Executive summary

Introduction

The Slovak Republic is located in the heart of Europe, with an area of 49 035 km². Until 1993, the Czech Republic and present-day Slovakia formed one state (Czechoslovakia). In 2008, 2.4 million inhabitants lived in provincial municipalities, that is, 45% of the total population of 5.4 million people (Infostat, 2010). Slovakia has been a member of the United Nations and its agencies since 1993, a  member of the OECD since 2000, and a member of the North Atlantic Treaty Organization (NATO) and the EU since 2004. Since 1990, the formerly centrally planned economy has been transformed into a market economy. Economic performance in terms of gross domestic product (GDP) per capita (PPP) in 2008 has reached approximately 66% of the average performance of OECD countries (OECD, 2010). The Slovak Republic is a parliamentary democracy with separation of legislative, judicial and executive powers. Its unicameral Parliament consists of 150 members. They are elected by proportional representation for a four-year period. The president is the Head of State and has limited legislative power. Average life expectancy at birth in Slovakia is increasing and has reached 78.7 years for women and 71.3 years for men. The child mortality rate has been continuously decreasing from 2.4 per thousand in 1993 to 1.5 in 2009. A  continuing unfavourable mortality rate among men of middle age (30–55 years) is observed, which is almost three times higher than that of women of the same age. Generally, progress has been made for most relevant health indicators and Slovakia is comparable to or better than the EU12 average. Yet Slovakia still falls substantially behind when compared to EU15 countries.

Overview of the health system

The health care system in Slovakia is based on universal coverage, compulsory health insurance, a basic benefit package and a competitive insurance model with selective contracting and flexible pricing. Health care, with exceptions, Slovakia is provided to those insured free at the point of service as benefits-in-kind (paid for by a third party). After fulfilling certain explicit criteria, there are no barriers to entry to the health care provision and health insurance markets.

Based on the quality of their services, health insurance companies compete for insured individuals. Health care purchasing creates room for competition. Health insurance companies are obliged to ensure accessible health care to those they insure according to provisions laid down by law. Health insurance companies fulfil this obligation by contracting health care providers. The Health Care Surveillance Authority (HCSA) is responsible for monitoring health insurance, health care provision and the health care purchasing markets. Since 2005, all health insurance companies are joint stock companies, that is, they were transformed from (public) health insurance funds to health insurance companies operating under private law. As of 2010, three health insurance companies operate in the market, one of which is state-owned (66% of insured) and two privately owned.

Different ownership structures characterize health care providers and health insurance companies. The state, represented by the Ministry of Health, is the owner of the largest health insurance company. Furthermore, the state owns the largest health care providers, including university hospitals, large regional hospitals, highly specialized institutions, and almost all psychiatric hospitals and sanatoria. The majority of them are contributory organizations, a Slovak form of legal entity that is established by a government (including regional and municipal governments), to which part of the entity’s budget is linked; that is, they may have other revenue sources. In 2006, five state-owned health care facilities were transformed into 100% state-owned joint stock companies. Since 2007, the health care facilities in state ownership must be contracted by health insurance companies. The government in power in the period 2006–2010 saw these care facilities as crucial in guaranteeing geographical accessibility, but critics argued that this may also have given an unfair competitive advantage to these hospitals. Health departments of the Ministry of Defence, Ministry of Transport, Ministry of the Interior and Ministry of Justice also manage several health care facilities.

Pharmacies and diagnostic laboratories, as well as almost 90% of outpatient facilities are in private hands. Some outpatient specialists are employed by hospitals and provide ambulatory care in polyclinics attached to hospitals. Providers of emergency health care services are either in private or state ownership; four-year operating permits are issued by the Ministry of Health based on a successful tender.

State bodies (the Ministry of Health, HCSA) and self-governing regions, which have regional competences mainly in outpatient care, administer the system and issue permits to health care providers. Organized interest groups also participate in health policy-making. Although they are invited to comment on legislative proposals, their recommendations carry relatively little political weight. Representatives of employees and employers meet with government representatives at the Tripartite Economic and Social Council, but their mutual agreement is not needed to continue the legislative process. Professional associations (known as “chambers”) keep registers of health professionals and they issue or revoke licences. They cooperate in monitoring the management of health care facilities and issue opinions on ethical issues concerning the medical profession. The membership in chambers is not compulsory.

