Health Care System Reform and Short Term Savings Opportunities Iceland Health Care System Project

Home , Akranes, Geography of Iceland, Western Region (Iceland)

Health Care System reform and short term savings opportunities Iceland Health Care System project

7 October, 2011 Preface

This is the final report from a 5 week effort to analyze the performance of the Icelandic health care system and iden tify oppor tun ities f or sh ort t erm savi ngs and more l ong t erm H ealth Care re form.

The BCG project team has reported on a weekly basis to a Steering Group consisting of key stakeholders in the Icelandic health care syypstem and has been suppported bypyy a Data Group. In addition, an Advisory Group has meet with the project team on one occasion. Five site visits have been made to different organizations (Reykjanesbaer, Landspítali, Akranes, Akureyri, Glaesibaer).

As the Ministry of Welfare was in urgent need of external input as part of deciding on priorities for 2012 this work has been done in a "best effort approach" in a very short period of time. Individual recommendations and savings potentials need to be further investigated and detailed in order for the Ministry of Welfare to make decisions but the report provides directional advice on which areas should be the focus of further review. ll rights reserved. rights ll Analysis is based on data provided by the Data Group as well as publicly available sources. AA

For any questions to The Boston Consulting Group (BCG) please contact:

Elisabeth Hansson Stefan Larsson Group, Inc. nsulting oo Partner & Managing Director Senior Partner & Managing Director BCG Stockholm BCG Stockholm +46 730 79 44 48 +46 730 79 44 33 011 by The Boston C Boston by The 011 [email protected]@bcg.com [email protected]@bcg.com 22 Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 1 Executive summary

The Icelandic health care system is publicly financed and provides care to 318 000 inhabitants of which 2/3 live in the capital region. The system is organized in 7 health care regions (which provide specialized care, primary care and elderly care) and 76 municipalities (of which some provide elderly care). About 14% of the care i s pri va te ly prov ide d an d there is no gatktekeep ing system. The popu la tion w ill grow by 7% the nex t 20 years an d is overa ll s till fa ir ly young compared to other European countries. The most important risk factor among the population is obesity which is increasing at a rapid speed.

Iceland has very good quality of care results compared to other European countries especially in areas such as AMI, stroke and breast cancer but dental and diabetes care stands out as exceptions. Access to specialist care is good although access to GPs is viewed as a concern. Overall Iceland spends 9.3% of GDP on health care which is averaggpe compared to other European countries but the financial crisis has strained the budged. The current ppglan is to increase the budget by 0.3 BISK 2012. This increase is the result of reallocation of funding consisting of a 2.5 BISK increase (in private specialist care, drug spend and care for patients treated abroad) and a cut of cost by 2.2 MISK in other areas (primarily public hospital care). Our review has shown that overall the current system is characterized by a number of challenges: • Care structures: The current care structure and service levels of specialized care and elderly care have not been designed in sufficient detail on a country wide level resulting in a suboptimal structure. • Current market rules & gatekeeping: The current reimbursement system for private specialist is fee-for-service and for public providers there is a fixed budget. In combination with no gatekeeping this is causing a continuous increase in private specialist care visits and risk for over consumption e.g. cataract surgery. Primary care has similar incentives challenges with fee-for service for private after hours GPs while the public primary care organization has a large number of internal challenges (focus has been on capital region). • Patients flows: There is also likely to be potential to improve the current patients flows through better care integration and better patient guidance. ll rights reserved. rights ll • Direc t expen diture: There is po ten tia l to fur ther re duce drug spen d an d a lso rev iew oppor tun ities to imp lemen t Lean processes in publi c care providers. AA • In addition: There are substantial improvements needed in the planning and performance management of the system. A component in this will be improved E-Health. Given the obesity trend a strong prevention strategy is needed. Our Value Based Health Care maturity assessment indicates that much of the infrastructure is in place, however, strategic direction from the government is needed to accelerate data richness and reporting. nsulting Group, Inc. nsulting

In summary, several imp rovements can be made to the system in order to provide better service, better qualit y of care and increase efficiencyyy. Further analysis oo is needed to both understand the current challenges in more detail as well as design future solutions. Together with the Steering Group we have defined the following prioritizations in terms of which areas need to be addressed: 1) A reform of the current primary care model and the private specialist model in the capital region. In addition, an improvement project around data gathering, budgeting and performance management needs to be launched and several short term savings ideas need to be further analyzed.

2) A review of the current elderly care model to identify how more equal, efficient and higher quality care can be provided. C Boston by The 011 22 3) An redesign of the overall care structure across the 7 regions and municipalities. Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 2 The project has reviewed the current Icelandic HC system

Finances Access

Quality Efficiency

HC system landscape System performance First priority of reform

Identifying and describing Evaluating the performance Short term savings potential the HC system landscape of the system in four • Despite recent cuts, identify with focus on dimensions further short term cost • Demographics and • Quality e.g. outcomes and improvements

geography of Iceland VBHC maturity reserved. rights ll • Key risk factors and • Access e.g. waiting times Long term reform AA incidence of common • Finance e.g. key growth • Identify areas with long diseases contributors term improvement potential

• Current resources and • Efficiency e.g. care Group, Inc. nsulting oo capacity of the system structures, market rules, • Financial situation and patient flows degree of private provision • Recent developments 011 by The Boston C Boston by The 011 22 Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 3 Role & responsibilities of key project members

Role & Responsibility

• Identifying key areas for short term savings Steering and long term reform Group • Prioritize which areas need to be further analyzed

• Enable the Steering Group in identifying hypothesis for savings and reform BCG • Support the Data Group in data gathering for Advisory Group the Steering Group and identifying key issues with current processes and systems for

• Speaking partner for reserved. rights ll

ppgplanning & performance management AA BCG

• Data gathering for the Steering Group

• Problem solving around data issues and Group, Inc. nsulting

Iceland HCS-Final report-extended version.pptx 4 Participants in key groups

Anna Lilja Gunnarsdotti Permanent secretary Ministry of Welfare Anna Sigrun Baldursdottir Political advisor to the minister Ministry of Welfare Björn Zöega CEO Landspítali Maria Heimisdottir Chief of Finance and Information Landspítali Steering Thorvaldur Ingvarson CEO Akureyri hospital Group Stefan Thorarinsson Chief of Medicine East Health Directorate Steinunn Sigurðardóttir Chief of Nursing and Operations West Health Directorate Kristján Guðmundsson Chief of Medicine Glaesibaer Health Care Center Sveinn Magnússon Director General, Operations Ministry of Welfare Fjola Agustsdottir Special Advisor Ministry of Welfare

Hrönn Ottósdóttir Director General, Economic Analysis Ministry of Welfare Advisory Vilborg Ingólfsdóttir Director General, Quality Ministry of Welfare ll rights reserved. rights ll Group Jón Baldursson Special Advisor Ministry of Welfare AA Halldor Jonsson Special Advisor Ministry of Welfare

Hrönn Ottósdóttir Director General, Economic Analysis Ministry of Welfare Group, Inc. nsulting oo Hrafnhildur Gunnarsdóttir Special Advisor Ministry of Welfare Data Margrét Björk Svavarsdóttir Special Advisor Ministry of Welfare Group Kristlaug Helga Jónasdóttir Project Manager Landspítali 011 by The Boston C Boston by The 011

Iceland HCS-Final report-extended version.pptx 5 Agenda

Description of the Icelandic health care system

Current performance of the system

Iceland HCS-Final report-extended version.pptx 6 Agenda

Description of the Icelandic health care system

Current performance of the system

Iceland HCS-Final report-extended version.pptx 7 Summary of the Icelandic health care system set-up

• Total population of 318,000 which • 80% government,20% out-of- will grow by 23,000 (7%) by 2020 pocket Population & • Relatively young population with an Financing • Dental care to larger extent funded geography additional 3,000 >75 by 2020 out-of-pocket • Rural areas becominggpp depopulated • Public care units have fixed and 2/3 live in the capital region budgets but private providers reimbursed fee-for-service

• 14% of total expenditure is • Overall average incidence privately provided primarily in – Diabetes particularly low Degree of dental and specialized care Incidence and historically although increasing private • Additional 7% from non profit risk factors • Low tobacco and alcohol consumption provision nursing homes however overweight is very high and ll rights reserved. rights ll increasing AA

• Care organized in 7 regions and • Large cost cutting efforts have nsulting Group, Inc. nsulting 76 municipalities been made last few years oo Structure • 2 main hospitals, 6 regional Recent events • Recent creation of the Ministry of hospitals, 16 health institutions Welfare through merging of two • No gatekeeping ministries 011 by The Boston C Boston by The 011 22 Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 8 Iceland's population of 318 000 is spread out in 7 regions Southern regions attracting people from northern parts

2/3 of the population lives in the capital region Population is moving from north to south

Thousand inhabitants Westfjords region 400 -2% 318 300 213 (67%) Northern region Eastern region 200 West region -0.3%1 0%

1% reserved. rights ll AA 100

35 Capital region 1% 26 21 18 10 6 2% 0 Southern region

Southwest Group, Inc. nsulting Peninsula region oo 3%

X% Annual population growth 2000-2010 011 by The Boston C Boston by The 011 22

1. 2011 statistics CAGR refer to 2000-2010 where the previous Northwest and Northeast are combined to new Northern region © Copyright Source: Ministry of Welfare, BCG analysis Iceland HCS-Final report-extended version.pptx 9 Today 6.4% of the population is above 75 years old Fairly similar distribution of elderly in the health care regions, except the Southwest Peninsula

39,000 persons in Iceland above Fairly even distribution of elderly across the age of 65 country, Southwest outlier

No. of persons % of pppopulation >75 years 25,000 24,139 8 >75 7.0 65-74 6.8 6.4 20,000 6.1 6.1 Ø 6.4 6 575.7

15,000 4.0 4 ll rights reserved. rights ll AA 10,000

2 5,040

5,000 Group, Inc. nsulting

3,3,466466 oo 2,316 2,018 1,374 820 0 0 North Westfjords West East South Capital Southwest Capital North South West Southwest East Westfjords Region Peninsula

Region Peninsula C Boston by The 011 22

Note: Population 1 Jan 2011 © Copyright Source: Ministry of Welfare, BCG analysis Iceland HCS-Final report-extended version.pptx 10 Population projected to increase by 7% by 2020 With an increasing share of elderly (>75 years) reaching 13% 2060

Iceland has a relatively 65+ population will increase 61,900 by 2060 young population

Population ('000) Italy Sweden 500 France Austria Belgium 433 Spain 417 Switzerland 397 Norway 400 +7% 13% 75+ +37, 811 EU-27 371 12% Finland 12% Slovakia 341 9% 10% 65-74 UK 10% +24, 059 Greece 318 6% 10% 11% Portugal 6% Denmark 300 9% Germany 6% Estonia Hungary Netherlands ll rights reserved. rights ll

SSolov eni a AA 53% 53% 20-64 +40,174 Bulgaria 200 55% 54% Latvia 59% 58% Czech Republic Lithuania Luxembourg Croatia Iceland

Malta Group, Inc. nsulting 100 Liec htens te in oo Poland +12,756 Cyprus 28% 27% 25% 24% 24% 24% 0-19 Romania Ireland Macedonia 0 Turkey

2011 2020P 2030P 2040P 2050P 2060P C Boston by The 011 0 1 2 3 4 5 6 22 Share % of population 80 years or older 2009 Copyright © Copyright Source: Statistics Iceland, OECD 2008 BCG analysis Iceland HCS-Final report-extended version.pptx 11 Overweight and obesity is the worst risk factor Icelanders have low alcohol and tobacco consumption

Icelanders consume less alcohol ... and tobacco consumption is ... but high share of population is than most OECD countries ... also low... overweight or obese

France 12 Netherlands 28 US 64 Austria 12 Poland 27 Iceland 60 Estonia 12 Greece 59 Hungary 27 Hungary 12 Hungary 54 Ireland 11 Spain 26 Spain 54 Poland 10 Italy 23 Portugal 52 UK 10 Germany 22 Germany 51 DkDenmark 10 UK 22 IlIrelan d 51 Switzerland 10 Finland 49 Denmark 20 Finland 10 Canada 48 Germany 10 Norway 19 Netherlands 47 Netherlands 9 Finland 19 Belgium 47 ll rights reserved. rights ll

Greece 9 Luxembourg 18 Italy 46 AA US 9 Canada 16 Sweden 46 Canada 8 Norway 46 US 16 Sweden 7 Denmark 45 Iceland 7 Iceland 14 France 38

Sweden 14 Group, Inc. nsulting

Norway 7 Switzerland 37 oo

0 5 10 15 03010 20 0 80604020 Liters of alcohol consumed per capita (15+) % of population aged 15+ smoking % of population overweight or obese1 011 by The Boston C Boston by The 011 22

1. Self-reported © Copyright Source: OECD Statistics Iceland HCS-Final report-extended version.pptx 12 Obesity is increasing rapidly in Iceland Obesity is more common in rural areas

Obesityyg and overweight Obesityyg rates higher in rural areas than 5th most obese country has increased rapidly in Capital area

