Kirk Zeller , DBA


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EU Healthcare Market
The EU-15 average healthcare spending as a percentage of GDP is 8.6% (versus 14% in the US) and among the EU-25 an average of 6.4% of healthcare spending is on medical technology (versus 5.1% in the US) (EUCOMED 2004). EU healthcare markets tend to depend on public sources to fund this healthcare spending and there is increasing pressure to contain healthcare costs. In the EU healthcare costs are often capped as a percentage of GDP (Marchant 2003). The 15 original EU member country average spending on medical devices is 6.4% of the total healthcare budget (Marchant 2003). Aging population, new disease, new treatments, increased patient expectations, and macroeconomic pressures are driving up healthcare costs in the EU (Kanavos 1999).

The increased focus on healthcare costs has lead to changes in how healthcare spending is managed and reimbursed. Governments have taken a number of measures to influence and control the supply and demand of healthcare and subsequently medical devices. Supply side controls limit the prices with fixed reimbursement rates or in some cases no reimbursement which means patients have to pay out of pocket. Additionally some countries require co-payments. Cost containment measures in EU markets can be summarized as being based upon one of the following three policies (Bhatti 2003) (OECD 2002):

1- regulation of medical device and pharmaceutical prices, regulation of other products/inputs, and healthcare service volumes
2- shifts of costs onto the private sector
3- caps on health spending

The hospital sector is the most costly sector as for most EU member states it accounts for around 50% of healthcare spending and it is the most targeted for cost containment. There is a shift away from global budgets in hospitals to DRG type systems which are activity based. This is seen as being restrictive to the growth of medical device markets (Bhatti 2003). There is some consideration within the EU of introducing more market based forces, not just for medical products, but also among healthcare providers and insurance companies. Sweden has done this successfully with the Stockholm model and has reduced waiting lists and increased productivity (Bhatti 2003).

Many countries have or are planning to implement DRG (diagnosis-related group) systems similar to those that originated in the United States. These are expected to result in improved efficiency and better control of spending. The German DRG system became mandatory in 2004. Italy and France are also in the process of implementing DRG like systems. These DRG systems are based on a case-mix system of hospital funding which uses the hospitals profile of cases to determine funding (Lewington 2003). DRGs cover the in-patient stay and treatments given during the stay (Lewington 2003). The Dutch system funding is based on total costs from the patientís original diagnosis to the final treatment(Lewington 2003). In most European countries GPs or local doctors determine wether they can treat a patient or if they should refer them to some type of specialist or to a hospital.


Copyright © 2004 Kirk Zeller, All rights reserved