2nd Meeting of the Joint Network

on Fiscal Sustainability

of Health Systems

Paris, March 2013

Health spending

on the road to fiscal consolidation

Horizontal expenditure interventions affecting the health sector

Public Sector Wage Bill

– Rationalization of the doctors’ special wage regime

– Elimination of seasonal bonuses

Hiring restrictions

– Application of the 1:5 rule to doctors

– Reduction in the number of fixed term contracts by 20%

– 1.453 doctors and 1.926 nurses/paramedical staff

resigned/ retired during 2011-2012 (MoH data)-

Approximately 550 recruitments

Measuring wage bill interventions

2011

Outcome Estimates OutcomeBaseline

Scenario

After

interventions

Personnel Salaries

(doctors, nurses etc.)2.374 2.198 2.167 2.127 1.939

Overtime payments

(doctors only)356 322 324 315 285

2012 2013Expenditure

in million euros

An indicative example

Doctors Basic wage (in Euros)

Difference

2011 as of 1.8.2012

Director Coordinator 2.055 1.665 19%

Director 2.054 1.580 23%

Senior Registrar 1.759 1.513 14%

Registrar 1.468 1.321 10%

Residents 1.027 1.007 2%

Interventions in hospitals (1/2)

New Health Map

– The New Health Map was introduced in 2013 as a modern

management tool for the rationalization of the decision-

making process based on the actual needs of the

population in terms of health care services provision

– The New Health Map is also conducive to a more effective

allocation of both human and material resources

– The implementation of this measure

• led to extensive mergers of NHS hospitals and the reduction of their

number from 127 to 89

• is expected to produce savings of 36M € for 2013 and 38M € for 2014

Reduction in hospitals’ outlays

– Resulting from the aforementioned measure and the

consequent economies of scale, hospitals rein in

administrative and operational costs

– The expected savings are 38M € for 2013 and an additional

amount of 111M € for 2014-2016.

As of January 2014, hospitals will also collect a fee of

25€ for each inpatient care

– The expected yield of this measure amounts to 44M €

(number of hospitalized patients in 2012 was 2,28M)

Interventions in hospitals (2/2)

Overview of hospitals’ interventions

Hospitals Interventions' yield 2013-2016 (in million Euros)

Description 2013 2014 2015 2016 Total

2013-2016

New Health Map 36 38 74

Reduction in hospitals' expenditure

38 73 38 149

Fee for inpatient care 44 44

Total Interventions

267

A shift in practices

– In order to ensure that the aforementioned measures

are implemented solidly and effectively, there has

been a respective cut of State Budget transfers to

hospitals.

In million

Euros

2011 2012 2013 2014 2015 2016

ACTUAL Estimates ACTUAL Baseline

After

interventi

ons

Baseline

After

interventi

ons

Baseline

After

interventi

ons

Baseline

After

interventi

ons

Grants

from state

budget

1.595 1.450 1.402 1.415 1.341 1.340 1.110 1.265 997 1.265 997

Financial management and monitoring mechanisms

Arrears clearance program

– An ambitious program for the clearance of General Government Entities’ arrears to third parties has been launched in November 2012

– Within this framework hospitals’ funding for 2013 amounts to 1.517M €

Fiscal rules and practices mechanism

– All Line Ministries and General Government Entities set quarterly budget targets and draw a monthly budget execution program closely monitored by the respective Accounting Officer and the General Accounting Office

Establishment of the Social Budget Committee (SBC)

– With the participation of the Ministries of Finance, Labor and Health

SOCIAL BUDGET-SECTOR BALANCE (HOSPITALS)