% of population obese U.S 34,3 % of Icelandic population Mexico 30, 0 N.Z 26,5 100 U.K 24,0 8% 12% Australia 21,7 20% 21% Obese Iceland 20,1 Luxemburg 20,0 80 Hungary 18,8 29% Greece 16, 4 OECD 15,4 36% Canada 15,4 Portugal 15,4 13% obesity 20% obesity Ireland 15,0 60 40% Finland 14,9 43% Overweight amongst females amongst females Spain 14,9 in rural Iceland in capital area reserved. rights ll Germany 13, 6 AA Belgium 12,7 Iceland Poland 12,5 40 Austria 12,4 Turkey 12,0 Denmark 11,4 Netherlands 11,2 nsulting Group, Inc. nsulting

France 10,5 oo Sweden 10,2 20 Normal weight Italy 9,9 Norway 9,0 Switzerland 8,1 Korea 3,5 Japan 3,4 0 011 by The Boston C Boston by The 011

1990 2002 2007 2009 22 Copyright © Copyright Source: OECD health at a glance, Smoking, obesity and education of Icelandic women by rural-urban residence, Steingrimsdottir et al 2010, BCG analysis Iceland HCS-Final report-extended version.pptx 13 Average or low incidence of common diseases Incidence for chronic disease exceptionally low

Low prevalence of major chronic Incidence of common cancer forms around Nordic average diseases

Colon Breast Prostate Diabetes Renal failure

N.Z Belgium Ireland Mexico Japan1 DkDenmark France France U.S U.S Australia Netherlands Norway Canada Portugal Canada Ireland Sweden Germany Norway N.Z Australia Turkey Germany Netherlands Switzerland Belgium Korea Belgium Italy Denmark Iceland 102 Canada Ireland UK Canada Poland Belgium Finland N.Z France Greece Germany Italy Finland Spain OECD Luxembourg Iceland 86 Switzerland OECD France Greece Japan Australia US Austria Portugal Canada Austria Italy Iceland 30 Sweden Germany Finland Spain ll rights reserved. rights ll Spain Luxembourg UK Australia Korea AA France Germany Luxembourg Denmark Denmark UK Norway Netherlands Netherlands Australia US US Denmark N.Z Austria Austria Italy N.Z Sweden Spain Spain Sweden Netherlands Ireland

Switzerland Portugal Portugal Finland Group, Inc. nsulting Japan oo Estonia Estonia Poland U.K Poland Poland Estonia .U.K Finland Greece Japan Norway Slovak Rep. Greece Japan Greece Iceland 1,6 Iceland 51,0

0 604020 0 50 150100 0 15010050 50 10 15 0 100 200 011 by The Boston C Boston by The 011 Incidence / 100, 000 inhab. Incidence / 100 , 000 inhab. Incidence / 100 , 000 inhab. % of population Patients/ 22 100,000 inhab

1. Japan data from 2003 © Copyright Source: OECD health at a glance 2009 statistics from 2007 Iceland HCS-Final report-extended version.pptx 14 Reimbursement model differ between providers In addition, Iceland is one of the few countries with no gatekeeping

Keyyy elements of Icelandic healthcare system

Generally fixed budgets in public provision • Hospitals and primary care have yearly budgets • No DRG system or compensation depending on care volume • Budgets to nursing homes are weighted with a RAI score which assess the care need of Reimbursement the patient model Private care reimbursed based on "fee-for-service" • App lies to prov iders in pr imary care as well as spec ia lis ts • Reimbursement generally regulated with yearly contract with Ministry of Welfare • Patient fees decided in contract with Ministry of Welfare1 ll rights reserved. rights ll AA

No gatekeeping Gatekeeping • Patients are generally free to seek specialist care without referral • Easy for specialists to start up practice nsulting Group, Inc. nsulting – no verification of patient need or optimal geographical location required oo 011 by The Boston C Boston by The 011 22

1. No contracts for private specialists since end of March 2011 © Copyright Source: Interviews, BCG analysis Iceland HCS-Final report-extended version.pptx 15 Icelandic system set-up is very decentralized This particularly applies to the municipalities

No. of county Inhabitants per Inhabitants councils/ county council/ No. of Inhabitants per (million) regions region municipalities municipality

Sweden 929,2 21 440 290 32

Denmark 5,5 5 1097 98 56

Norway 4,8 4 1191 430 11 ll rights reserved. rights ll AA

Finland 5,3 19 281 336 16 nsulting Group, Inc. nsulting oo Iceland 0,3 7 44 76 4

01,0002,000 0 604020 Not directly comparable with other 011 by The Boston C Boston by The 011 Nordic regions as not stand alone 1 000 inhabitants 1 000 inhabitants 22 entities with own financing etc Copyright © Copyright Source: CIA World Factbook, BCG analysis Iceland HCS-Final report-extended version.pptx 16 Efforts have been made to merge municipalities But there are still municipalites with less than 60 inhabitants

Effort in 2003 to reduce to 46, but 76 Mergers of municipalities to today's 76 was achieved

No. of municipalities In 2003, the Minister of Social Welfare 250 suggested that the inhabitants of 66 municipalities should vote on mergers 204 • Would all suggestions have passed, the 200 171 number of municipalities would have been reduced from 105 to 46 150 • The result of the work is that there is today 76 124 municipalities 105 100 79 76 Minimum population in a municipality is by reserved. rights ll law 50 AA 50 • Today four municipalities with 61,57,57 and 52 inhabitants nsulting Group, Inc. nsulting 0 oo 1990 1995 2000 2005 2010 011 by The Boston C Boston by The 011 22 Copyright © Copyright Source: Ministry of Welfare, Directorate of Health Iceland HCS-Final report-extended version.pptx 17 Current structure consists of 7 health care regions All with one main/regional hospital, additional general hospital institutions and primary care

Isafjarðarbær Siglufjörður (()15) (3) 49 (0,49,0) Húsavík Patreksfjörður Sauðárkrókur Hólmavik (8) (3) (7) (2) Blönduós FSA Egilsstaðir (3) Hvammstangi (131) (3) Stykkishólmur (3) Neskaupsstaður (15) 458 (252,108,98) (24) 260 (126,63,71) 117 (32,58,27)

Akranes Landspítali (44) 1 reserved. rights ll A (654 ) A 1552 (1366,0,186) Main hospitals2 2 373 (175,69,129) Regional hospitals 6 Höfn generally open 24h, Reykjanesbær Selfoss (3) specialist availability vary (33)

(30) Places with acute beds 10 Group, Inc. nsulting oo General internal medicine, 114 (71,43,0) nursing ,causality care, rehabilitation and necessary support functions (X) = number of hospital beds (996) 011 by The Boston C Boston by The 011 VtVestmannaey jar 2923 22 XX (x,y,z) In region (2022,390,511) 1) 636 beds at Landspítali and 18 at St. Jósefspitali (15) total nursing beds (nursing home 2) Also serving as regional hospitals Note: Number of nursing beds that are paid for by Ministry of Welfare beds,hospital beds used for Source: Ministry of welfare data nursing, other nursing beds) © Copyright

Iceland HCS-Final report-extended version.pptx 18 Details on care provision by region Western Health Region

Distribution of health care provision in Western region Key facts

Hospital beds: 641 Elderly care: • Nursing home beds (RAI): 126 • Hospital beds used for nursing (RAI): 632 • Other long term nursing beds: 71 Hólmavik • Home care provision: ~10,700 visits, ~430 apacity individuals serviced CC Primary care physicians on call: Reykhólar 8 Hvammstangi Emergency rooms: 1 (Akranes) Ambulances: 14 Stykkishólmur Búdardalur

3 reserved. rights ll s Ólafsvik Surgeries : In total 1,425 AA • Top 3: 20% female genitals, 16% digestive Grundarfjördur system and spleen, 16% muscles and bones Deliveries: 358 Volume Regional hospital Borgarnes nsulting Group, Inc. nsulting o o Health Care Institution Physicians (Annual Working Unit, AWU): 27 Primary Care Clinic Akranes • Of whom practicing at Health care clinics (AWU): 9 Nursing home sources Nurses (AWU): 67 011 by The Boston C Boston by The 011 ee 1. Number of beds reduced to 63 according to institution, but get funding for 64 beds. Other medical personnel (AWU): 22 R 74 2. Number of beds reduced to 49 according to institution, but get funding for 63 beds "in order to meet the budget cuts" 3. Surgeries performed in OR under anesthesia.

Note: Capacity and resource data from 2011, except no. of ambulances (2009). Volume data from 2010  See appendix for more regions © Copyright Source: Ministry of Welfare data market 2011, slide checked and confirmed by each institution Iceland HCS-Final report-extended version.pptx 19 State and patient health expenditure was 142 B ISK 2010 Pharmaceuticals, nursing and aids increased most since '08 whereas hospital decreased

Annual increase Share of Health expenditure 2010 '08-'10 (%) increase (ISK)

Hospital service33.3 4.2 2.07.8 47.3 -1.6 -1.6

1 Pharmaceuticals 23.4 Includes outpatient 9.5 3.9 andSd S-lblldlabelled drugs Nursing2 22.0 3.8 1.6

Primary care 13.7 2.0 0.5

Dental 8.8 5.1 0.8

Medical aids 7.1 10.6 1.3

Private specialists 7.0 6.9 0.9 ll rights reserved. rights ll Rehab. Disability 535.3 Total expenditure 191.9 020.2 AA & Day care Landspítali 3 Governance 2.5 Akureyri 6.6 0.3 Ambulance4 1.2 Regional hospitals 5.9 0.1

Treatment abroad Group, Inc. nsulting oo Other 4.3 Total segment -2.2 -0.2

Total 142.5 2.9 7.8

0 2010 30 40 -5 50 1510 -2 86420 011 by The Boston C Boston by The 011 22 B ISK % B ISK 1. Does not include ~2B inpatient drugs only S-labelled 2. Include nursing homes and residential homes. Also include budget from social department 2010 which was included 2008, 2009 and again 2011 3. Include Ministry of Welfare, Directorate of Health and Icelandic radiation authority 4. Only include state spend not the budget on the individual hospitals 5. Other include Sjúklingatrygging,

new Landsítali Capex and Heilbrigðismál, ýmis starfsemi eand other capex costs etc © Copyright Source: Ministry of welfare reported data 2011 Iceland HCS-Final report-extended version.pptx 20 State expenditure has increased 1.5% per year since 2008 Pharma and nursing are cost drivers whereas hospital service is decreasing

Annual increase Share of State actual 2010 '08-'10 (%) increase (ISK)

Hospital service33.1 4.2 7.4 2.0 46.7 -1.7 -1.7

Pharmaceuticals1 14.5 Includes outpatient 8.2 2.1 and S-labelled drugs Nursing2 22.0 3.8 1.6

Primary care 11.5 2.3 0.5

Dental 1.3 -3.1 -0.1

Medical aids 2.7 12.5 0.6

Private specialists 5.0 4.1 0.4 ll rights reserved. rights ll

Rehab. Disability AA 313.1 Total -404.0 -030.3 & Day care Landspítali Governance3 2.5 Akureyri 6.6 0.3 Regional hospitals Ambulance4 1.2 5.9 0.1 nsulting Group, Inc. nsulting

Treatment abroad oo Other 4.1 Total segment -2.5 -0.2

Total 114.0 1.5 3.4

0 40302010 -5 50 1510 -2 420 C Boston by The 011 22 B ISK % B ISK 1. Does not include ~2B inpatient drugs only S-labelled 2. Include nursing homes and residential homes. Also include budget from social department 2010 which was included 2008, 2009 and again 2011 3. Include Ministry of Welfare, Directorate of Health and Icelandic radiation authority 4. Only include state spend not the budget on the individual hospitals 5. Other include Sjúklingatrygging,

new Landsítali Capex and Heilbrigðismál, ýmis starfsemi eand other capex costs etc © Copyright Source: Ministry of welfare reported data 2011 Iceland HCS-Final report-extended version.pptx 21 Co-payment has increased in all sectors and is 20% in total Driver behind 2% total increase since 2008 is pharmaceuticals, dental and medical aids

Co-payment change Share of Share of co-payment per area since '08 (ppt) increase (ISK)

Hospital service 1 0,2 0,1

Nursing

Pharmaceuticals 48 4,7 1,8 for outpatient: Primary care 17 0% for S- 0,0 0,1 labelled Private specialists 28 3,1 0,4 Rehab. Disability & Day care 42 7,8 0,5

Governance 0 0,0 0,0 The increase is driven by a ll rights reserved. rights ll

higgph total increase despite AA MdilMedical a ids 62 -101,0 070,7 lower share of co-payment

Dental 85 2,6 0,9

Ambulance 0 0,0 0,0 nsulting Group, Inc. nsulting oo Other 5 -0,5 0,0

Total 20 2,2 4,5

0 80604020 100 -20 2 4 6 8 543210 C Boston by The 011 22 % co-payment change (ppt) B ISK 1. Include 10 B from social department budget 2010 which was included 2008, 2009 and agian 2011 2. Does not include ~2B other inpatient drugs 3. Include Ministry of Welfare, Directorate of

Health and Icelandic radiation authority 4. Only include state spend not the budget on the individual hospitals © Copyright Source: Ministry of welfare Iceland HCS-Final report-extended version.pptx 22 Total hospital service budget reduced with 5%-p since 2008 West have received increased budgets