Financing

After the establishment of the Slovak Republic in 1993, the Bismarck system of social health insurance (SHI) was reintroduced through the establishment of the National Insurance Fund. In 1994, the Act on Health Insurance was passed, which allowed the establishment of multiple health insurance funds. Since its inception in the early 1990s the system has suffered from financial instability. The 2002–2006 reforms sought to remedy this by tightening budgetary restrictions, increasing effectiveness in utilizing resources as well as identifying internal reserves of the system. The reform included a transformation of health insurance funds into joint stock companies.

Total health expenditure as share of GDP was 7.8% in 2008, well above the EU12 average but still significantly lower than the EU15 average. In 2008, total health expenditure per capita reached US$ 1717 PPP, significantly more than neighbouring Visegrád Four countries Hungary and Poland, and slightly more than the Czech Republic (WHO Regional Office for Europe, 2010).

As of 2010, the Slovak SHI system provides universal coverage for a broad range of benefits, guarantees an annual free choice of one of three nationally operating health insurance companies and is based on solidarity. The main sources of revenue in the health system are contributions collected by the health insurance companies, which are formally profit-oriented joint stock companies that, in the period 2008–2011, were only allowed to use their profit for health care purchasing. The contributions are collected from: (1) employees and employers; (2) the self-employed; (3) the voluntarily unemployed; and (4) the “state-insured”. The “state-insured” is a term used for the group of mostly Slovakia economically inactive people for whom the state pays contributions (one-third of the total resources from SHI contributions). The collected resources are risk adjusted for two demographic predictors, age and gender, and, since 2010, for the characteristic “state-insured”. Payments to the providers are subject to a contract that determines the amount of payments, the nature and quality of services, and the payment system. In outpatient care a system of capitations and fees is applied for primary care, whereas outpatient specialists are paid using capped fee-for-service payments. Inpatient care is reimbursed using a case-based system. Finally, cost-sharing mainly takes place through a system of small fees to users for prescriptions and health services, and co-payments for pharmaceuticals and spa treatments introduced in 2003. Because of the broad definition of the SHI benefit package voluntary health insurance (VHI) plays only a very marginal role.

Apart from funding the state-insured, the central government budget finances the activities of several ministries, most notably the Ministry of Health. The Ministry of Health, for example, funds the Public Health Authority (PHA) and a state-run Slovak Health University. Self-governing regions and municipalities often invest additional money in their health facilities and usually bear the investment costs in these hospitals and outpatient centres.

Physical and human resources

There are three steps involved in entering the Slovak health care provision market. First, health care professionals have to obtain a licence from the Slovak Medical Chamber. Second, the provider has to obtain a permit from the self-governing region or the Ministry of Health, depending on what type of provider it is. Third, providers need to submit a request for a contract with a health insurance company. It should be noted that meeting the first two conditions does not guarantee obtaining a contract, and that providers may provide services without a contract with a health insurance company.

The technical infrastructure of hospitals is outmoded; on average, Slovak hospitals are 34.5 years old. Capital investments from the Ministry of Health budget were abolished in 2003. Instead, these resources were allocated to health insurance companies to include amortization in their payments to providers. Acute beds, psychiatric beds and long-term beds have seen a gradual decline in relative and absolute terms since 2000, although the number of acute beds is still among the highest in Europe. An active bed reduction plan provided the basis for adjustments in the structure of both inpatient and outpatient care providers: 6000 acute beds were eliminated or transformed into chronic care beds; three acute care hospitals were closed and several others transformed into almost exclusively chronic (long-term) care facilities. A decline in the number of beds per 1000 population and the occupancy rate can be explained by the aforementioned active reduction policy, a simultaneous decline in the average length of stay in acute hospitals and a gradually decreasing number of admissions. Substitution by one-day surgery procedures lags behind, although a dynamic growth of facilities with one-day surgery has been observed in the past years.

Compared to other countries, the number of physicians and nurses was similar to that of Germany and the EU15 until 2001. After 2001, Slovakia witnessed a continuous fall in the number of physicians and nurses in relation to the population, although their numbers remain above the EU12 average. These changes are closely linked with the migration of doctors and nurses abroad and the restructuring of health care facilities. National data show that, since 2006, the health workforce has begun to increase again. Yet the ageing workforce, combined with the migration of health care workers, may exacerbate the shortage of health care workers. Although exact data on migration are lacking, this is considered common knowledge. Health care workers may receive professional qualifications in four ways. They may either complete (1) a Bachelor’s or Master’s degree in an accredited university programme, or (2) higher vocational training, (3) full secondary vocational training, or (4) secondary vocational training in degree programmes of secondary health schools.

