6.2. Future developments

The Advisory Committee for Strengthening the Public Health System was appointed in mid-2013 by Minister of Health Yael German, who also chaired the Committee (hence, it is known as the “German Committee”). In June 2014, the Committee issued a report proposing the most significant reform to Israel’s health care system since the introduction of NHI in 1995 (Advisory Committee for Strengthening the Public Health System, 2014). However, because of the recent change in government, it is very unclear which, if any, of the Committee’s recommendations will move ahead.

Background

The German Committee was formed against the background of major concerns about Israel’s health care system, including:

• a decline in the resources available to the publicly financed system;
• growing deficits in the public hospitals;
• an increase in the use of private health insurance and private health care to supplement (or substitute for) public care;
• the perceived movement of senior physicians and resources from the public to the private system; and
• erosion of the general public’s confidence in the system.

There was a growing concern that these trends had led, or were leading to, a situation in which Israeli citizens in need of health care in general, and hospital care in particular, could not count on the publicly financed system to provide them with high-quality, geographically accessible and timely care.

The Committee consisted of experts from the Ministry of Health, the Ministry of Finance, the Prime Minister’s Office, the Bank of Israel, the IMA and academia, as well as representatives of the general public. It worked intensively for a full year, with hundreds of hours of work in both plenary meetings and the meetings of three subcommittees (medical tourism, private insurance and the government hospital system). The Committee heard testimony from a wide range of health system leaders, including chief executive officers of the four HPs and of leading hospitals, and health policy experts from Israel and abroad. In addition, the Committee intensively mined existing databases and newly created ones for input into the decision-making process.

The reform’s objectives, recommendations and avenues of operation

The main overall objective of the reform proposed by the German Committee appears to be to ensure that all Israeli citizens can receive consistently high-quality care (particularly with regard to hospital care) within the publicly financed care system. An additional objective (not elaborated upon here) was to strengthen the public and non-profit-making hospitals.

The reform seeks to achieve its main overall objective through three major avenues.

1. A substantial increase in the financial resources available to the public system
2. The introduction of a broad range of structural and organizational changes in the public system to enhance its efficiency and responsiveness, preserve equity, and enhance the general public’s confidence in it
3. The adoption of measures intended to constrain the growth of private insurance and private hospitals.

The key Committee policy recommendations for each of these avenues are outlined. Some of the measures proposed relate to more than one initiative but, for ease of presentation, each measure is presented in conjunction with only one of the three avenues, and footnotes are used to highlight links with additional avenues. Overall, the measures listed in these three groups are intended to directly move resources from the private to the public system and to ensure that private insurers and providers do not have unfair advantages over their public counterpart in their competition for patients, funding and physicians.

1. Increase in financial resources available to the public system

The main measures proposed include the following.

Changes to HP core funding levels. An immediate increase should occur in the health system’s core funding (which is distributed among the HPs) by about 2%. Future levels of core funding should be linked to an annual demographic index so that it automatically grows as the population grows.[41]

Ongoing direct support for hospitals. An additional NIS 700 million (about €162 million) per year should be allocated from the government’s general revenues for distribution among the government and non-profit-making hospitals; this should be in conjunction with efforts to reduce waiting times and other structural/organizational changes (as detailed below).

Funds to support measures to reduce hospital waiting times. A one-time injection of NIS 300 million (about €70 million) was proposed to develop the infrastructure needed to reduce hospital waiting times.

As noted below, some of the measures designed to constrain the private sector are also expected to increase public sector revenues.

2. Structural and organizational changes

The main structural and organizational changes proposed include the following.

Quality of care and waiting times. Existing efforts to improve quality of care would be strengthened, including the reduction of waiting times, in accord with new standards that would be established. One key component involves developing Ministry of Health databases on quality and waiting times for purposes of monitoring and supervision. Comparative data will also be made available to the public. Giving patients more information and more choice will, it is hoped, reduce waiting times for treatment and improve quality of care.

Quality of service. Efforts to improve the patient experience should include training staff in relevant skills, providing patients with more information, using new technologies to improve scheduling and reminder systems, and so on.

Full-time employment for senior physicians. Giving senior physicians in public hospitals substantial financial and structural incentives to become full-time employees of the hospitals (“full timers”) should reduce the common practice in which doctors leave the public hospitals to work in private clinics in the afternoons and would, thus, significantly expand the time available to treat patients and perform surgery in public hospitals.[42]

Hospital choice. Requiring that HPs offer patients who need hospital care a choice from among at least three hospitals should enhance hospital responsiveness to aspects of care that are valued more by consumers than by HPs.[43] It is also expected to increase hospital revenues by reducing the HPs’ power in price negotiations.