Actual budget 2010 Change in budget Share of decrease Result (initial-actual (excl. treatment abroad) since 2008 (%-p) (B ISK) budget, %)

Capital1 Excl. region 33,10,9 34,0 -5 S-labelled -1,9 0,2 drugs5

North2 4,2 5,3 -3 -0,1 -0,2 1,1 West 1,8 14 0,2 -0,3

South3 1,3 -3 0,0 0,0

Easts 0,8 -15 -0,1 0,0 ll rights reserved. rights ll Landspítali AA Westfjords4 0,7 Akureyri 9 0,1 -0,1 Regional hospital service Total

Southwest 0,6 -19 -0,1 0,3 Group, Inc. nsulting oo

Total 44,7 -5 -2,2 -0,1

0 10 20 30 -20-10 0 10 20 -3-2 -1 0 -0,5 0,0 C Boston by The 011 22 B ISK % B ISK B ISK 1. Besides Landspítali Rjóður, hvíldarheimili fyrir börn and St. Jósefsspítali, Sólvangur are included 2. Besides Akureyri actual spend for hospital service in Heilbrigðisstofnun Þingeyinga Blönduósi Fjallabyggð and Sauðárkróki in total amounting to 1.1 B ISK is included 3. Included institutions are Heilbrigðisstofnun Suð-Austurlands Suðurlands and Vestmannaeyjum 4. Include a

Heilbrigðisstofnun HVestfjarða & Patreksfirði 5. Landspítali spend on S-labelled drugs 3.067 B for 2008 have been excluded as it is not in the budget 2009 and 2010 © Copyright Source: Ministry of Welfare Iceland HCS-Final report-extended version.pptx 23 Increased budget for nursing driven by Capital region A result of higher budget per bed partially driven by higher care need

Capital region increase driven by higher Increase driven by Capital region budget per bed

No of RAI beds Increase -2% State actual budget 2010 '08-'10 (B ISK) 2.000 1.441 1.424 1.411 1.366 Decreasing CitlCapital 12, 5 141,4 care 10001.000 volume North 2,5 0,2 0 2008 2009 2010 2011 South 2,4 0,2

West 1,2 -0,1 (M ISK per bed and year) 20 +11% East 0,7 0,1 8,5 10 6,8 7,6 reserved. rights ll SthtSouthwest 050,5 000,0 AA Increasing Westfjords 0,3 -0,1 0 per bed 2008 2009 2010 Nursing Other nursing 1 0,5 0,1 budget (Weighted RAI score 2) nsulting Group, Inc. nsulting

Residential oo 2 +1% Residential beds 1,5 Total -0,2 1,04 1,04 1,06 1 Total 22,0 1,6 011 by The Boston C Boston by The 011

0 22 0 5 10 25 -1 0 1 2 2008 2009 2010 B ISK B ISK

1. Unspecified post in Social Ministry budget 20102 "general nursing beds". RAI score assess care need of patients and higher score mean more care intense patient © Copyright Source: Ministry of Welfare reported data 2010 Iceland HCS-Final report-extended version.pptx 24 Reallocations will be made in the budget 2012 Increase in private specialist budget by 22%

Required additional Increase % of Proposed State acctual budget 2010 investments 2012 current budget saving (B ISK)

Treatment -1% Hospital service 46,7 0,6 abroad -1,20 Pharmaceuticals2 14,5 0,8 6%

Nursing1 22,0 -2% -0,40

Primary care 11,5 -1% -0,10

Dental 1,3 0% Additional saving Medical aids 2,7 0% of 0.4B from the national insurance Private specialists 5,0 1,1 22% ll rights reserved. rights ll

Rehab. Disability AA 3,1 -2% -0,06 & Day care Governance3 2,5 -2% -0,06

Ambulance4 1,2 -2% -0,02 nsulting Group, Inc. nsulting oo Other 4,1 -1% -0,04

Total 114,0 0% -2,20

0 40302010 543210 -10 0 302010 -2,5 -1,0 -0,5 0,0 C Boston by The 011 22 B ISK B ISK % B ISK 1. Include 10 B from social department budget 2010 which was included 2008, 2009 and agian 2011 2. Does not include ~2B other inpatient drugs 3. Include Ministry of Welfare, Directorate of

Health and Icelandic radiation authority 4. Only include state spend not the budget on the individual hospitals © Copyright Source: Ministry of welfare Iceland HCS-Final report-extended version.pptx 25 Private provision has been flat around 14% In ISK private provision has increased but not as a share of the total expenditure

Private provision dominated by dental and Degree of private provision constant outpatient specialists

% of total healthcare expenditure (public & patient co-payment) CAGR 100 Total revenue (budget & patient co payment (B ISK) '08-'10 Home nursing 13% 14% 14% Private provision 19,6 19, 5 14% 14% Private provision 20 20% Nutrition & nourishment Non-profit 17,7 0,9 1,0 16% 7% 6% 7% Primary care1 nursing homes 1,0 1,0 80 12% 0,8 Nursing homes 0,9 2,2 1,8 19% Pharmaceuticals & -3% 21% 21% Rehabilitation & therapy medical devices 15 1,9, 60 6% 6,6 6,5 Outpatient specialist 5,8 10

40 reserved. rights ll AA

61% 59% 58% Public institutions

20 5 8,0 8,4 8,8 Dental care 5% nsulting Group, Inc. nsulting oo

0 2008 2009 2010 0 2008 2009 2010 011 by The Boston C Boston by The 011 22

1. Patient revenues estimated by using same percentage as for public primary care for all years Note: Dental, outpatient specialists, rehabilitation, nutrition and nurishment and home nursing are from SI data, Primary care are from Ministry of Welfare budgets for Laeknavaktin, Laumuli adn

Salarstodin © Copyright Source: Ministry of Welfare, national insurance (SI) Iceland HCS-Final report-extended version.pptx 26 Examples of recent changes and cost reductions

• Regions created in 2007 to govern organization of health care provision • Two ministries merged 1 Jan 2011 creating Ministry of Welfare Structure • Centralization of deliveries e.g. increase of deliveries in Akureyri and decrease in surrounding health centers • Closing of surgery department in Reykjanesbaer

• Increase outpatient treatments in Landspítali, Akureyri and West region • Increasing share of day surgeries at Landspítali and West region Care delivery • Decreased length of stay at Landspítali • Reduced number of hospital beds in several regions

• Procurement of outpatient pharmaceuticals done monthly where the lowest cost drug must be reserved. rights ll AA Drugs used (generics are promoted)

• Increase in co-payment of private specialists Group, Inc. nsulting oo Other • Centralized role recently created with responsibility and overview of emergency response 011 by The Boston C Boston by The 011 22 Copyright © Copyright Source: Interviews, BCG analysis Iceland HCS-Final report-extended version.pptx 27 Landspítali has reduced it's operating cost in order to meet state budget the last three years

Operating cost reduced by a number of 16% cost reduction '08-'10 and 4% state initiatives budget reduction

Structural shifts Excl S- • Shifting patient volumes from inpatient wards to outpatients, B ISK labelled • Merged the two sterilization units, inpatient wards and the two 50 drugs1 general emergency rooms -16% 40 Staffing shifts -4% • Reduction of doctors on call & nurse shifts 30

Limits on disposables/labs/pharma 20 • Limit consumables/disposables assortment & diagnostic tests State budget • Savings in pharmaceutical costs – recommendations in 10 Operating costs patient records, etc.

0 reserved. rights ll

Direct cost cuts AA • Reduction of overtime hours paid (-10%) 2008 2009 2010 • Less education and restrictions on conferences, travels etc Key facts '08-'10

Savings in support functions No. of beds 788 718 677 ‐14% nsulting Group, Inc. nsulting • Outsourcing of support functions, (staff cantina & cleaning) oo Average ‐7% • Cut the use of printing by 30% and centralized printers length of stay 8.1 7.5 7.5 • Centralize medical secretaries Employees 5,118 5,219 4,752 ‐7% Increased awareness/culture 011 by The Boston C Boston by The 011 22 • Increase cost transparency e.g cost labeling disposables, Personnel (% 63% 70% 72% 9 ppt • Encouraging change behavior contributing to savings of total cost)

1. Actual budget 2008 was 37.6 B ISK of which 3.067 was for S-labelled drug which was not included in budget 2009 and 2010s © Copyright Source: Hospital Statistics and Financial accounts 2009, Landspítali webpage Iceland HCS-Final report-extended version.pptx 28 New Ministry of Welfare formed 1st January 2011 Responsibilities and operating models are still being developed

Minister of Political Welfare advisor

Ministerial Permanent Secretary office

Department of Budget and Department Department Department Department Department Financial Affairs of Social and of Economic of Welfare of Quality of Protection

Labour analysis Service and of Rights reserved. rights ll AA Market Prevention Affairs Department of Administration nsulting Group, Inc. nsulting oo 011 by The Boston C Boston by The 011 22 Health Insurance Landlaeknis agency agency under under Quality and

Economic Analysis Prevention © Copyright Source: Ministry of Welfare Iceland HCS-Final report-extended version.pptx 29 Agenda

Description of the Icelandic health care system

Current performance of the system

Iceland HCS-Final report-extended version.pptx 30 Review of key system performance in four dimensions

• Iceland has among the highest care quality in Europe Quality • Maturity of VBHC Iceland scores high on national enables but lower on data richness, quality and sophistication of use

• Overall access to care is good especially in specialized care Access although some concerns raised about primary care access

• HC cost as a share of GDP has been increasing and the ll rights reserved. rights ll Finances financ ia l cr is is has pu t cos t pressure on the HC sec tor AA • Budget reallocations need to be made next year nsulting Group, Inc. nsulting • First analysis indicate a large number of improvement areas in oo Efficiency terms of care delivery structure, market rules, to high usage of emergency care etc 011 by The Boston C Boston by The 011 22 Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 31 Quality of health care in Iceland high Scoring top five in Europe when measuring outcomes

Quality points based on medical outcomes 300

250 Sweden Norway NL CH Iceland Finland Italy Germany Luxemburg Denmark 200 Ireland France Czech Rep. EU-average1 Spain Greece Austria ll rights reserved. rights ll UK BliBelgium AA 150 Portugal

Poland Hungary nsulting Group, Inc. nsulting

Slovakia oo 100 678910 11 12 Health care costs (% of GDP 2007) 50 billion EUR 011 by The Boston C Boston by The 011 TtlTotal cost of fh hea lth care 22 2007

1. Weighted average based on Euro Health Consumer Index 2009 and total health care costs 2007 © Copyright Source: Euro health consumer index 2009, OECD health data 2009 Iceland HCS-Final report-extended version.pptx 32 Analysis of Iceland's VBHC maturity level identify lack of data collection and sophistication of use

Average on national enablers for outcome data collection but scores low on data richness and sophistication of use A countries maturity level guides areas for national focus

Scores high on important infrastructure enablers Data richness and quality and sophistication of use • High clinical IT usage and reasonable level of interoperability 5 • Unique identifiers personal numbers • High use of standards however not always consistently • No patient consent required

4 Lower score on national commitment enablers • Little governmental strategic direction Sweden • Medium-high engagement among physicians • Very little reporting to public on outcome data and there is fiscal 3 interest from the public Canada Australia • Registry for cancer nationally funded USA UK New Zealand ll rights reserved. rights ll

Japan Singapore Curre nt ly fe w reg ist ri es an d l ow ric hn ess in outcom e data AA 2 Hungary Austria • Two national with low data richness Germany Netherlands • A number of Landspítali registries with higher data richness score primarily used for clinical improvement work Iceland – However with little impact on clinical guidelines and 1 nsulting Group, Inc. nsulting

reimbursement, accreditation oo 152 3 4 National enablers Data is currently primarily used in research applications See appendix for • Low level of reporting to clinicians, public and payers additional detail • IceBio registry is an exception with a platform used as a clinical

tool and data shared with clinicians on a monthly basis C Boston by The 011 22

Note: National enablers is average of scores for 1a3-6, 1b (all), and 2a6; Data richness and quality and sophistication of use is average of 2a (all), 2b (all), 2c1-3, and 3 (all, except 3.5). Note clinician

engagement is not included in this overall assessment. Singapore data is desk base research only interviews scheduled for 26th August -2nd September , Austria Data is still not finalised © Copyright Source: BCG interviews and analysis 2011 Iceland HCS-Final report-extended version.pptx 33 Correlation between high quality and availability of registry

Incidence Quality Disease Quality indicator /Prevalence Registry ranking 1 Acute myocardial infarction • Lowest post 30 days mortality in OECD 2.1% ~200/ year2 Very High 2 1 Breast cancer • Next highest 5 year survival rate among OECD 88% ~600/ year3 Very High

3 1 • Next highest 5 year survival rate among OECD 66% for 4 Digestive tract cancers ~40/ year3 Very High OECD colorectal cancer 4 • Highest proportion of treated patients receiving transplants in Chronic renal failure 3 OECD ~150 people High 5 • Lowest ppyyost 30 days mortality for isocemic stroke 2.3%1 Strok e 2 Hig h • OECD average for hemorragic stroke 19.8%1 ~500/ year

6 • Revision rate 3% 7 after surgery in line with Sweden's Knee arthroplasty 367/ year3 High revision rate and lower than Norway and Denmark's Public- 7 ations • Revision rate for total hippp replacement 6% after 10 years 3 reserved. rights ll Hip arthroplasty ~635/ year Medium AA higher than Sweden 's 3%

