This presentation was made by Stefan Kiss, Slovak Republic, at the 3rd Health Systems Joint Network meeting for Central, Eastern and South-eastern European Countries held in Vilnius, Lithuania, on 25-26 April 2019

1. Value for Money Division
Ministry of Finance
Spending review in Slovakia
April 2019

2. Healthcare spending review – achievements
2
 121 mil. euro saved (2,4 % of the budget)
 Budgeting shifted from “how much is available” to “how
much is needed”
 Spending measures are part of the budget
 More public debate about results

3. We have to do more with less
3
James Whiting (The Wire, Season 5)

4. Broader goals – mindset, institutions, data
1. Philosophical change
 Not only „comply with the law“ but look for "the best option"
2. Strengthen institutions
 „four eyes“ principle
 analytical capacities everywhere in public sector
 Implementation unit
 Transform National Audit Office to a performance auditor
3. Data and analytical tools
 CBA, CEA, CUA, CMA
 benchmarking
4

5. Slovak spending reviews go beyond savings
 Comprehensive and regular review of effectiveness and
efficiency of expenditures, by sector (transport, healthcare, etc.) or
by a common topic (IT, wages, etc.)
 Review most of the public expenditure during the election term
 Proceed in rounds (3 sectors per year)
 Allocative efficiency - cut „bad“, promote „good“ expenditure
within each sector
 Analysed by internal capacities – analytical units in ministries,
MoF leads the process, methodology and analytical capacity
 Specific attention on big (investment) decisions - CBA by MoF
for every major investment
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6. 6
Institutional setup - Slovak case
 we have less formal structure, process driven by MoF
 government makes strategic decisions, the rest is on us
 consensual outputs – agreements between MoF and line min.
 20 analysts at the MoF, more at the line ministries

7. Lessons learnt
 Political ownership
 Crucial for the exercise. It is never good enough
 Internal analysts are good value for money
 Rather than outsourcing the analysis, results are much better when an in-house
analytical (and implementation) unit exists
 Sectoral analysts are good cops, MoF are bad cops
 Ambitious goals, optimistic reality
 Budget is a key tool for MoF
 Use budgetary process as much as you can (spending limits, measures,
performance goals, annex the spending review reports
 Ideally with clear spending baseline projections
 Implementation is typically a weakness
 And key to translate ideas into better services for citizens
 Broader engagement is necessary
 Set the implementation unit – in the center of government and elsewhere
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8. What makes it a success
8
2016 2017
Health
care
Transport IT
Labor and
social
Educatio
n
Environmen
t
Relevant savings      
mil. eur
(% of total
expenditure)
363
(8,3 %)
0,5
(0,02 %)
22-40
(5 – 9 %)
49
(1,6 %)
88
(2,9 %)
130
(25,9 %)
Implemented in the
budget
     
Significant increase
in value
-  - - - 
Cooperation on the
review
      
Transparency      
KPIs go beyond proposed savings measures – value,
data, accountability, transparency

9. Health-care spending in line with peers
 Similar to other Visegrad Group countries (V3)
 Expenditure grows faster than GDP
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Healthcare spending (% of GDP) Healthcare spending and GDP relation,
2017
Source: EC 2018 Source: OECD

10. 10
 The case for Value for Money
 Objective: amenable mortality rate at the V3 level by 2025 = 2
443 deaths prevented by healthcare annually
Amenable death rate (per 100 000
population)
Life expectancy - Females at birth
(years)
Source: Eurostat Source: OECD
However, results lagging behind

11. Key saving measures from the first spending
review (2016)
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Million euro
Potential
saving
Implemented %
MEASURES REDUCING COSTS 363 40,4 11%
Measures reducing costs of public health insurance (summary) 268 121,5 45%
Overprescription of medications – introduction of prescription limits for outpatient service
providers
59 29,7 50%
Exceptions for medications – introduction of rules on refund of exceptions 10 -0,2 -2%
Cost inefficient medications – central procurement of medications covered by health insurance 42 4,5 11%
Special medical material – price reduction through reference pricing 55 33,0 60%
Medical devices – reference pricing and inspection activities 15 22,4 149%
Diagnostic exams – reduction of unit prices and limits to CT and MRI examinations 25 5,9 24%
Diagnostic exams– introduction of limits for outpatient service providers 37 -6,5 -18%
Improvement of inspection activities of VšZP 25 32,5 130%
Measures reducing hospital costs (subordinate organisations of MoH) 95 -81,1 -85%
Operational expenses optimisation 10 -20,9 -209%
Medical processes optimisation 74 -59,4 -80%
Medication and special medical material procurement optimisation 8 -17,3 -216%
Medical equipment procurement 3 16,4 547%
Source: MoF SR

12. Consumption of pharmaceuticals*
(in daily doses, per 1,000 inhabitants, 2017)
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Savings measures – pharmaceutical policy
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800 SK CZ EU** OECD**
*only includes selected ATC groups
 System of reimbursement
 Internal and external referencing
 Utilization of generics and biosimilar products
 Decisions based on pharmacoeconomics
 Overconsumption
 Overspending
 Side effects (incl. negative interactions)
 Antibiotic resistance (long-term fiscal effect)

13. 13
Savings measures – hospitals
 Operational costs
 Hospitals unreasonably vary in unit prices of electricity, heating, washing...
 Central procurement
 For example special medical material
20
25
30
35
40
45
50
55
60
65
70
január16
február16
marec16
apríl16
máj16
jún16
júl16
august16
september16
október16
november16
december16
január17
február17
marec17
apríl17
máj17
jún17
júl17
august17
september17
október17
november17
december17
január18
február18
marec18
apríl18
máj18
jún18
júl18
august18
september18
október18
november18
december18
UN
KE
FN NR
UN BA
FN NZ
FN
NZ
DF
BA FN
TT
FN TN, UN
MT
UN FN KE
NR
DF
BB
FN
BB FN
BB
Unit prices for electricity, (by the beginning of the validity of agreements)

14. 1. Start from the largest expenditure areas
2. Benchmarking of costs, resources, outcomes, etc.
 With foreign countries (EU28, EU15, V3)
 Within the country (i.e. among hospitals)
3. International best practises
 OECD, WHO, World Bank, academic papers
4. Focus on outliers, understand them in detail
 If no good explanation is offered, aim for a policy change
5. Implementation
 Ideally done by the delivery unit and line ministries, but sometimes we have to get involved,
mostly through the budget process
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Spending review methodology

15. Remaining challenges and organizational
questions
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 Where improvement is needed:
 Performance budgeting, focus on results
 Budget prioritization
 Management of hospitals
 Public vs private debate, unfinished reforms
 Organizational – how we work
 Intersection of economic and medical questions
 Quality of data
 Contact with third parties (health insurance companies, pharma
industry, hospitals…)

16. Topics for the next spending review
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 As our measures get implemented and the system
improves, we must shift from simple cost cutting to more
complex topics
 Healthcare systems overview, implications for Slovakia (roles of
health insurers, the ministry, regulators…)
 HTA, budget prioritization
 Mental Health
 Out of pocket payments

17. Štefan Kišš
Director
Value for Money Division
Ministry of Finance
E-mail: stefan.kiss@mfsr.sk
Tel.: +421 2 5958 2429
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