2012 2013 2014 2015 2016

ESTIMATES ACTUAL Dif/ce BUDGET REVISED MTFS

IV.HOSPITALS

Revenues 2.654 1.579 -1.075 2.711 2.400 2.242 2.242

1. Own resources 209 67 -142 220 290 345 345

2. Grants from state budget 1.450 1.402 -48 1.341 1.110 997 997

3. Transfers from SSFs 995 111 -884 1.150 1.000 900 900

Expenditure 2.653 1.612 -1.041 2.351 2.107 1.891 1.891

1. Goods 1.563 1.124 -439 1.398 1.117 962 962

2. Personnel Salaries 200 85 -115 185 192 187 187

3. Services 490 403 -87 368 398 342 342

4. Earmarked payments (arrears clearance)

400 392 -8 400 400 400 400

IV. BALANCE HOSPITALS 1 -33 -34 360 293 351 351

Stock of payables to third parties 1.681 1.975 -294 1.750 1.500 1.400 1.300

Hospitals 2012-2016

Introducing a major reform: EOPYY

EOPYY is the National Organization for the Provision of Health

Care Services

It was established in 2011 and consolidated the health branches

of 8 major Social Security Funds

The foundation of EOPYY answers the long awaited separation

between the administration of pensions and health care

However significant administrative and financial management

problems hamper the Organization’s effective and efficient

operation

Main revenues for EOPYY

Transfers from State Budget

Transfers from Social Security Funds (contributions)

Rebate: Mechanism whereby private pharmacies/

pharmaceutical companies are to reimburse EOPYY on a

predefined scale (calculated as a percentage of the amount

due to them by EOPYY or of the volume of sales or as a fixed

amount)

Claw back: Mechanism whereby pharmaceutical companies

are to reimburse EOPYY for any excess of the fixed in the

Social Budget monthly pharmaceutical expenditure of EOPYY

EOPYY’s main figures (2012-2016)

SOCIAL BUDGET- SECTOR BALANCE (EOPYY) (in million Euros)

2012 2013 2014 2015 2016

ESTIMATES ACTUAL Dif/ce BUDGET REVISED

MTFS REVISED MTFS

III. EOPYY

Revenues 5.398 4.858 -540 5.498 5.942 5.637 5.704 5.826

1. Contributions 3.816 3.244 -572 4.047 4.355 4.384 4.450 4.569

2. Grants from state budget

843 1.187 344 808 1.108 774 774 774

3. Rebate 250 123 -127 250

4. Other Revenues 489 304 -185 393 479 479 480 483

Expenses 5.723 4.655 -1.068 5.524 5.685 5.016 4.946 4.995

1. Pharmaceutical (private pharmacies)

2.838 2.848 10 2.453 2.371 1.935 1.956 1.987

2. Other illness Benefits (cash & kind)

1.577 1.479 -98 1.448 1.671 1.595 1.604 1.622

3. Transfers to hospitals 865 74 -791 1.120 1.150 1.000 900 900

4. Other Expenses 443 254 -189 503 493 486 486 486

III. BALANCE -325 203 528 -27 257 622 758 830

Pharmaceutical expenditure

The Ministry of Health in cooperation with the Ministry of

Finance have made significant efforts to further tighten

control over the pharmaceutical expenditure of EOPYY-SSFs

Key interventions:

– Prescription by active substance (promoting the penetration of

generic/off patent drugs)

– Full implementation of the e-prescription system

– Reduction in medicine prices – transfer of about 700 drugs from

on-patent to off-patent status as of October 2012

– New positive drug list

Quantification of interventions 2013-2014

2013 2014

PHARMACEUTICAL 390 410

1.1 Reimburse 30/60/90 day dosage packages for chronic diseases/ reimburse only the most cost effective package for

chronic diseases. 20 0

1.2 Further develop monitoring and control of e-Prescription by implementing ICD -10 & SPC filters 20 90

1.3 Co-payment percentages set to combination of pharmaceutical product and disease. Revision to 0% co-payment

percentages 50 75

1.4 EOPYY negotiates a 5% further discount on pharmaceuticals (200 drugs). Rebate on expensive products 35 50

1.5 Purchase pharmaceuticals for EOPYY pharmacies at hospital price-5% (& increase EOPYY pharmacies revenue in

2014) 30 30

1.6 Control the entry of new products in the positive list with cost effectiveness criteria (allow only really innovative

products and cost-effective generics). 50 50

1.7 Reevaluate drugs already in the positive list with strict medical criteria. 25 25

1.8 Reevaluation and extension of negative and OTC list. 60 40

1.9 Further increase of the generics market share substituting off-patents. 15 15

1.10 10% reduction on the prices of drugs cheaper than €10. Repricing of selected drugs included in the cheaper than 10€

list 45 15

1.11 Mechanism to reduce off-label prescription, 10 0

1.12 Reevaluate prices of generics and off-patent. 30 20

Thank you for your attention!