8 • Proportion of surgeries performed as day cases is 91% Cataract ~2653/year3 Medium lowest in Nordics OECD 9

• Mortality index adjusted for prevalence is 2, avg. in Nordics 3 Group, Inc. nsulting Diabetes 1. 6% of population oo • Hig hes t in dex of acu te a dm iss ions a djus te d for preva lence Low 10 Leukemia & lymphoma • No quality indicators found 17 /year3

11 ~400 disc oper. Spine surgery • No quality indicators found 3 C Boston by The 011 /year 22 12 0.3-0.7% of Schizophrenia • No quality indicators found pop. 2 See appendix for

1. Age adjusted 3.Data from publications 3. Official Icelandic data 4. Health at a Glance 2009 additional detail © Copyright Source: OECD, Iceland HCS-Final report-extended version.pptx 34 Reallocation is needed within the HC budget for 2012

Adjjpusted for inflation health expenditure has decreased 5% per annum '08-'10 Current savings target

To afford escalating costs in S-labelled drugs B ISK (0.8 B ISK), treatment abroad (0.6 B ISK) and 2.7% -5.3 private specialists (1.1 B ISK) reductions of 97 98 the other budget post amounting to 2.2 B ISK 100 91 93 86 87 88 88 is required

Translating budget savings into resources 1 50 could hypothetically mean • Cutting 23% of outpatient pharmaceutical

budget, or reserved. rights ll AA • Completely stop reimbursing medical aids 0 • Laying off 157 doctors, corresponding to 12% 2003 2004 2005 2006 2007 2008 2009 2010 of total number of doctors and surgeons, or

• Laying of 314 nurses, corresponding to 12% Group, Inc. nsulting oo of all nurses Health exp. 10.4 9.9 9.4 9.1 9.1 9.2 9.6 9.3 % of GDP

Increased as a result of lower 011 by The Boston C Boston by The 011 GDP growth 22

1. Average cost per doctor estimated at 14,000,000 ISK per year and nurse 7,000,000 ISK per year © Copyright Source: OECD, Iceland Statistics, Ministry of Welfare, BCG analysis Iceland HCS-Final report-extended version.pptx 35 Landspiítali has better access than Karolinska in most cases Note that it is inherently difficult to compare waiting times

Waiting times at Karolinska in Waiting times for selected procedures at Landspítali Stockholm

Prosthetic replacement of knee 68 12 Cataract surgery 30 182 Prosth thtietic rep lacemen t of fhijit hip joint 21 12 Repair of septum of nose 18 40 Repair of gastro-oesophageal reflux 18 12 Tonsillectomy and/or adenoidectomy 12 4 Heart valve surgery 11 n/a Operations for incontinence or prolapsed uterus 9 24 Repair of inguinal or femoral hernia 6 12

Cholecyyystectomy or lithotrip pyysy of biliary tract 6 12 reserved. rights ll AA Partial or total thyroid excision 6 4 Hysterectomy 5 24 Extracorporal shock wave lithotripsy of pelvis of kidney 3 12 nsulting Group, Inc. nsulting Coronary anastomosis surgery 3 5 oo Removal of calculi from kidney and pelvis of kidney/opera 2 12 Partial excision of mammary gland 0 31

0 20 40 60 80 0 20 40 60 80 011 by The Boston C Boston by The 011 22 Weeks (Feb 2011) Weeks (Sept 2011)

1. This number regards 2009 and not 2011; 2. Procedure executed at St Görans eye clinic and not at Karolinska © Copyright Source: SLL; omvard.se; Öppna jämförelser av cancersjukvårdens kvalitet och effektivitet 2011 Iceland HCS-Final report-extended version.pptx 36 Access to primary care in capital region better than Sweden Definition of overall acceptable waiting time needs to be defined

50% of patients seeking primary care in Capital Corresponding number for Region gets an appointment within 2 days Sweden is 61%

% of all patients seeking primary care % of all patients seeking primary care fall 2010 100 2 2 100 5 4 5 5 4 5 5 7 Waitinggy, time >14 days, % 9 11 12 Waiting time >7 days, % 7 19 16 18 14 14 15 20 20 21 Waiting time 8-14 days, % 80 80 21 23 Waiting time 3-7 days, % 23 25 46 25 40 27 30 30 Avg. 60 28 60 38 29 Waiting time 3-7 days, % 61.4 % Avg. 49.6 % ll rights reserved. rights ll

40 40 AA 66 61 65 Waiting time 0-2 days, % 57 56 53 50 48 4847 44 43 Waiting time 0-2 days, % 20 38 20 nsulting Group, Inc. nsulting oo

0 0 rbotten y 2008 y c 2010 c lland eden b 2008 b 2010 b 2011 b ril 2009 ril pt 2010 pt ly 2009 ly 011 by The Boston C Boston by The 011 ct 2008 ct ne 2009 ne ee aa ee aa ee ee ee 22 pp ee uu ww O F F F J D H M A S S Ju Väst Note: Swedish data based on surveys among patients visiting GP centers during fall 2010, 238 699 surveys were sent out with a response rate of 56.7 %. Icelandic data based on service in all public primary care clinics in Capital area and private clinic Lagmuli © Copyright Source: Primary Health Care of the Capital Area (waiting time surveys as part of an internal quality check). Mr. Jonas Gudmundsson; Institutet för kvalitetsindikationer Iceland HCS-Final report-extended version.pptx 37 Overview of key hypothesis on efficiency

Strength of Key hypothesis hypothesis

1 Unequal and inefficient elderly care provision Structural levers 2 Un-optimal hospital structure e .g . elective care, emergency care etc

3 Capitation for public and fee for service model for private providers in combination with lack of gate keeping causing issues Market rule • Large use ofGff private GPs after hours levers • Overuse of private specialized care • Likely overuse of emergency rooms ll rights reserved. rights ll Patient flow AA 4 levers Over hospitalization resulting in long average length of stay

5 Drug spend too high in selected areas

Direct Group, Inc. nsulting expenditure oo levers 6 Potential to optimize care service further with Lean approach

Other 7 C Boston by The 011

Iceland HCS-Final report-extended version.pptx 38 1

Elderly care should be equal, of high quality and efficient

Equal High quality Efficient

• Although efforts have been • Limited performance • Likely to be some efficiency ll rights reserved. rights ll made to benchmark and management of quality in improvements given the AA divide beds per inhabitant elderly care lack of structured planning recent data indicated that • Recent report indicated that and performance there is an uneven there are large quality management nsulting Group, Inc. nsulting distribution of elderly care issues in selected areas of oo today elderly care 011 by The Boston C Boston by The 011 22 Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 39 1 Large variation in elderly care provision between the regions West and South consume more elderly care than Capital region

High variation in number of nursing beds across regions Same tendency for other elderly care

High RAI score in Capital Other nursing Home Number of beds per region and type of bed region show high care need beds1 Day care nursing

West 67% 33% 168 0,98 63 44 14

South 72% 28% 154 1,00 81 32 10

North 70% 30% 146 0980,98 40 40 22

East 36% 64% 144 0,99 43 43 9 -30%

Southwest 62% 38% 136 1,03 0 37 33 reserved. rights ll AA

Iceland total 84% 16% 129 1,03 27 35 22

Westfjords 0% 100% 118 1,00 0 43 59 nsulting Group, Inc. nsulting oo Capital 0% 118 1,06 16 33 23 Region

0 50 100 150 200 1,51,00,50,0 0 10050 0 50 0 10050 No. of beds per 1,000 capita 75+ Sum of RAI index per region No of beds pp,er 1,000 Individuals per Thousand visits C Boston by The 011 22 capita 75+ 1,000 75+ per 1,000 +75 Nursing home beds Nursing beds in hospitals 1. Non-RAI elderly care beds, to higher extent patient co-financed

Note: Data from 2011 © Copyright Source: Reported by Ministry of Welfare 2011 Iceland HCS-Final report-extended version.pptx 40 1 Budget per bed differ across regions Regions with higher proportion of hospital beds have lower budgets per bed

Historically different budgets for hospital and Difference in budget per bed across regions nursing homes may explain difference

Budget per Budget per nursing Nursing homes per bed budget determined by: 1 nursing bed '10 bed adj for RAI '10 Standard RAI per bed x RAI per institution x 365 days + 2-6% additional budget if home has < 60 beds Ø 7.0 Ø 6.8 % hospital beds3 Capital • Standard RAI per bed has to some extent been 0% Region 8.5 7.8 adjusted for inflation and other extra cost including additional tax per employee South 7.3 7.3 28%

2 East 6.9 6.8 64% Hospital nursing beds budget have not been adjusted in the same manner for RAI until 2011 ll rights reserved. rights ll

30% AA North 686.8 -29% 686.8 -25% • Fixed budgets only based on number of beds not adjusted for inflation and other extra costs West 6.8 6.7 33%

Southwest 6.7 6.3 38% nsulting Group, Inc. nsulting oo 100% Westfjords 6.0 5.8

0 5 10 042 68 011 by The Boston C Boston by The 011

(M ISK) (M ISK) 22

1. Refer to combined budget for both hospital and nursing home beds 2. Outlier as it has many smaller nursing homes resulting in a higher budget per bed see slide XX for more detail 3. Ratio of number of beds in hospital devided by total number of nursing beds

Note: 2010 budget data © Copyright Source: Reported by Ministry of Welfare 2011 Iceland HCS-Final report-extended version.pptx 41 1 The Finnish example Shifting elderly to less care intense housing types types in an effort to increase quality and reduce costs

Finland have shifted patients from less care intense Reforms driven by cost reductions but also care forms with regards to preferences of elderly

Est budget per bed 24 h service homes are non institutional publically (kEUR/bed, year)1 financed housing for elderly with somewhat lower % of pppatients per housin g care offering 100 Residential 2 • Generally preferred by elderly 12% 15 15% 15% 14% (non 24 h service) • Higher private provision ~50% • Similarly to Iceland waiting lists have increased and 80 typically patients are sicker when admitted 32% 35% 38% 43% • Non 24 h hour service housing has been decreasing 24 h service 2 60 30 as a result of policy to reduce number of elderly elderly homes needing to change housing ll rights reserved. rights ll

40 Strong political support for increasing home nursing AA 33% 32% 31% 29% Nursing homes 46 • A number of reforms to increase access and utilization of home care and home nursing 20 • Primarily driven by ambition to keep patients at home 20% 18% Inpatient Health rather than in more cost driving housing services 18% 16% Group, Inc. nsulting

Not available oo centers 0 2006 2007 2008 2009 011 by The Boston C Boston by The 011 22

1. Based on public expenditure and potential co-payment divided y number of patients 2..Include co-payment of around 20% © Copyright Source: Statistics FInland, National Institute for Health and Welfare Finland, BCG analysis Iceland HCS-Final report-extended version.pptx 42 1 Lower number of beds and per bed spend in Finland Finland increasingly utilize home nursing and less care intense housing types

ClCare volumes Utilizati on PbliPublic spen d per b bded

Occupancy rate of nursing Public spend /housing Housing beds Home nursing beds bed

Nursing beds Residential beds

Iceland total 12927 156 65 92% 42 The difference i s primarily due to high Capital region 16118134 -14% 61 94% 48 number of ll rights reserved. rights ll

patients in AA 24h service housing in Finland Finland1 118 16 134 143 90% 30 nsulting Group, Inc. nsulting o o

0 100 200 0 200 0 10050 0 50 Beds per 1,000 75+ capita Visits per day per % k EUR per bed

1,000 75+ capita C Boston by The 011 22

1 Finish nursing beds include inpatient beds, nursing homes and 24 h service housing

Note: Icelands number of beds per 1,000 75+ capita data is from 2010 and from 2009 for FInland © Copyright Source: Statistics FInland, National Institute for Health and Welfare Finland, BCG analysis Iceland HCS-Final report-extended version.pptx 43 1 Swedish example on performance management 30 indicators used to evaluate quality , access and efficiency of Swedish elderly care

Home care and Drug Specific needs Risk minimization nursing homes prescriptions

% of dying Share of % of pers. % of dying % of pers. % satisfied patients for No. of injured nursery home >80 with % satisfied getting >80 with with the which a pain from falls out residents for prescription with overall informative prescription treatment assessment of 1000 pers . which fall risk of 3 or more help/care tlktalks of 10 drugs from the is done last >80 years old assessment psycho- overall beforehand or more personnel week of life been made pharmatics % of deaths % of dying % of nursing % of nursing % of pers. % satisfied where relatives % of pers. with home resid. home resid. >80 with with how staff % satisfied have been >80 with someone for which for which prescription consider their with the taste offered prescriptions present at malnutrition pressureulcer of drugs with personal ofthf the f ood someone ttlkto talk with risky time of death risk assess. risk assess. anticholi- to afterwards combinations thoughts been made been made nergic effects % % of nursing % satisfied % (>65 years independent home resid. with the old) with of supporting for which opportunities good health 3 tools drug review to get out of months after reserved. rights ll 3 months bdbeen made AA home stroke after stroke last year

