What now or what awaits the Czech healthcare

Yet another person, let’s call him Mr. Novak, enters a waiting room full of people in a big hospital. He timidly looks around and quietly accepts the fact that he will indeed spend time doing what waiting rooms’ name implies. He will wait knowing that the word patient is derived from a latin word patient, meaning enduring without complaint. He in fact booked his appointment in advance, however, as he learns from an annoyed nurse after shyly knocking at the doctor’s door, his booked time is just approximate. Mr. Novak passively accepts his role in the system and without any signs of surprise or discontent takes his seat to wait for his turn in a couple of minutes or hours. After all, his health is at stake and it is not wise to anger the experts on its maintenance.

Apparent banality – waiting for a medical examination in crowded waiting rooms – is in fact a result of all the key variables of the current Czech healthcare system acting together. We can ask (just like Mr. Novak is asking himself): Is he waiting for two hours because there is a lack of money in healthcare? Or is the entire system set up the wrong way? His health issues have put him into a third waiting room already. It started with his family doctor, then health center and now a big hospital. Or is the lack of qualified doctors a problem, and whoever could just decided to set up his or her own practice or move abroad? (It cannot be private doctors because even there I have to wait despite my sponsorship gifts, thinks Mr. Novak). So is it a disregard and a feeling of superiority of the medical staff, situations where roles are clearly divided into a dominant doctor and submissive patient? Another possible explanation that comes to mind. Is it the lack of money, lack of staff, their poor qualification or all of this combined that causes the current situation? And most importantly: is the crowded waiting room going to be a symbol of healthcare in the future or will the system undergo a major reform that will change the waiting rooms situation as well?

Hospitals everywhere you look

People in western Bohemia must be extremely satisfied patients, at least regarding their access to healthcare.
A resident living in an approximate center of the beautiful Pilsen Region, a village with 4000 people called Stod, have a broad range of options. He can get treatment in a local hospital – Stod has a medical facility with eight inpatient departments and nine specialized ambulances. Or he can go to Domažlice, some 33 km away, and get treated in their brand new hospital. Or drive 38 kilometers to Rokycany hospital? Or go south to Klatovy where they have recently finished reconstruction costing billion CZK. He can also drive another 30 kilometres to reach a hospital in Sušice.

But why would he do it? Stod lays only 22 kilometres away from Pilsen that houses not only a University Hospital but also a number of specialized workplaces. Why would he undergo surgery somewhere, where they only do a handful of them a week, when he can get it in a hospital where doctors do dozens of them a day?

Attempting to answer this question, it is important to go through some numbers. Healthcare costs reached almost 300 billion CZK last year. In 2000 it was roughly 147 billion CZK meaning that they doubled since the new millennium! Wide network of hospitals contributes to a fair share of it. There is only one district that does not have a hospital bed – Pilsen-North. There were 193 hospitals with more than 61 000 hospital beds in the Czech Republic at the end of 2016 (IHIS CR Yearbook). That meas 600 beds per 100 000 people. For example in Finland, there were only 179 of them per 100 000 people. Although Austria and Germany have higher capacity than Czechia, the EU average is 300.

Health industry rules

However, the key problem that Czech healthcare must tackle is a growing extent of health industry. Compared to that, downsizing inpatient wards is a trifle. The industry managed to get control over the entire system and health has become a market commodity with guaranteed demand and increasingly more money spent by states. Hundreds of millions are being accumulated in insurance companies and cannot be used anywhere else than in healthcare again. And everyone – including doctors, hospitals, pharmaceutical companies and medical device producers – is very well aware.

More than 20 years ago, American economists John Goodman and Gerald Musgrave proved that everything in the US healthcare system is much more expensive that it would be on a normal market. Simply because the money intended for healthcare cannot be spent anywhere else. There is no reason to think that the situation in the Czech Republic is different. Nearly everything that is being used in healthcare is overpriced.

When you disassemble ultrasound, you will find out that a similar sensor is being used in discovering pipeline damage and it is much less expensive. The same applies for a computer that processes collected data or stores them. Why? Because the current system makes it possible. Let’s take this device as an example: a doctor decides to buy an ultrasound. He approaches a producer with his request and he sets a price for 79 500 CZK. The doctor has no reason to negotiate because for decades the medical lobby has established a price that adds a generous margin to the real costs. This ensures a very good income for doctors and demands it from the insurance company. The price is, just like Marx would like it, set at costs.

