tool.

 

State Aid and SGEI (Services of General Economic Interest)

From a State aid perspective, health and social services form a subgroup of services of general (economic) interest (“SG(E)I”). They include medical care provided by hospitals and other healthcare providers, long-term care, childcare, access to and reintegration into the labour market, social housing and the care and social inclusion of vulnerable groups. State aid control comes into play when these services are provided as an economic activity on a market and are, at least partially, financed through public resources.

The Commission’s State aid practice, having as a key objective preventing public interventions from distorting the level playing field for operators, mainly focuses on ensuring that SGEI compensation finances genuine SGEIs and that there is no overcompensation or cross subsidisation of commercial activities. In principle, compensation measures for health and social services are subject to EU State aid rules and, more particularly, the four texts that the Commission adopted as part of its 2012 SGEI package (SGEI CommunicationSGEI DecisionSGEI Framework and SGEI de minimis Regulation, which is the only text expiring on 31 December 2020). The SGEI de minimis Regulation applies to compensation measures which do not exceed EUR 500 000 over any period of three fiscal years granted to undertakings providing an SGEI and therefore shall be deemed not to constitute State aid in the sense of Article 107 paragraph 1 Treaty of the Functioning of the European Union (TFEU).

Compensation measures for health and social services – to the extent that they constitute State aid and exceed the (SGEI) de minimis threshold – usually fall under the SGEI Decision, regardless of the aid amounts involved.

Since May 2012, the Commission has implemented a major reform of EU State aid rules, the State Aid Modernisation.

On 7 January 2019 the Commission launched in line with the Commission’s Better Regulation Guidelines the evaluation of the rules, which were adopted as part of the State aid Modernisation. The evaluation takes the form of a “fitness check”. It aims to provide a basis for decisions, to be taken by the Commission in the future, about whether to further prolong or possibly update the rules.

On June-July 2019, the Commission opened a Roadmap consultation. The purpose of the evaluation was to check if the rules on health and social services of general economic interest (‘the services’) meet their objectives under the 2012 services package. The evaluation also assessed how the Regulation on small-scale government subsidies (de minimis State aid) for such services has been applied. The Roadmap was open until December 2019. The Roadmap was complemented by a Public consultation open from July to December 2019.

On 19 March 2020, the European Commission adopted a Temporary Framework to enable Member States to use the full flexibility foreseen under State aid rules to support the economy in the context of the COVID-19 outbreak.

 

EU Projects

HealthBasket
Health benefits and service costs in Europe

EURO-DRG
Diagnosis-Related Groups in Europe: Towards Efficiency and Quality

PHIS
Pharmaceutical Health Information System

HoNCAB
Support creation of pilot network of hospitals related to payment of care for cross border patients