Personnel and Group, Inc. nsulting Access Standard cost oo competence

No. of Share of staff Days of different with at least Deviation waiting time Information persons high school from

for nursing online C Boston by The 011

during 14 care standard cost 22 home days education Copyright © Copyright Source: Öppna jämförelser, Vård och omsorg äldre 2010, SKL and Socialstyrelsen Iceland HCS-Final report-extended version.pptx 44 1

Scorecard example: Stockholm

% satisfied with overall help/care overall 63 No. of injured from falls out of 1000 persons >80 70 % satisfied with the treatment from the personnel years old 75 ation

are Share of nursery home residents for which fall zz cc 76 %tifidithhtffidthi% satisfied with how staff consider their persona l 61 rikisk assessmen tbt been mad e thoughts % of nursing home residents for which 66 malnutrition risk assess. been made

Home % satisfied with the taste of the food 47 % of nursing home residents for which pressure % satisfied with the opportunities to get out of ulcer risk assessment been made 69

42 isk minimi home % of nursinggg home residents for which drug RR review been made last year 75 % satisfied with overall help/care overall 57 % satisfied with the treatment from the personnel 65 % of pers. >80 with prescription of 10 drugs or % satisfied with how staff consider their personal 10.9

on more g homes thoughts 45 ii % of pers. >80 with prescription of 3 or more 4.5 % satisfied with the taste of the food 42 psycho-pharmatics

Drug % of pers. >80 with prescriptions with risky Nursin % satisfied with the opportunities to get out of 3.0 home 28 combinations prescript % of pers. >80 with prescription of drugs with ll rights reserved. rights ll

anticholi-nergic effects 6.4 AA No. of different persons during 14 days 7

Share of staff with at least high school care % of dying getting informative talks beforehand 12

tence 77 nel and compe- education Person- % of dying patients for which a pain assessment nsulting Group, Inc. nsulting

ds 6 is done last week of life oo % of dying with someone present at time of death Days of waiting time for nursing home 17 87 % % of deaths where relatives have been Information online 64 Access 68 offered someone to talk to afterwards

pecific nee % (>65 years old) with good health 3 months 011 by The Boston C Boston by The 011 SS 65 22 after stroke Deviation from standard cost -7 % independent of supporting tools 3 months after 54 Std. cost stroke Copyright © Copyright Source: Öppna jämförelser, Vård och omsorg äldre 2010, SKL and Socialstyrelsen Iceland HCS-Final report-extended version.pptx 45 2

Key findings on structure of specialized care delivery

Ambulance services covering large part of the country with 78 ambulances • Po tenti al t o opti m ize leve l o f emergency response because o f overcapac ity in ambulances on several locations Emergency care • Ambulances Wide network of GPs on call every night • ERs • OtitfibdiGPllbtittidtbltdOpportunity for savings by reducing GPs on call, but situation needs to be evaluated • GPs on call region by region Two large ERs complemented with 6 smaller ones with limited access • Potentially an opportunity to limit opening hours and staffing of small, low volume ERs

Obstetric services offered in 9 places in Iceland • Structural shift towards high volume places ll rights reserved. rights ll Obstetric • Signs th at l ength o f s tay longer in sma ller p laces AA services Quality of care and efficiency in current model unclear. Some smaller units have identified this as a short term savings opportunity for next year nsulting Group, Inc. nsulting oo Surgeries performed on nine locations throughout country • Very small volumes in some places, e.g Saudarkroki and Vestmannaeyar

Surgeries C Boston by The 011 Dat a o f very poor quality due no jo in t co ding sys tem ma king it very 22 difficult to evaluate how optimal the current structure is. This needs to be

further analyzed than we possible © Copyright

Iceland HCS-Final report-extended version.pptx 46 2 The current system is not designed top down There appears to be great consensus across system around this

Current model is not optimal Quotes for site visits

• No clear standards are set as to what services should be provided by service "Acute care should be all about organization and structure" type and type of geographic area – ER opening hours Acute specialist – Visits per GPs – Surgeries concentration "We have too many on-call GPs at night in our – Specialist service offering small region "

• Service offering often based on historic Chief medical officer

service offering and resources available reserved. rights ll

"Services pr ovi ded a re based on wh at ev er AA e.g. sub specialty of doctors working in local resources e.g. doctors they have, not on hospital what makes sense from a quality and cost perspective " nsulting Group, Inc. nsulting • Lack of holistic system design across Doctor in Landspítali oo regions and municipalities "We would like for someone to define what • Limited benchmarking is done of current type of care and resources are needed in 011 by The Boston C Boston by The 011 service levels and best practice different part s of I cel and" 22

Nurse in one region © Copyright

Iceland HCS-Final report-extended version.pptx 47 2 Ambulance services covering large part of the country Complemented by 2 large around the clock ERs and6smallwithand 6 small with limited access

Wide network of 78 ambulances and 2 large emergency departments ERs across Iceland and 6 smaller ERs

Two main emergency rooms • Landspítali with ~90,000 visits1 • Akureyri with ~12 , 000 visits Isafjarðarbær Sauðárkróki 6 small emergency rooms

Húsavík • Four with lighter opening hours: Mon-Fri, 8-16 – Akranes – staffed from hospital during day, with 4 Akureyri on-call physicians during off hours – Vestmannaeyar – staffed with primary care Neskaupsstað physician during daytime and with 3 on-call during off hours ll rights reserved. rights ll

– Isafjördur – staffed with hospital physician AA Akranes daytime and primary care physician and surgeon 14 LSH on call during off hours Selfoss – Neskaupsstadur – staffed with hospital physician during daytime, and hospital physicians on call nsulting Group, Inc. nsulting during off-hours oo • Two ERs with increased opening hours emergency department – Selfoss , ER in hospital opened 24/7 with on- Vestmannaeyjar site/on-call service from 1 physician emergency rooms – Reykjanesbaer, ER in hospital opened 8-20 011 by The Boston C Boston by The 011 22 ambulances Monday to Friday and 10-13/17-19 on weekends, with on-site/on-call service from 2 physicians 1. Including visits to trauma room, pediatric ER, psychiatric ER and obstetric ER.

Note: Number of ambulances from 2009 © Copyright Source: Emergency Health Care in Iceland, a brief overview September 2011, Ministry of Welfare, data collected by Data Group September 2011, BCG analysis Iceland HCS-Final report-extended version.pptx 48 2 Potential to optimize level of emergency response Overcapacity in ambulances on several locations

Very low utilization of several Opportunity to reduce ambulances and ambulance stations optimizing emergency response level

Very low utilization of some 1 Number of F1 and F2 transports per station per year Over- ambulances 100 capacity in • Potential to limit number of 89 ambulance ambulances to reduce costs for 83 care staffing and limiting expensive 80 replacement of old ambulances 66

60 57 Educational level off ambulance staff 53 Low level of low • Basic level ~130 hours education

education reserved. rights ll 40 36 34 • Intermediate level ~320 hours AA 30 of staff • Target to have at least one intermediate in each vehicle 20 17 1315 1212 8 7 6 Group, Inc. nsulting 3 1 oo 0 Current efforts to improve emergency Ambulance stations in Iceland response • Improve skill level of ambulance personell 011 by The Boston C Boston by The 011 • Implement light emergency response with less 22 costly vehicles 1. Stations can have more than one ambulance, e.g. Husavik. F1 and F2 transports are acute, prioritized transports

Note: Data from 2009 © Copyright Source: Ministry of Welfare, expert interviews, BCG analysis Iceland HCS-Final report-extended version.pptx 49 2 Opportunity for savings by reducing GPs on call Situation needs to be evaluated region by region

Siglufjördur 15km 35km X GP1s on call in Health Care Region1

Ólafsfjördur X GP2s on call in Health Care Region Dalvik 2 ~3,900 inhabitants ~4,200 inhabitants

3 1 Stykkishólmur

ÓfÓlafsvik Grundarfjördur 8 4 6 2 8 ll rights reserved. rights ll AA 3 25km

9 1 50 km 2 nsulting Group, Inc. nsulting oo

According to interviews there is opportunity to decrease number of 011 by The Boston C Boston by The 011 GPs on call in some regions b ut fur ther i nvesti ga tion need ed 22

1. GP1 is a physician less than 30 minutes away, GP2 is a physician less than 120 minutes away. Approximate cost of a GP1 is ~2 MISK/year and 0,5 MSIK/ year for a G2

Note. Capital Region excluded © Copyright Source: Ministry of Welfare, interviews, BCG analysis Iceland HCS-Final report-extended version.pptx 50 2 Obstetric services offered in 9 places in Iceland Clear indications that births are moving to high volume places

2008-10 Length of Places that offer obstetric services Births per year delta stay 2010

Landspitali 3420 +41 1.4

Ísafjarðarbær Akureyri 515 +81 2.6

Akranes 358 +96 2.4

Reykjanesbaer 172 -79 1.9

Akureyri Neskaupsstað Selfoss 95 -89 171.7

Neskaupsstað 87 +17 3.5

Akranes Ísafjarðarbær 55 -18 3.2 ll rights reserved. rights ll Vestmannaeyjar 37 -1 AA Landspítali Selfoss n/a Höfn Höfn 4 -2 1.7

Reykjanesbaer Other1 92 0 n/a nsulting Group, Inc. nsulting oo 0 3500 420 Vestmannaeyjar Number of births per year ALOS (Days) Very sensitive area as patients feel there is security in 011 by The Boston C Boston by The 011 being able to give birth close to home. 22

1. Other including 86 births in parents home, 1 unknown, 1 in Egilsstadir, 4 in Saudarkrokur

Note: Data from 2008-2010 © Copyright Source: Landspítali statistics Iceland HCS-Final report-extended version.pptx 51 2 Surgeries performed on nine locations throughout country Very small volumes in some places, ege.g Saudarkroki and Vestmannaeyar

Vest- Saudar- Landspítali Akureyri Akranes Selfoss mannaeyar kroki

Musculoskeletal system 2,315 962 247 0 35 1

Digestive system and spleen 1,908 344 640 2 30 6 Female genital organs 1,461 377 295 96 5 0 Eye and adjacent structures 1,392 214 9 0 42 0

Obstetric procedures 1,038 174 384 0 6 0

Urology and genetals male 874 247 81 0 6 24 Other 143 851 12 0 0 0 Nervous system 744 98 47 0 2 0

Ear, nose and larynx 457 73 169 145 1 20 ll rights reserved. rights ll

Skin 270 141 304 18 75 17 AA Teeth, jaws, mouth and pharynx 456 27 154 126 0 0 Vains and lymphatic system 407 86 50 0 12 18

0 2,000 4,000 0 500 1,000 0 500 0 500 0 500 0 50 Group, Inc. nsulting oo

Extensive • Data not avalable for some hospitals No overview of problems with • Differences in stringency when coding data operations and care

• OR used for other purposes in rural hospitals C Boston by The 011 collecting data • Some hospitals estimating number of procedures done in OR provided in hospitals 22 Copyright © Copyright Source: Data collected by Data Group during September 2011 Iceland HCS-Final report-extended version.pptx 52 2 Swedish example: analysis of night time patient visits showed opportunities to close ERs during night Example from one health care region in Sweden Responsibilities of the smaller hospitals in Studying patients reason for visits the region unclear showed closing during night possible

Provision of emergency care in region both in On average 8 patients are affected by the closing, small hospitals and large regional ones of them • Of the five small hospitals, 3 had 24h emergency • 3 patients can come the next day rooms while 2 closed down during night • 1 patient can be admitted immediately • 1 patient receives home care Evaluation of patient visits during night showed • 3 patients seeks care at the large ERs in the that closing the emergency rooms during night regional hospitals time would affect 5-13 patients – 2 of these can be sent home after evaluation – 1 patient admitted

Avg. no. of visits during night time (20-08) reserved. rights ll AA 15 13 More flexibility in direct admittance and home care 11 enables closing of emergency room 10 Week days 88

Weekends Group, Inc. nsulting oo 5 5 Patient security is positively affected since 5 patients are being cared for at better equipped hospitals 0 011 by The Boston C Boston by The 011 Hitl1Hospital 1 Hitl2Hospital 2 Hitl3Hospital 3 Total financial saving of 3 MEUR 22 Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 53 2 Low number of visits to ER in Reykjanesbaer during evenings and night

Low number of visits to Reykanesbaer ER during evening and night shift

Average no. of visits to ER per day during 2010 20 17.8

15.8 4.9 15.0 15 13.8 14.1 Average 13.1 13.0 4.9 12.6 12.8 11.9 5.3 4.1 5.0 11.0 Visits during evening 4.3 4.2 4.7 4.2 and night shift 16-8 10 5.0 8.9 5.7 4.5 ll rights reserved. rights ll 12. 8 444.4 AA 11.0 5 9.6 10.1 Visits during 8.7 8.8 8.6 8.8 8.6 7.6 day shift 8-16 6.2 6.5 4.5 nsulting Group, Inc. nsulting 0 oo JanFeb March April May June July Aug Sept Oct Nov Dec

Patient diagnosis and staffing levels needs to be detailed C Boston by The 011 and analyzed to understand how optimal this solution is 22

Note: Data for 2010, further split of data not available. © Copyright Source: Data provided by Reykjanesbaer Hospital and Health Center Iceland HCS-Final report-extended version.pptx 54 2