If a mobile phone producer decided to take the same approach and make gilded phones, it would immediately went bankrupt. His argument that the cost of gold is 20 000 CZK and thus the phone must be priced at over 20 000 CZK would simply not appeal to people.

However, a doctor buys that ultrasound without giving it a second thought. Doctors are thus, without even realizing it, the main lobbyists of this industry. They are tough negotiators and insurance companies are paying the bills. This anti-market system of setting up prices got over time translated into various forms of regulations and flat rates that in the end mean that sometimes it is more profitable not to treat a patient. Rising costs of healthcare system were however not capped even after current rules, considered extremely demotivating by many doctors, were put in place.

Gloomy prospects

What to do about it? We cannot expect that growing healthcare costs can be magically capped. In the last hundred years healthcare expenditures grew from having 0% share in economic performance to 8% (Czech Republic), 11% (Denmark, France, Canada, Switzerland or Greece) or 18% (USA). Putting aside country differences, it is undoubtedly the fastest expansion of a single economic sector in the history of humankind. This growth will only continue in the Czech Republic as we catch up with economically more developed countries. Let’s hope the expenditures won’t reach the mammoth heights of the USA, where the healthcare is by far the most expensive in the world.

Pressure to increase healthcare expenditures will not come only from the industry, but also from the aging population. It is expected that one third of the Czech population will be older than 65 in 2050. And it is precisely people above this age limit that seek doctor appointments most often and are the most expensive for the system.

Chronic diseases are another significant factor that contributes to growing expenditures of our system. These diseases virtually did not exist until the second half of the 20th century and thus no money was needed to cure them. Some estimates suggest that curing chronic diseases swallows as much as 70% of all financial resources in the system. On top of that, scientific progress enables doctors to tackle more and more difficult diseases. Diabetes is a good example. While there were around 234 000 diabetes patients in the Czech Republic in 1975, there are more than 900 000 of them now.

Successful curing of chronic diseases prolongs the life expectancy. Life expectancy grew by 27 years in men and 31 years in women since 1920. All this set into the framework of “free” healthcare. It is just a matter of time when we find out we ran out of money.

Nothing costs nothing

Mr. Novak had finally moved from the waiting room into the doctor’s office. Currently it costs him only what he regularly deducts from his wage. It can be thus said – putting aside monthly paid health insurance – that this examination costs him nothing.

It is obvious that sooner or later people will have to start paying for their own medical treatments. However, if the current system (initiated in the late 19th century by The Prussian prime minister Bismarck) did not exist, and healthcare would simply be based on market principles, a great majority of people wouldn’t be able to afford it. On top of that, charging the healthcare provision is not feasible even for right extremist government, much less so for the Czech political spectrum.

It might see there is no way to escape this trap. However, there are a few solutions. The Netherlands, which arguably has the best public health insurance system in the world, has recently started successfully testing a model that makes patients contribute a significant amount. In “the worst case” he can pay as much as 20 000 CZK a year. In exchange, however, he pays lower premiums. There are other options as well. Adrian Gore, South African businessman and trained actuary, suggests a way out of this trap. In 1992 he founded an insurance company called Discovery Health, which quickly became the biggest insurance company in the country. Gore took a different approach and took into account two key factors.

First was to stop inflation of expenditures in healthcare. That can never be done with free healthcare provision because whatever is free has no value. If a medical examination has no price tag, people approach it as such when using it. It leads to unlimited consumption, oftentimes unnecessary examinations and drug prescription. If they are well aware of the price, for example by sharing the expenses, they will change from patients to clients. And as such they will always consider what is really necessary.

The second vital factor to reform the current system is to make people take care of their own health. Rapid development of our civilization brought together many positives. But it is also burdened with negatives, civilization diseases, be it obesity, cancer, heart attack, depression or atherosclerosis, among the most visible ones. These diseases can be greatly influenced by our lifestyle, but people often lack motivation to change it. Adrian Gore gave it to them.

He realized that taking care of one’s own health has enormous economic importance and he started to reward people who adhered to the agreed rules. So if the insured doesn’t smoke, drinks alcohol only occasionally and does sport, he receives interesting benefits. Some of the rewards include package holidays or discounts in healthy food stores. Awareness is raised through their own TV channel, website, newsletters and medical consultants. It is by no means an exotic idea. While Gore has a global patent on his Vitality program, we can nevertheless see parts of it applied in various countries. Gore himself caught a widespread attention when presenting at Economic Forum in Davos.

