October 2013

Applying the lessons of austerity to build sustainable healthcare systems

The expression ‘don’t waste a crisis’ has been overused and abused. However, there have been some positive outcomes for healthcare and these should not be overlooked, says Josep Figueras.

It is obviously insensitive to talk about the financial crisis as an opportunity. However, there is evidence to indicate that, “austerity pressures have focussed the minds of policy makers in confronting change,” says Josep Figueras, Director, European Observatory on Health Systems and Policies, and Head of the WHO European Centre for Health Policy, Brussels.

At the same time, the impact of the crisis has underlined the extent to which health and economic prosperity are entwined, adding weight to a growing body of research that demonstrates that rather than being an ever-more costly overhead, funding Europe’s health systems is an investment in health and wealth. In short, a healthy population is an economically active population.

In a number of countries in Europe there was a policy vision to update and modernise healthcare systems through measures such as hospital restructuring and the reshaping of primary care. “Before the crisis there may not have been the urgency to see these through,” Figueras says. “The cuts provided the impetus.”

Over the past five years since the financial crisis started to unfold, The European Observatory on Health Systems and Policies has been tracking the impact in partnership with member countries, the European Commission and the World Health Organisation Regional Office for Europe. Inevitably, cuts to healthcare budgets have had negative outcomes, with evidence of an increase in mental health problems and of infectious diseases, for example.

However, there is also evidence that some countries have used budget cuts as a spur to promote efficiencies that will ensure health systems are more resilient and sustainable in the future, Figueras says. It may be “by default not design” but measures such as increasing the use of generic drugs, centralising procurement and value-based purchasing have shown returns.

“They are areas where immediate savings have been made to meet targets. This has occurred without damaging quality or outcome; in other words, these measures have strengthened the system,” says Figueras.

Such positive outcomes are not a charter for cuts, Figueras cautions. It is critical to examine the evidence, be clear about the objectives and distinguish between cost containment,  savings and efficiency. “You can be successful in making cuts in one area to achieve savings, but  end up with worse outcomes and lower efficiencies. . The objective is to achieve savings through increases in cost-effectiveness. .”

It is also the case that measures aimed at making health systems more cost effective, for example by introducing integrated care, do not result in immediate savings in the short term. “You are bound to be more cost effective and save in the long run, but you may need to invest additional resources to implement what are often complex structural reforms” Figueras said.

Confronting a waste of resources

No doubt, as in any sector, there is room to make more efficient use of resources in healthcare. But it is critical to understand the complexities. If not, economic productivity and well-being will be undermined and the ability to restructure healthcare in the future will be constrained. “We want an evidence-based, transparent debate to understand the true impact of the crisis austerity responses and their potential outcomes,” said Figueras.

In addition to the challenge to healthcare systems, the financial crisis has led some political commentators to call into question the European welfare state model as a whole. However, Figueras says the data indicate social security systems with broad social and health benefits make economic sense. “The evidence shows that countries with robust welfare states such as the Nordics have higher health outcomes and better performing economies.” 

The evidence gathered by the European Observatory over five years of austerity illustrates that health has an intrinsic value – as a fundamental human right - and also contributes to economic growth. This change in perspective, from seeing health as overhead to viewing it as an investment, implies other decisions need to be made. Spending on healthcare must become more strategic and be underpinned by data about performance, value for money and opportunity cost. The focus must be on value-based coverage, reforming service delivery, strengthening public health, improving governance and increasing transparency.

Some countries have had to make sizeable cuts, and it can be difficult in those circumstances to be thinking about reshaping delivery or other structural reforms as these require investments. But in summary Figueras says, the evidence from five years of austerity is that, “There is definitely an opportunity to make healthcare systems more resilient and sustainable.”