Landspítali visits highlighted some of the structural issues

Example of effects of current system on Landspítali

• Lack of appropriate primary care structure lead to visits to Woman and private specialist for uncomplicated cases "We can't incentivize our staff" children unit – Specialists employed by Landspítali work in private practice to take care of easier pediatric cases (fee -for service)

• Unclear strategy of distribution of surgical practices across "We could probably take on 10-20% hospitals leading to inefficiencies and jeopardize patient safety additional surgical volume in current Surgical unit • Lack of Orbit system in all hospitals (E-Health should be more facilities" of a priority) ll rights reserved. rights ll • Lack of nursing beds causing longer average length of stay AA Internal – Patients right to nursing home preference adds to complexity "Our specialist services have had to Medicine unit • Lack of a joint electronic record creating large inefficiencies and come into the vacuum that lack of quality of care issues GPs has left" nsulting Group, Inc. nsulting oo

• Inflow of patients too high and visits could be avoided with more Emergency structured collaboration with primary care "The ER department is broadening its scope to solve the issues in other unit – Estimated 30,000 out of 70, 000 visits could be handled by GP ppylaces in the system" C Boston by The 011 • Low outpatient offering also "stretching" the current ER offering 22 • Lack of care guidance function in HC system Copyright © Copyright Source: Interviews with department heads, BCG analysis Iceland HCS-Final report-extended version.pptx 55 3

Key findings in the area of private specialists

In general, Icelanders prone to visit doctor, second after Denmark in doctor visits Overall number per capita of visits • Especially high number of visits per capita to specialist doctors

Population of doctors skewed towards specialists • Clear overweight of specialists to GPs in Iceland compared to Nordics although GPs Resources are in line with for example Sweden and likely to be higher than OECD data shows • Data indicating that especially specialists in internal medicine, surgeons and pediatricians are overrepresented in Iceland

Expenditures on private specialists growing with 7% p.a. since 2008 • Patients share of this growing by 13% and governments share by 4%

• Diagnostic specialties, anesthesiologist, pediatric and ophthalmology are the large reserved. rights ll AA PiPrivat e categories specialists • Increase in number of visits driver of health insurance cost • Cataract

Increased access likely to drive growth in specialist visits Group, Inc. nsulting surgeries oo • Cardiologists • Surge in cardiologist visits when contract signed in 2008 and gatekeeping abandoned • Pediatricians Clear signs of overconsumption of some specialist care, e.g. cataract surgeries 011 by The Boston C Boston by The 011 The whole private provision model needs to be reviewed and market rules put in place 22 which will secure a optimal provision of the right volume of care Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 56 3 In general, Icelanders prone to visit doctor Second after Denmark in doctor visits per capita

Specialist visits more common in Iceland than Driven byyg high amount of any other Nordic country specialists and lack of GPs?

Finland 1.0 Norway 0.8 Denmark 3760 956 4716 GPs Denmark 0.7 (per 1,000 population) Sweden 0.6 Iceland 19851 1770 3755 Iceland 0.6

0.0 0.5 1.0 1.5 Norway2200 1174 3374 GPs per 1,000 population ll rights reserved. rights ll

Iceland 1141.14 AA Finland1631 1391 3022 Specialists Sweden 0.81 (per 1,000 Finland 0.61 Sweden1406 1402 2808 Visits to GP population) Norway 0.59

Visits to specialist Group, Inc. nsulting oo Denmark 0.54 0 2,000 4,000 6000 No of visits per 1,000 population 0.00.5 1.0 1.5 Specialists per 1,000 population 011 by The Boston C Boston by The 011 22

1. GP consults

Note: Medical specialists presented, but the pattern is the same for surgical specialists © Copyright Sources: Denmark: National Board of Health; Finland: THL; Iceland Statistics, Socialstyrelsen Iceland HCS-Final report-extended version.pptx 57 3 Population of doctors skewed towards specialists Clear overweight of specialists compared to GPs in Iceland

Physicians General Practitioners Medical specialists Surgical specialists

Austria Portugal Greece Greece Norway 4.0 France Italy Austria Austria Iceland 1.1 Italy Switzerland Australia Switzerland Germany Sweden 373.7 Belgium Austria UK Iceland 3.7 Canada Hungary Iceland 0.7 Finland 1.0 Portugal Estonia Germany Estonia Estonia Portugal Spain New Zealand Sweden 0.8 CH Italy Norway 0.8 Germany Australia Denmark 3.4 UK Belgium Sweden 0.6 Luxemb. Luxemb. Luxemb. Estonia Italy Poland Hungary Hungary Spain US Poland

Australia Netherlands France Belgium reserved. rights ll AA Belgium Denmark 0.7 Finland 0.6 Denmark 0.5 Germany UK NZ 0.5 Luxemb. Sweden 0.6 Netherlands Norway 0.5 Finland 2.7 Switzerland Norway 0.6 France 0.4 UK Iceland 0.6 NZ Finland 0.4 nsulting Group, Inc. nsulting New Zealand Ireland Denmark 050.5 US 040.4 oo United States Canada NL United States Greece Australia Canada Poland Poland Ireland Ireland

543210 0 0.5 121.5 0 1 2 0.0 0.5 1.0 011 by The Boston C Boston by The 011 22 Physicians per 1,000 population GPs per 1,000 population Medical specialists per 1,000 Surgical specialists per 1,000

Note: Data on physicians from 2009, except for Sweden, FInland, Denmark, Australia (from 2008). Data on GPs, surgical specialists and medical specialists from 2009 for all countries except

Sweden, Denmark and Netherlands (from 2008).Development of Iceland data: GPs: from 0.58 2009 to 0.57 2010, medical specialists: from 1.14 to 1.11, surgical specialists: same as 2009 © Copyright Source: OECD Statistics Iceland HCS-Final report-extended version.pptx 58 3 Specialists in internal medicine, surgeons and anesthesiologists common in Iceland

Comparison of specialties between the Nordic countries

Employed physicians by specialty per 100,000 inhabitants Employed physicians by specialty per 100,000 inhabitants 3 1 12 100 3 12 4 200 6 17 10 80 9 19 8 Plastic surgery 8 10 11 150 6 11 24 9 3 Neurology 16 12 9 10 1 5 9 RdilRadiology 60 5 55 Oncology 14 25 14 2 5 2 22 10 Clinical hbcrotory 3 5 16 6 Skin and STDs 16 8 14 spec. incl. pathology 5 3 100 2 7 3 Ear, nose and throat 14 6 26 54 26 Paediatrics 40 5 17 2 22 8 Other specialities Anaesthetics 3 reserved. rights ll 12 AA 13 6 10 OhthlOphthalmp logy 29 Surgery 3 7 50 102 5 7 7 Gynaecolocy and 20 75 Psychiatry 12 13 obstetrics 59 58 9 11 11 48 Internal medicine Orthopaedic surgery 11 12 12 General practice 8 9 incl. hand surgery Group, Inc. nsulting 0 0 oo Denmark Finland Iceland Norway Sweden Denmark Finland Iceland Norway Sweden

Despite questionable data quality, this this gives an indication of an overweight of C Boston by The 011 22 some specialties in Iceland, e.g. internal medicine and pediatrics

Note: Employed physicians by specialty in health and social services per 100,000 inhabitants 2008 © Copyright Source: Health Statistics in the Nordic Countries with data from 2008 Iceland HCS-Final report-extended version.pptx 59 3 Trend that people visit specialists more and GPs less Hospitals increasing their outpatient and daycare activities

Number of ppprivate specialist GP visits at Health Care Landspítali outpatient and visits growing with 3% p.a.1 centers declining day unit visits stable

800 800 -2% 800

+3% 661 669 632 600 570 572 600 600 540 +1%

432 444 438 400 400 400 Day units ll rights reserved. rights ll AA

200 200 200 Outpatient units nsulting Group, Inc. nsulting 0 0 0 oo 2008 2009 2010 2008 2009 2010 2008 2009 2010 011 by The Boston C Boston by The 011 22

1. Data from Iceland Health Insurance, excluding Laboratory research at hospitals, contracts w/health institution other than laboratory research and material costs.

Note: Data for 2010 © Copyright Source: Ministry of Welfare, Landspítali, Directorate of Health Iceland HCS-Final report-extended version.pptx 60 3 Expenditures on specialists growing with 7% p.a. since 2008 Patients absorbing largest part of cost increase

Patient co-payment has grown P.a. growth from 25% to 28% 2008-10 Co-payment now on average 28%

Average 72 28 B ISK Paediatric psychiatrists 92 8 8,000 Paediatricians 92 8 +7% 69886,988 Clinical ppgathologists 88 12 6,595 Anaesthesiologists 85 15 6,150 Treatments for lens disorders 83 17 6,000 28% Patient 13% ENT specialists 72 28 26% Laser treatment, skin 71 29 25% Neurologists 70 30 Psychiatrists 70 30 Radiologists/clinics 68 32 4,000 Surgeons 68 32 Urologists 67 33 ll rights reserved. rights ll

Orthopaedic surgeons 65 35 AA 72% 4% 75% 74% Social Medicine Cardiologist 65 35 2,000 Ophthalmologists 65 35 Medicine Gastroenterologist 62 38 Plastic surgeons 61 39 nsulting Group, Inc. nsulting Medicine and pulmonologlist 59 41 oo 0 Medicine Rheumatologist 58 42 20082009 2010 Dermatologists 55 45 Medicine Endocrinologist 52 48 In Vitro fertilisation 48 52 Insurance 011 by The Boston C Boston by The 011

Gynaecologists 43 57 Patient 22

Note: Total excluding Laboratory research at hospitals, contracts w/health institution other than laboratory research and material costs. 0 50 100 When excluding discounts, the total expenditure has grown with 5.6%

Data for 2008-2010 © Copyright Source: Reported by Ministry of Welfare (Specialists and care outside institutions) % of payment Iceland HCS-Final report-extended version.pptx 61 3

Health insurance spend driven by few specialist areas

Diagnostic-related specialties two Cost per visit varying, with a Ophthalmology with largest spend areas few large outliers highest volumes

Radiologists/clinics 580 11,644 50 Clinical pathologists 536 8,069 66 Anaesthesiologists 414 29,022 14 Paediatricians 359 72967,296 49 Ophthalmologists 342 4,982 69 Orthopaedic surgeons 316 9,584 33 Psychiatrists 281 7,274 39 Ear, nose and throat specialists 268 6,605 41 Medicine Cardiologist 229 69986,998 33 Dermatologists 171 3,814 45 Medicine Gastroenterologist 152 10,612 14 Surgeons 136 9,568 14 Gynaecologists 115 3,726 31 ll rights reserved. rights ll

Urologists 105 8,293 13 AA In Vitro fertilisation 78 91,590 1 Plastic surgeons 72 7,453 10 Treatments for lens disorders 61 18,801 3 Neurologists 56 7,174 8

Medicine Rheumatologist 45 4,148 11 Group, Inc. nsulting oo Paediatric psychiatrists 38 13,188 3 Medicine and pulmonologlist 32 4,818 7 Laser treatment, skin 25 11,068 2 Medicine Endocrinologist 22 3,508 6 011 by The Boston C Boston by The 011

0 200 400 0 20, 000 100, 000 0 20 40 60 80 22 Total social expenditure (MISK) Social expenditure per visit (ISK) No. of visits (thousands)

Note: Data for 2010. Total excluding Laboratory research at hospitals, contracts w/health institution other than laboratory research and material costs. © Copyright Source: Reported by Ministry of Welfare (Specialists and care outside institutions) Iceland HCS-Final report-extended version.pptx 62 3 Increase in number of visits driver of health insurance cost On individual specialty level , cost per visit driving up costs for some specialist areas

Growth 2008-2010

Total social expenditures 2010 Total cost = No. of visits x Cost per visit

Radiologists/clinics 580 0% 0% 0% Clinical pathologists 536 -1% 1% -1% Anaesthesiologists 414 26% 19% 6% Paediatricians 359 11% 6% 5% Ophthalmologists 342 0% 0% 0% Orthopaedic surgeons 316 -8% 8% -15% Psychiatrists 281 1% 0% 1% Ear, nose and throat specialists 268 10% 4% 6% Medicine Cardiologist 229 27% 13%1 -2% Dermatologists 171 -6% 4% -10% MdiiMedicine Gas troen tero log itist 152 10% 8% 1% Surgeons 136 -6% 2% -7% Gynaecologists 115 -7% -3% -4% Urologists 105 3% 3% 0% In Vitro fertilisation 78 10% 12% -1%

Plastic surgeons 72 -3% -1% -2% reserved. rights ll AA Treatments for lens disorders 61 103% 113% -5% Neurologists 56 0% -4% 3% Medicine Rheumatologist 45 -6% -6% 0% Paediatric psychiatrists 38 4% 3% 1% Medicine and pulmonologlist 32 -3% 0% -3% nsulting Group, Inc. nsulting

Laser treatment , skin 25 -51% 0% oo Medicine Endocrinologist 22 -2% 2% -3% 0% Total2 4507 3%2 4% -1%

0 400200 4600 -50 0 -20-40 0 -20 -10 0 10 011 by The Boston C Boston by The 011 Total social expenditure (MISK) 22

