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

0

2

4

6

8

10

12

14

16

18

20

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

US

NZ

AUS

UK

OECD Average

LUX

6.9% public

Long term care spending as % GDP, OECD, 2008

0.00.51.01.52.02.53.03.54.0

Por

tuga

l

Cze

ch R

epub

lic

Slo

vak

Rep

ublic

Hun

gary

Kor

ea

Pol

and

Spa

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Aus

tral

ia

Uni

ted

Sta

tes

Slo

veni

a

Aus

tria

Ger

man

y

Luxe

mbo

urg

New

Zea

land

OE

CD

Can

ada

Japa

n

Fran

ce

Icel

and

Bel

gium

Den

mar

k

Sw

itzer

land

Finl

and

Nor

way

Net

herla

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Sw

eden

% of GDP public LTC expenditure private LTC expenditure

1.4% 1.5%

Growth in core Crown health spending has outstripped national income...

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

1950

1952

1954

1956

1958

1960

1962

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1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

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2004

2006

2008

2010

Health: 412%

GDP: 144%

% change since 1950

Core Crown health expenditure per capita and GDP per capita (indexed real growth)

...but NZ is not alone in increasing health care spending

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Turk

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Gre

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Uni

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Kin

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New

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Bel

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Spa

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Rep

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Finl

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Mex

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Real annual growth rate in total health spending (%)

Growth in total per capita health expenditure in OECD countries (1993-2008)

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

AUS

AUT

BEL

CAN

CZE

DNKFIN

FRA

DEU

HUN

ISLJPN

KOR

LUX

NLD

NZL

NOR

POLPRTSVK

SLOESP

SWE

CHE

USA

R² = 0.2383

0

0.5

1

1.5

2

2.5

3

3.5

4

0% 1% 2% 3% 4% 5% 6% 7%

Share of population aged 80+

LTC spending (% GDP)

Treasury’s current projections of health and long term care spending

0%

2%

4%

6%

8%

10%

12%

14%

16%

1972

1977

1982

1987

1992

1997

2002

2007

2012

2017

2022

2027

2032

2037

2042

2047

2052

2057

History and Budget 2012 forecast Projection

% GDPProjected core Crown health expenditure

11.1%

6.9 %

... of which long term care spending is projected to grow from 1.3% (2010) to 2.3%

(2060) of GDP

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

2007 2017 2027 2037 2047 2057

% of GDP

Older people & psycho-geriatric

Older people, psycho-geriatric, & disability support

Projected change in composition of govt expenditure (excl. financing)

Health

Superannuation

Education

Other

Non-NZS welfare

21%

31%

2010

2060

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, life-

threatening 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 20 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. tele-

health & 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, multi-faceted and need to act at all levels

• Requires persistent national leadership, absent until very recently

• Case for far more monitoring & external evaluation