Hospital authority. Establishing a government hospital authority to manage all of the Ministry of Health’s hospitals should free up the time of the Ministry of Health leadership for policy-making and overall system monitoring, and reduce potential conflicts of interest.

Reimbursement reform. Refining and modernizing the system of hospital reimbursement to better reflect differences in case mix is intended to reduce the incentive and capacity of private hospitals to “cream-skim” and to provide public hospitals with a fairer level of reimbursement for complex cases.

Case management. Encouraging family physicians to act as case managers would allow them to oversee and coordinate care for their patients.

These and the other structural and organizational changes recommended by the German Committee are intended to enhance the efficiency and responsiveness of the public system. If publicized effectively, they could also contribute to another Committee objective – increasing the general public’s level of confidence in the publicly financed system.

One of the most important Committee recommendations related to a potential organizational and financial change that was considered, but ultimately not adopted. “SHARAP”, in which patients in public hospitals are allowed to choose their physician in return for a privately funded fee,[44] will not be permitted in hospitals owned by the governmental and non-profit-making hospitals (aside from those in Jerusalem, which have long-standing SHARAP programmes).

3. Measures to constrain the growth of private insurance and private hospitals

A number of measures were suggested to constrain the growth of private hospitals and private insurers.

Standardized policies. Requiring all private insurers (both in the HPs and in the commercial insurance companies) to include, among their offerings, a standardized policy for choice of hospital physicians should reduce costly duplicate insurance coverage, enhance competition, restrain premium levels and improve efficiency.[45]

Medical tourism. Regulations governing medical tourism, in which foreigners come to Israel to obtain medical care and pay generously for such care, should be tightened to ensure that, in the Israeli context of shortages of both hospital beds and physicians, the care for tourists does not come at the expense of care for Israelis. In addition, a portion of the income from medical tourism should be used to support the public health care system.[46]

Surcharges and cross-subsidies. A surcharge should be collected on services provided by private hospitals and transferred to the public hospital system. These transfers would support public hospitals’ efforts to reduce waiting times and increase the availability of physicians in the afternoon hours. The surcharge is envisioned as compensating for the private hospitals’ tendency to “cream-skim” and to rely on physicians whose training costs were borne by the public sector (along with other externalities).

Incentives for private insurance use. HPs’ incentives to promote the use of private insurance when their members require hospital care should be reduced or eliminated.

An additional objective: strengthening Israel’s public and non-profit-making hospitals

The German Committee also wanted to strengthen the public and non-profit-making hospitals. In recent years, these hospitals have been squeezed financially and operationally from several directions, including:

• the basic pricing system has not reflected full costs;
• the HPs have used their market power to negotiate deep discounts;
• the annual revenue caps set by the Ministry of Health have become increasingly restrictive;
• the private hospitals have been drawing away many of the more lucrative types of cases; and
• the private hospitals have been attracting some of the public hospitals’ most senior physicians (particularly surgeons) for private work in the afternoons.

Many leaders of the Israeli health system consider the well-being of the public and non-profit-making hospitals to be vital for ensuring the provision of high-quality care for all Israelis (via the NHI’s basic benefits package), as well as for the training of the next generation of health care professionals.

The key measures proposed by the German Committee to promote the well-being of the public hospitals naturally overlap with the set of measures recommended to promote its main objective (ensuring that all Israeli citizens can receive consistently high-quality care within the publicly financed care system). Those with a direct impact on the revenues of the public hospitals include the planned injection of new funds directly from the government, the transfer of the surcharges to be levied on the private hospitals and the provision for continued operation of medical tourism. Additional measures expected to contribute to the well-being of the public hospitals include the incentives for physicians to work full-time in the public hospitals, the requirement that HPs offer patients a choice of hospitals, the introduction of case mix adjusters to the hospital reimbursement system and the reduction of the incentives for the HPs to channel their patients to private hospitals.

As noted, the German Committee also considered, but ultimately rejected, SHARAP. The adoption of SHARAP would probably have contributed substantially to the financial health of some of the public hospitals.

Conclusions

Whether or not the measures recommended would be sufficient to ensure that all Israeli citizens can receive consistently high-quality care within the publicly financed system, and to strengthen the public and non-profit-making hospitals, probably will depend a great deal on the extent to which, and how, they are implemented. Moreover, two of the Committee’s members wrote a minority report (Glazer & Kendall, 2014) in which they argued that even if fully implemented the set of recommendations endorsed by the majority would not be sufficient to achieve the Committee’s stated goals.

In either case, the 2015 change in government has put a big question mark on which recommendations, if any, will be adopted by the new government and implemented. Clearly, it will be important to monitor progress – both of implementation and of impacts.