1. Added 6,222 visits for the first four months of 2008 when cardiologists did not have a contract

2. Total excluding Laboratory research at hospitals, contracts w/health institution other than laboratory research and material costs, explaining the difference between 4% and 3% growth. © Copyright Source: Reported by Ministry of Welfare (Specialists and care outside institutions) Iceland HCS-Final report-extended version.pptx 63 3 Increased access likely to drive growth in specialist visits Example for cardiologists

6%-p increase in patient Surge in visits to private cardiologists since contract signed in 2008 co-payment since 2008

No contract since No. of visits per year Back on contract end of March % patient payment 40,000 May 5th 2008 15,000 LiLoosing con tttract 1st April 2006 33,256 32,773 32,902 Extra- 10,367 10,768 10,804 30,000 polation if 25,581 10,000 12,962 cont. w/o 22,351 22,370 29% 33% 35% Co-payment 6,222 contract 20, 039 19, 139 20,000 17,507 9,570 11,371 5,000 Social 10,000 19,359 71% 67% 65% 17,507 expenditure w/o contract reserved. rights ll 10, 370 AA 7,768 w contract 0 0 20032004 2005 2006 2007 2008 2009 2010 2011 ytd 2008 2009 2010 nsulting Group, Inc. nsulting Extrapolated yearly oo amount of visits without 15,200 17,500 18,700 31,100 contract

1 2 C Boston by The 011

With gatekeeping No gatekeeping 22

1. During time without contract 2006-2008, patient needed referral from a primary care physician in order to visit cardiologist. 2. During the five months without contract in 2011, no referal needed to

visit cardiologist © Copyright Source: Ministry of Welfare, Iceland Health Insurance Iceland HCS-Final report-extended version.pptx 64 3 Signs of overconsumption of some specialist care Example for cataract surgeries

Increase in private provision Iceland way above Sweden in cataract of cataract surgeries surgeries per capita >70

No. of cataract surgeries Cataract surgeries per 1,000 capita >70 3,000 150 27422,742 2,653 2,382 490 451 Lasersjón 102.6 98.3 26 100 89.8 275 2,000 108 496 453 Sjónlag 70.1 1,609 194 221 Akureyri 50 157 886 601 617 673 St. Jósefspítali 1,000 0 ll rights reserved. rights ll Iceland Iceland Iceland Sweden AA 1,087 2008 2009 2010 2009 835 961 855 Landspítali

2007 2008 2009 2010 Group, Inc. nsulting oo • Assuming Swedish rate of private providers surgeries, 'fair' number for 142 Private Iceland would be 1,891 in Public public providers 1,749 2010 , 30% less than today provision 2010 011 by The Boston C Boston by The 011

• Additional private volume 22 Share private 13% 36% 34% needed would be 142 surgeries Copyright © Copyright Source: Directorate of Health data on cataract surgeries, Nationellt kataraktregister, SCB Iceland HCS-Final report-extended version.pptx 65 3 Visits to pediatricians has grown with 6% p.a. last two years Capital Region main driver with 85% of volume

12% yearly cost increase driven by 85% of all pediatrician visits from growth in visits and cost per visit people living in Capital Region

Total costs for pediatricians at ~400 MISK

60000 Cost increase of 12% p.a. since 2008, derived from 42017 No. 40000 • 6% p.a. increase in number of visits, up to of ~50,000 ppyer year visits 20000 • 5% p.a. increase in cost per visit jointly 3134 1964 1252 355 186 160 absorbed by patient and IHI 0 – Patient co-payment stable at 92% Capital South South- West North EastWestfjords Region west ll rights reserved. rights ll AA 1000 MISK 843 600 No. of +12% Country avg. 609 visits Total 398 500 461 368 per Group, Inc. nsulting cost 400 320 6 326 oo 31 7 33 1,000 270 to 26 2 Neg. discount capita 100 spec. 39 72 200 359 Patient <18 292 330 0 Health insurance Capital South South- West North EastWestfjords 011 by The Boston C Boston by The 011

0 Health west 22 2008 2009 2010 Region Copyright © Copyright Source: Reported by Ministry of Welfare (Specialists and care outside institutions). Visits to specialists per postal code Iceland HCS-Final report-extended version.pptx 66 3 Potential opportunity to shift pediatrician volumes to GPs This needs to be further analyzed in great depth

... would result in 0.8 more visits to A shift of pediatrician volumes to GPs.... each GP per day

Number of visits in Capital Region Total number of GPs in Capital Region is 50,000 128 FTEs1 -72%

40,000

GPs Shifting volumes would mean 167 more visits per GP and year 30,000 21,278 • ~0.8 visits ppyer day2 20,000 42,017 9,119 There are 35 pediatricians operating 10,000 privately today

11,619 reserved. rights ll ricians Pedi-

• Their volumes would decline with 72% AA tt

0 a Todays Shifted to GP Reduction Fair volume volume in visit of specialist visits Total volumes would go down 62% gs nsulting Group, Inc. nsulting oo Assumptions: nn • Corresppgonding savin g in Healh • 'Fair' volume of visits to pediatricians per Insurance of 222 MISK

1,000 capita <18 is country average Savi • Additional cost for more GP work needs excluding capital region to be calculated – 0.23 instead of 0.84 011 by The Boston C Boston by The 011 • With less access , the rest of the volume This needs to be analyzed in detail – Very important 22 would decrease by 30% to ensure that children who need to se pediatricians get to do so without delay

1. 6 months average for 2011. 2. Assuming each GP works 205 days per year © Copyright Source: Iceland Health Insurance cost data 2010, BCG analysis Iceland HCS-Final report-extended version.pptx 67 3 Variations in number of visits per capita in the regions SouthwithhighoverallSouth with high overall number, Capital Region high in specialist visits

Visits to specialists1 Visits to GPs2 Visits to nurses3 Total number of consultations

South 1.9 2.8 1.2 6.0

East 0.7 2.8 1.3 4.7

Capital region 2.2 1.8 0.8 4.7

West 1.1 2.3 0.9 4.2

Southwest 1.2 2.1 0.9 4.1

Westfjords 0.7 2.7 0.6 4.1 ll rights reserved. rights ll AA North 0.7 2.1 0.7 3.6

Country average 1.8 2.0 0.8 4.6 nsulting Group, Inc. nsulting

3210 3210 3210 0 1462 3 5 oo Visits per capita Visits per capita Visits per capita Visits per capita 011 by The Boston C Boston by The 011 22

1. Visits to specialists by patient area of residence. 2. Visits to GPs by health care center location, only including actual visits. 3. Visits to nurses by health care center location, only including actual visits

Note: Data from 2010 © Copyright Source: Ministry of Welfare, Landlaeknir Iceland HCS-Final report-extended version.pptx 68 3 People in Capital region and South visit private specialists to a larger extent than others Per capita visits for the 15 most visited specialist areas

Country Capital Region North South Southwest West East Westfjords avg

Ophthalmologists 224 196 269 124 209 197 214 216 Clinical ppgathologists 263 21 192 98 46 65 201 115 Radiologists/clinics 199 15 180 98 78 41 57 156 Paediatricians 208 10 121 71 18 26 154 93 Dermatologists 180 39 136 85 73 22 35 141 ENT specialists 135 114 178 60 98 96 127 92 Psychiatrists 160 33 89 75 49 30 16 121 Orthopaedic 116 49 144 63 33 44 104 surgeons 109 Medicine Cardiologist 128 9 94 65 128 38 29 103 ll rights reserved. rights ll

Gynaecologists 125 15 103 35 21 62 97 AA 52 Medicine 59 5 44 15 8 9 45 gastroenterologist 34 Anaesthesiologists 50 30 59 25 27 18 45 40 Surgeons 53 21 59 30 20 13 12 44 nsulting Group, Inc. nsulting Urologists 43 41 46 36 11 11 40 oo 27 Medicine 34 60 28 18 18 8 34 Rheumatologist 21

0 400200 0 200 400 0 200 400 0 400200 0 200 400 0 200 400 0 200 400 0 200 400 011 by The Boston C Boston by The 011

below country average Visits per 1,000 capita 22 above country average

Note: data for 2010, reported number of specialist visits from people from each region © Copyright Source: Reported by Ministry of Welfare (Specialists and care outside institutions) Iceland HCS-Final report-extended version.pptx 69 3 Iceland has highest number of dentists in the Nordics Patient expenditure has increased with 7% p. a. since 2008

Iceland has more dentists per capita Patient expenditure has increased 7% than any other Nordic country annually 2008-2010

Annual B ISK growth 10 +5% '08-'10 94 Iceland 8,8 6 8,5 8,0 1,3 Public -4% 8 1,4 88 1,4 Norway 19 6 84 Denmark 25 4 7,5 Patient 7% 7,1 reserved. rights ll 83 666,6 AA Sweden 36 2 Dentists 44 Finland Dental hygienists 74 nsulting Group, Inc. nsulting 0 oo 0 20 40 60 80 100 2008 2009 2010 No. of dental health personnel per 100,000 population 011 by The Boston C Boston by The 011 22

1. Quality indicator used to compare dental care. Shows mean number of decayed, missing and filled primary or permanent teeth in selected age group. 2. Edentulous prevalence is a measure of past

disease and an indicator of oral health, recommended indicator by WHO (1997). © Copyright Source: Health Statistics in the Nordic Countries with data from 2008, Iceland HCS-Final report-extended version.pptx 70 3 Dental outcomes are worse than Nordic peers Caries in 12 year-olds at 50% higher level than second worst Norway

Outcomes of dental care worse than the Outcomes has varied considerably over other Nordics time

1 D3MFT 4,5 Iceland 2.1

Dental caries Norway 1.4 severity in Finland 1.2 children 12 years old1 Sweden 0.9 3,0 Denmark 0.6

2.52.01.51.00.50.0 reserved. rights ll AA 1,5 Finland 36 Edentulous Iceland 33

prevalence in Group, Inc. nsulting oo adults aged Denmark 18 0,0 65–74 years 1985 1990 1995 2000 2005 2010 2015 (%)2 Norway 7

0 10 20 30 40 Iceland Denmark Norway Sweden 011 by The Boston C Boston by The 011 22

1. Mean number of Decayed Missing and Filled Teeth (count) © Copyright Source A Nordic Project of Quality Indicators for Oral Health Care, 2010 Iceland HCS-Final report-extended version.pptx 71 3 Dental care only partly reimbursed for children Least generous dental reimbursement of all Nordic countries

Dental services Denmark Finland Iceland Norway Sweden

For adults, For adults, In general private For adults, For adults, generally generally practitioners generally both private Provider of dental private private private and public services Public services Public services Public services Public services for children1 for children for children for children

Reimbu rsement for Adults ty pically Partly Cost ceiling adults pay 60 %. reimbursement

Reimbursed dental Partial ll rights reserved. rights ll

services for children reimbursement AA and adolescents (in general 75%)

Orthodontic treatment for nsulting Group, Inc. nsulting children and Partly Partly oo adolescents 011 by The Boston C Boston by The 011 22

1. Private also allowed, reaching 12% in 2007. © Copyright Source: A Nordic Project of Quality Indicators for Oral Health Care, 2010 Iceland HCS-Final report-extended version.pptx 72 3 Key findings in the primary care area Focus on Capital Region

Primaryyy care models are varying in countries – but no 'golden standard' – every system has its issues • Iceland stands out with no gatekeeping and the mix of fee-for-service for private and fixed budget for public GPs and • Private ppyrovision mainly after hours gatekeeping Lack of GPs has historically been one argument against gatekeeping, while in fact Iceland does not appear to have fewer GPs than for example Sweden • Althougg,h, there are concerns of future lack of GPs due to age structure of current GP population

There is an unequal reimbursement model for private and public primary care ll rights reserved. rights ll

– Mix of fee -for-service and fixed remuneration likely limiting daytime productivity AA

Primary care in the Capital Region in need of reform, with organizational issues and Primary care in political uncertainty holding back organization nsulting Group, Inc. nsulting

cappgital region • Central management and dual leadership of clinics, with one head nurse and one head oo GP often operating separately and the level of cooperation decided by each clinic • Analysis showing large differences in productivity between clinics that is not explained by age structure of patient population 011 by The Boston C Boston by The 011 22 The primary care model in the capital region needs to be reviewed and reformed Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 73 3

The Icelandic model stands out in three ways

GPs per Country 1000 pop. Financing Privatization Structure GP role

Sweden 0.6 Mix of budget, fee for 20% private 50% of clinics >5 Mostly gatekeepers service and capitation doctors

Denmark 070.7 Capitation with some 100% private 40%1 doctor Gatekeeper additional fees clinics

Norway 0.8 Capitation (40%) and fee 80% private 90% 1 doctor Gatekeeper

system for service clinics

Iceland 0.7 Budget for public and 16% private (only On average 8 No Gatekeeper

Public fee for service for private after hours) doctors per clinic ll rights reserved. rights ll

UK 0.8 Capitation 20% private 2 doctors/clinic Gatekeeper AA

Spain 0.7 Salary & capitation 10% private 5-6 doctors/HC Gatekeeper center nsulting Group, Inc. nsulting oo France 1.6 Fee for service 70% private 40% 1 doctor Gatekeeper clinics

ce based ce Netherlands 0.7 Capitation and fee for 100% private 80% 1-2 doctor Gatekeeper 011 by The Boston C Boston by The 011 nn service clinics 22 Insura