Provision of services

Public health is supervised by the PHA, which concentrates predominantly on the monitoring of communicable diseases. The PHA organizes an immunization programme that is carried out by GPs and financed by health insurance companies. Ambulatory care is provided predominantly by privately organized physicians. People have free choice of their GP. Also, for specialized care, there is a free choice of specialist. Their services are provided without cost-sharing from patients, with the notable exception of dental procedures, which often involve direct payments from the patient. Inpatient care is provided in general hospitals (including university hospitals) and specialized hospitals, owned publicly or privately. Hospitals usually provide specialized ambulatory care as well. Emergency medical services are provided by a dense network of Slovakia private and public providers operating in a total of 264 areas and accessible to patients within 15 minutes. Compared to EU15 countries, Slovakia has low pharmaceutical expenditure per capita in absolute terms; nevertheless, such expenditure accounts for one-third of public expenditure on health care – the highest share of all OECD countries. The provision of pharmaceutical care is monitored by the State Institute for Drug Control (SIDC). Distributors and pharmacies are virtually all private. There is a lack of coordination between the health care and social care frameworks in the long-term care sector. Similar services provided in health care facilities and in social care facilities are subject to different regulations and financing arrangements. Complementary and alternative medical services are predominantly provided in private specialized outpatient departments or specialized facilities. These are not covered by SHI.

Principal health reforms

Since 1990, Slovakia has witnessed a turbulent reform trajectory, with periods of sweeping reforms alternating with calmer periods. The early 1990s were characterized by the reintroduction of the Bismarck model and privatization of providers. The institutional and regulatory framework was quite weak and plagued by corruption. This led to rapidly increasing debts and bankruptcies in the health insurance market. The late 1990s were in turn quite calm, although debt was accumulating quickly. In the period 2002–2006, a shock-type reform replaced all relevant health care legislation and imposed a new approach based on individual responsibility. The health insurance companies were transformed into joint stock companies, hard budget constraints were introduced, and a new regulatory and institutional framework created. User fees were introduced with the aim of making patients more aware of their health care utilization. The health system was based around managed competition, which was expected to leave enough room for the market (liberalized prices, easier entrance to market, liberalized payment mechanisms), albeit under strict regulation (minimum network requirement, solvency criteria, licensing). The model sought to create an environment in which societal goals are met through setting the right incentives for market players.

The government that entered into power after the 2006 elections brought a shift in paradigm. The pro-market reforms effort and individual responsibility were discarded in favour of more direct state involvement and responsibility. Although the institutional and regulatory framework remains largely intact, health insurance companies were no longer allowed to make a profit and selective contracting was restricted. Furthermore, user fees were scaled down or completely abolished. The 2010 elections brought to power a government that is politically more closely aligned with the government of 2002–2006. The manifesto of the new government declared that health insurance companies would again be allowed to make profits, that the halted transformation of hospitals into joint stock companies would resume, that the independence of the HCSA would be increased, that a DRG payment system would be introduced and that market mechanisms in health insurance would be increased.

Assessment

Compared to the international benchmark, Slovakia has a progressive system of financing health care. Indirect taxes and out-of-pocket payments have increased regressivity in the period 2002–2005, but this trend was offset by rising progressivity of direct taxes and SHI contributions in the same period. This does not capture all distribution effects, however. The health reforms of 2002–2006 led to an increase in the number of households that contributed more from their income. In addition, the distributive impacts were not equitable and the highest increase was reported for people in the second and third income quintiles. This was mainly caused by the introduction of a reference pricing scheme for pharmaceuticals, which substantially increased co-payments.

Per capita health spending (in PPP) in Slovakia was fairly low in 2008 and around half the EU15 average. A large share of these resources was absorbed by pharmaceutical spending (28% in 2008, compared to 16% in OECD countries), effectively making spending on other components of care even lower. Compared to OECD averages, relatively high hospital bed availability, relatively low occupancy rate in hospitals, high hospital discharge rates and a high number of consultations signal that there are plenty of resources in the system but may also indicate excess bed capacity and overutilization. In terms of human resources, the number of physicians and nurses is below the EU15 average, but still above the EU12 average. Although large improvements have been made, most notably in life expectancy and lower infant mortality, Slovakia’s health outcomes are still generally substantially worse than the averages for the EU15 and OECD, but close to those of the other Visegrád Four countries.