Mr. Novak in the new

Let’s cut forward to a time when Czech Republic has the system described above put in place. This article would start like this:
A client enters an empty waiting room in a big hospital. Let’s call him Mr. Novak. He sits down but then a nurse immediately invites him into the doctor’s office. Through a central infoline run by his insurance company, he scheduled his appointment for 8:30 with 94% chance that the examination will start at precisely that time (South African insurance company statistics). Mr. Novak, who is suffering from diabetes, is lucky, because he strictly adheres to his doctor’s recommendations, took an online course explaining his disease and he does sport regularly. On top of that he does not smoke and keeps a stable weight. As a result he is a gold card holder in his insurance company, which allows him to draw the most valuable benefits. He has just returned from his vacation in the Alps for which he paid only half of the price. The second half was covered by the insurance company. Last day, he unfortunately slipped on a slippery rock, twisted his ankle and needed medical treatment. He simply called his insurance company’s infoline which he regularly uses to schedule his doctor’s appointments. A lady on the other end of the line sent him to a hospital that has a contract with the insurance company. Thus it guarantees standards required by the insurance company.

After treating his ankle, the nurse prepared a bill. Rules of the insurance company require him to sign every bill. He shares a portion of the examination costs, he usually pays up to 50% (but never more than 500 CZK). In a partner hospital he pays much less. Mr. Novak pays a deductible in almost the entire spectrum of healthcare services. In case of drugs the extra charge is large while in case of hospitalization it makes up only a minimum. 500 CZK is covered from his health saving account while 2 000 CZK is paid by the insurance company.

Mr. Novak does not have to fear that his ankle injury will ruin him. The limit for his own expenditures is 6 000 CZK. If for whatever reason he does not have this money available at the end of the year, the insurance company can issue him up to 3 years payment schedule. However, Mr. Novak is lucky. He did not have any health problems recently so he has sufficient cushion in his health account.

The system Mr. Novak choose is just one of many available on the health insurance market. Premiums are subsidized by the state and due to his diabetes he receives even higher subsidy than if he was healthy. Nevertheless he pays part of the premiums price so he chooses his insurance company based on how expensive it is – just like 95% of the population. The remaining 5% are fully subsidized by the state.

Subsidies for pensioners’ health needs and the poorest is not by far the most pressing issue the state has to address. Because people lead active lifestyles they only undergo examinations that are necessary. There is a high demand for one-day surgery due to significant cost savings. And most importantly obesity is almost non existent. The state does not know what to do with empty hospitals.

Do not knock!

Back to the reality of crowded waiting rooms and tight budgets. Czech Republic is lucky in having a great medical staff. Many local doctors are leaders in their field on a European scale. Specializations like cardiology or neonatal care can withstand the toughest criteria. Women in the UK can only envy us our care for pregnant women, not to mention the US. Our hospitals often have the best equipment available. There is one thing in which we are lagging behind – the undefined patient-doctor relationship or the attitude that doctors and nurses take to their clients.

When Mr. Novak entered the waiting room at the beginning of this story he did not really know what to do. Doctor’s door no longer bears the “Do not knock!” sign but neither there is any guide (printed or in the form of a receptionist or nurse) that would help him find his way around. Will he – lost in the crowd of people assigned to few square metres – get noticed by a nurse, if she ever comes out? If he entered a hotel with no receptionist he would probably leave after a few minutes to find a different one.

If he was with a good insurance company then one of the benefits would be no waiting. This service organization and functioning would be highly dependent on sticking to appointment and examination schedule. In case there is a delay, let’s say longer than 15 minutes, then a person would be compensated with bonus points assigned to his or her account from which he draws benefits. It’s nothing new. Grocery stores and hypermarkets with very well thought out customer service have been using it for a long time. If there are more than 3 people in line in front of you than you get a free bag, discount or another benefit.

Patient-doctor relationship will only be clarified once people realize that they are paying for the services they receive. Only then will people realize that the doctor is not just a benefactor and patient just a unicellular organism without a will and mind. Of course we cannot generalize. It is very well possible that people are putting themselves into subordinate role more often than doctors taking the dominant one. However, only after both sides realize the value, or if you want the price, their relationship has, then everything will become clear.