Economic Survey - Portugal 2004: The on-going reform of the health care system

Is the reform of the health care system addressing most of the sector’s weaknesses?

In another area, the comprehensive reform to increase efficiency of the health care system launched in 2002 should help put public finances on a sounder medium-term path. The reform has two main aims: to deliver better-quality public health services than at present but at no higher cost; and to reduce the underlying growth rate of public health-care spending over the medium term. New legislation has been approved over the last two years, including: the separation of the functions of regulation, financing and provision of health care services; setting up new models of financing for providers, which impose harder budget constraints; the introduction of incentives towards productivity, management and quality improvements in both primary health care centres and hospitals; the possibility for the private sector to play a larger role in service provision; and the promotion of generic drugs. In contrast to previous attempts of gradual reforms, which were never fully implemented, the strategy has been to create a big bang in the health sector, making reform efforts essentially irreversible.

Expenditure and health status in OECD countries
In 2002 or nearest year available

Note: No data available for Mexico and Turkey.
1. Males aged less than 70.
Source: OECD Health Data, 2004.

The reform is an important step forward. It addresses the most serious weaknesses of the system identified in earlier OECD Economic Surveys, in particular:

• It places public providers under pressure to provide cost-effective services via changes in the way they are managed (especially with regard to organization, budget, staff remuneration and monitoring of results).
• More than one-third of public hospitals (34, mostly medium-sized) have been incorporated. Higher production and some productivity gains seem to have been achieved already.
• A specific programme to reduce waiting lists addresses a key source of patients’ dissatisfaction and of inequitable access to health care. First results show a significant reduction in waiting time, partially obscured by a concomitant increase in demand for treatment.
• The progressive strengthening of the long-term care network, which is relatively under- developed in Portugal, should help reduce the overcrowding of hospitals by (ageing) patients requiring long-term care rather than acute health care.
• The new pharmaceutical policy designed to curb expenditure (which had been growing at double digit rates over the last decade), by putting pressure on the pharmaceutical industry to reduce prices and by increasing cost sharing, has had an immediate impact. Spending decelerated in 2003 and the generic market share more than tripled, to over 6.5 per cent by early 2004, though still low in international comparison.

What more should be done to achieve durable improvements in efficiency and quality of health care?

Now that most legislation has been approved, the key challenges lie in its implementation and monitoring, and in consolidating recent achievements. Although short-term positive results may be easy to reach, sustained improvements will be more difficult to achieve. The reform strategy should thus be strengthened. Dissemination of information about the reform process and progress needs to be improved in order to help garner public support, and, as importantly, to facilitate external assessment of results and identify areas where corrective actions are necessary. Efforts are also needed to ensure that progress in efficiency is followed by improvements in quality of care and health outcomes, where Portugal still lags more advanced EU countries. This calls for putting more emphasis on quality in the benchmarking of health institutions and putting in place mechanisms to avoid adverse selection practices. The regional health administrations also need to be modernised to fulfil the new tasks as purchasers of health care assigned to them in the reform. The introduction of a new independent regulatory body is an important step in the reform process. Lastly, the reform needs to be better integrated in a medium-term strategy. The National Health Plan and the programmes it contains are a possible vehicle for this but, at this stage, the articulation between the ongoing reform and this 10-year plan is not yet clear.

The reform also needs to be completed by additional measures to release its full effects. In particular, to further increase efficiency and reduce current pressures on costs, the reform should:

• seek more actively the integration of the various provider networks (primary care, hospitals, long term care) so as to reduce wasteful duplication of acts and improve the quality of follow-up of patients across the system;
• put in place additional measures to tackle excessive expenditure, such as assessments of new technologies before they are generalised in public health care, measures to curb hospitals’ expenditure on pharmaceuticals and additional measures to consolidate the recent slowdown of spending on drugs sold in pharmacies;
• consider measures to limit excessive demand for health services, for instance by increasing co-payments (with safeguards to promote equity of access) and rationalising reimbursements so as to avoid duplication of care and limit excessive requests for second or third opinions;
• enhance medical prevention and early detection of illnesses, which tend to improve health outcomes and to reduce costs of health care associated with late detection;
• consider other actions which could almost certainly improve the population’s health status, with very little impact on public finances, for instance running information campaigns on the benefits of “healthy life-styles” and road security.

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The full edition of the OECD Economic Survey for Portugal is available from:

• SourceOECD for subscribing institutions and many libraries
• Government officials with OLISnet accounts
• OECD Online Bookshop for non subscribers
• Password-protected web site for accredited journalists

Return to the OECD Economic Survey - Portugal 2004 homepage

A printer-friendly Policy Brief (pdf format) may also be downloaded. The Policy Brief contains the OECD assessment and recommendations, but does not include all of the charts available from the above pages