The European healthcare market is changing

The different local markets vary in terms of presence of private providers, growth prospects and funding conditions, yet there are a number of common factors shared by all of the markets in which Capio operates. Capio believes that these common factors create significant opportunities for private healthcare providers.

The development in European healthcare systems is moving towards shorter (AVLOS) and a shift from inpatient to outpatient care. This is primarily driven by the development of new treatment methods, medical equipment and protocols. Hospital care is being replaced by home care, preserving the patient’s  autonomy and avoiding the negative side-effects of hospital stays, e.g. infections acquired in hospitals. Adequate remuneration systems are important to promote this development. European payors have historically reimbursed healthcare on a per diem basis in certain countries. For example, Germany and to some extent France, have thresholds for minimum required lengths of stay for patients in hospital, in order for the provider to receive full reimbursement. The threshold is called borne basse in France, and untere grenzverweildauer (“UGVD”) in Germany. These reimbursement systems have provided poor incentives for healthcare providers to drive quality and productivity improvements. Over the past decade, healthcare systems in Western Europe have developed at a faster rate towards the adoption of performance-based reimbursement structures. Sweden introduced the DRG (Diagnosis Related Groups) remuneration system in 1995, but it was not introduced in France until 2005.

In the Nordic countries, the early introduction of DRG-based remuneration, among other things, has resulted in shorter AVLOS and an extensive shift from inpatient to outpatient care and day surgery. In France, a shift is taking place, but there is still  considerable potential to increase the outpatient share and reduce average length of stay during the coming years. In Germany, the development in this area has barely started, mainly due to regulatory factors and a lack of incentives.

Simultaneously with this development, structural changes have been implemented in healthcare systems to enable independent providers to play a larger role in driving change in the healthcare sector. This transition has led to increased focus on productivity, incorporating both the volume and quality aspects of service delivery. Dynamic factors, such as the transfer of elective care volumes from large hospitals to independent specialist clinics, and the productivity of medical staff, show considerable variation between countries. In Sweden, free healthcare choice reforms within primary and specialist healthcare have contributed to the  establishment of new primary care centers and specialist clinics, which has increased patients’ possiblility to choose healthcare provider, and significantly reduced the cost per treatment within specialist care. On the other hand, Nordic healthcare faces major challenges in driving staff productivity, as well as reducing waiting times.

In France and Germany, conditions are very different to the Nordic countries’. The transition to lower care levels and specialization is not taking place on any large scale, mainly because healthcare is concentrated to hospitals and inpatient care. On the other hand, differences in working methods have led to significantly higher staff productivity compared to the Nordic countries, and shorter waiting times.