Germany 0.7 Fee for service 100% private ~50% of GP No Gatekeeper © Copyright offices 1 doctor Iceland HCS-Final report-extended version.pptx 74 3 Iceland does not have fewer GPs than Sweden Clear overweight of specialists compared to GPs in Iceland

General Physicians Practitioners1 Medical specialists Surgical specialists

Austria Portugal Greece Greece Norway 4.0 France Italy Austria Austria Iceland 1.1 Italy Switzerland Australia Switzerland Germany Sweden 3.7 Belgium Austria UK Iceland 3.7 CdCanada Hungary IldIceland 070.7 Finland 1.0 Portugal Estonia Germany Estonia Estonia Portugal Spain New Zealand Sweden 0.8 CH Italy Norway 0.8 Germany Australia Denmark 343.4 UK Belgium Sweden 060.6 Luxemb. Luxemb. Luxemb. Estonia Italy Poland Hungary Hungary Spain US Poland Australia Netherlands France Belgium

Denmark 0.7 Finland 0.6 Denmark 0.5 reserved. rights ll Belgium AA Germany UK NZ 0.5 Luxemb. Sweden 0.6 Netherlands Norway 0.5 Finland 2.7 Switzerland Norway 0.6 France 0.4 UK Iceland 0.6 NZ Finland 0.4 Ireland Denmark 0.5 US 0.4 New Zealand Group, Inc. nsulting UitdSttUnited States CdCanada NL oo United States Greece Australia Canada Poland Poland Ireland Ireland

543210 0 0.5 121.5 0 1 2 0.0 0.5 1.0 011 by The Boston C Boston by The 011

Physicians per 1, 000 population GPs per 1 ,000 population Medical specialists per 1, 000 Surgical specialists per 1, 000 22

Note: Data on physicians from 2009, except for Sweden, FInland, Denmark, Australia (from 2008). Data on GPs, surgical specialists and medical specialists from 2009 for all countries except

Sweden, Denmark and Netherlands (from 2008).Development of Iceland data: GPs: from 0.58 2009 to 0.57 2010, medical specialists: from 1.14 to 1.11, surgical specialists: same as 2009 © Copyright Source: OECD Statistics Iceland HCS-Final report-extended version.pptx 75 3 Not a uniform view of number of GPs in Iceland Estimations placing Iceland higher than Sweden in GPs per capita

Number of GPs in Iceland 247 248 250 218 27 27 1 200 27 182 The sources other than OECD might 150 contain other doctors who are not 220 221 100 191 formally GP trained working as GPs 50

0 Head count data Ministry of Welfare Questionnaire on Approximation

sent to OECD data on number of number of doctors based on Capital reserved. rights ll AA 2010 state employed working in health Region with 148 GPs in 2010 and care clinics in each GPs and providing of number of region, adding the 67% of the primary private GPs, head private (2011) care in the country, count2 2010 nsulting Group, Inc. nsulting oo Sweden: Number of GPs 0.57 0.69 0.78 0.78 0.623 per capita 011 by The Boston C Boston by The 011 22

1. 12 private GPs with contract with Health Insurance, 5 GPs in Lagmuli, 10 GPs in Salasverfi (incl 3 residents). 2. Only including practicing GPs

3. From Socialstyrelsen 2008 data on number of allmänläkare, same number that was provided to OECD © Copyright Source: Ministry of Welfare, Iceland Health Insurance, OECD, Heilsugaeslan Capital Region Iceland HCS-Final report-extended version.pptx 76 3 ~1/4 of the GP visits in the Capital region are to private GPs Laeknavaktin by far largest provider

Two large private clinics operating in Share of private provision has been Capital Region stable between 2008 and 2010

No. of GP visits 0% 400,000 Læknavaktin 61,356 Sólvangur 28,470 4% 4% 7% 4% Lágmúli Salahverfi 26,075 6% 7% Salahverfi Seltjarnarnes 23,983 16% 300,000 Grafarvogur 22,857 18% 17% Laeknavaktin Árbær 21, 139 Mosfellsumdæmi 17,609 Efra-Breiðholt 16,705 Fjörður 16,369 200,000 Mjódd 15,745 ll rights reserved. rights ll Efstaleiti 15, 266 AA 73% Garðabær 15,100 73% 72% Public provision1 Hvammur 14,109 100,000 Lágmúli 13,958 Hlíðar 13,627 public primary care nsulting Group, Inc. nsulting oo Hamraborg 12,982 private primary care Glæsibær 12,432 0 Miðbær 11,947 2008 2009 2010 0 50,000 100,000 011 by The Boston C Boston by The 011 No. of visits 2010 22

1. 15 public Health Care Clinics © Copyright Source: Directorate of Health "Contacts with Health Centers 2005-2010" data file, BCG analysis Iceland HCS-Final report-extended version.pptx 77 3 Reimbursement differences between daytime and after hours Public GPs also working under fee-for-service agreement after hours

15 public and 3 private primary care Reimbursement system differs between providers in Capital Region hours of the day

Opening hours in general from Day 8-16 • For regular visits to own time doctor 8-16 319,000 visits 70%

All primary care centers have Síðdegisvakt (~afternoon

After recepp)tion ) reserved. rights ll Laeknavaktin AA hours • No guarantee to see own 16-18 doctor

52,000 visits 14% nsulting Group, Inc. nsulting oo Night Private clinic Laeknavaktin with opening hours 17-23.30 time Private primary care provider 17-23.30 61,000 visits 16% 011 by The Boston C Boston by The 011

Public Health Care Clinic 22

1. Individual doctors get fee-for-service during afternoon reception, Laeknavaktin operating on fixed budget under contract from the Ministry of Welfare, but doctors paid on fee-for-service basis.

Note: Translation of Síðdegisvakt to 'afternoon reception' © Copyright Source: Ministry of Welfare data market 2011, Directorate of Health "Contacts with Health Centers 2005-2010" data file , interviews with Heilsugaeslan and Ministry of Welfare, BCG analysis Iceland HCS-Final report-extended version.pptx 78 3 Primary care in capital region facing lots of challenges Organizational issues and political uncertainty holding back organization

• 2nd largest health care provider in Iceland – deliveringgp primar y care services to 2/3 of the population through 15 clinics Large health care • Budget of 4.1 BISK 2011 provider in Iceland – 148 doctors and 156 nurses on payroll • 835,,g000 doctor's contacts including visits, phone contacts and home visits • Also serving 23,000 school children in 68 primary schools

• Laying off 40 employees Savings and • Reduction of extra ppyayments and benefits reductions due to • Eliminating, to large extent, overtime work crisis • Renegotiated all contracts with suppliers • etc. ll rights reserved. rights ll AA • Overall vision unclear and political uncertainties • Disgruntled physicians due to reduced income Organizational • Frictions between professional groups - and between management and physicians difficulties nsulting Group, Inc. nsulting

• Orggpyanizational model potentially not optimal oo hindering • Historically lack other score card measures than financial: focus on waiting-times, improvements patient satisfaction, employee job satisfaction • Stagnation of improvement efforts - debates within the organization - "can best

practices be applied when operating 15 clinics?" C Boston by The 011 22 Copyright © Copyright Source: Interviews with Heilsugaeslan, BCG analysis Iceland HCS-Final report-extended version.pptx 79 3 Today, central management and dual leadership of clinics Role of nurses decided on individual clinic level

Capital Region Heilsugaeslan Central management Usually no single • CEO manager of clinic, • CFO decisions made • Head of nursing centrally • Head of doctors • Head of staffing

Clinic

Dual frontiers of leadership of the Head Nurse Head GP two professional ll rights reserved. rights ll groups AA

Level of Nurse operations GP operations nsulting Group, Inc. nsulting cooperation btw. • Nurses • GPs oo nurse and GP • Midwifes • Specialists (gynec, based on • Part of pediatricians, etc.) individuals and administrative • Part of 011 by The Boston C Boston by The 011 personal styles personnel administrative 22 personnel Copyright © Copyright Source: Ministry of Welfare, expert interviews, BCG analysis Iceland HCS-Final report-extended version.pptx 80 3 Current cooperation model of doctors and nurses should be reviewed to see if more optimal solution can be found

Similar amount of GPs but fewer nurses in Potential opportunit y to increase Iceland than in Sweden efficiency by redefining roles

No. of GPs per capita No. of nurses per capita Nurses in both countries performing typical tasks, such as; 0.8 0.78 15 • Vaccinations • Wound care 0.62 • House calls 0.6 11.0 • Phone reception 0.52 10 • In Sweden; nurses usually have reception for 8.7 chronically ill patients, such as diabetes and asthma patients 0.4 Lack of structure and ad hoc setup of nurse versus ll rights reserved. rights ll

5 GP responsibility in Iceland AA 0.2 • Basically up to each clinic how much the two professions should work together Iceland

Sweden Group, Inc. nsulting 000.0 0 oo GPs1 Nurses2 This needs to be detailed furthered to understand potential future models for Iceland 011 by The Boston C Boston by The 011 22

1. Data for Sweden based on Socialstyrelsen data from 2008, Iceland data based on estimates, see previous slide. 2. Data for Sweden based on Socialstyrelsen data from 2008, number of nurses in Iceland 2,760 according to Nurse Association (in line with OECD data)

Note: Swedish data is from 2008, Iceland data from 2010 © Copyright Source: Ministry of Welfare, Iceland Health Insurance, OECD, Heilsugaeslan Capital Region, Socialstyrelsen, The Icelandic Nurse's Association, BCG analysis Iceland HCS-Final report-extended version.pptx 81 3 Variances in productivity of the HCCs in the Capital Region Comparison of visits in the Capital Region

2010 effort per physician in the clinics

Visits Phone calls House calls Total weighted effort

Árbær 3,077 3,667 2 4,291 Sólvangur 3,276 2,923 3 4,248 Fjörður 31243,124 29502,950 2 41024,102 Seltjarnarnes 2,893 2,987 6 3,891 Glæsibær 2,996 2,266 8 3,759 Hamraborg 2,579 3,361 7 3,703 Hlíðar 2,699 2,814 8 3,643 Mjódd 2,495 3,076 8 3,526 -37% Mosfellsumdæmi 2,705 1,508 155 3,513 Efstaleiti 2,959 1,323 2 3,398 Garðabær 2,302 2,925 6 3,280 ll rights reserved. rights ll

Hvammur 22502,250 30713,071 2 32683,268 AA Efra-Breiðholt 2,210 3,027 3 3,215 Grafarvogur 2,463 2,177 3 3,187 Miðbær 2,021 2,038 2 2,697 nsulting Group, Inc. nsulting 0 20002,000 40004,000 0 20002,000 40004,000 0 100 200 0 20002,000 40004,000 60006,000 oo No. of visits No. of phone calls No. of house calls Total weighted effort per Weights per GP and year per GP and year per GP and year GP and year Visit 1 Phone call 0.3 Applying House call 2 C Boston by The 011 weighting1 22

1. Visits have weight 1, phone calls 0,33 and house calls 2

Note: 2010 data © Copyright Source: Heilsugaeslan Reykjavik, data sent 29 Sept 2011 on visits and number of FTEs Iceland HCS-Final report-extended version.pptx 82 3 Socioeconomic factors might explain some of the difference However no signs of productivity of clinic and age of population

No signs of correlation between productivity of Lacking data points for further clinic and age of patient population comparison

For complete comparison of % of population in serviced area >65 productivity of health care clinics, 20 Efstaleiti Glæsibær need to look at other risk- and socioeconomic factors, e.g: • Unemployment • Obesity • Share of population born outside Iceland 15 Hamraborg Garðabær • Average income Hlíðar

Hvammur • Educational level reserved. rights ll AA Efra-Breiðholt • etc. Seltjarnarnes Mjódd Miðbær

10 Group, Inc. nsulting Sólvangur oo Fjörður Árbær Grafarvogur Mosfellsumdæmi

2,500 3,000 3,500 4,000 4,500 011 by The Boston C Boston by The 011 Total no. of weighted efforts per year per resource 1 22

1. Including visits to GPs, phone calls by GPs, house calls by GPs weighted according to model described © Copyright Source: Heilsugaeslan Reykjavik, data sent 29 Sept 2011 on visits and number of FTEs Iceland HCS-Final report-extended version.pptx 83 3 Unclear what incentvies the reimbursement model is giving Study showing patients referred to afternoon reception

Afternoon reception part of primary care Remuneration structure counter- service offering incentivizing daytime productivity

Problems with incentives when doctors salary made up of both fixed part and fee-for-service • Limited incentives during daytime to increase productivity • 16-18 operating under fee-for-service agreement

Significant part of salary made up from fee- for-service

• On average ~24% of doctors salary in Capital reserved. rights ll AA Region in 2010

25% of referrals to 25% of referrals to afternoon reception afternoon reception This needs to be investigated further to nsulting Group, Inc. nsulting before 15. 00 15. 00-16. 00 understand patients types , patient flows oo and the incentives the current Study showing that people are often referred to the afternoon reception, before it starts reimbursement model is giving

• Easyyp for clinics to refer patients to afternoon hours C Boston by The 011 22 • Many patients find it convenient to come in afternoon

Note: Graph based on data from measuring all public clinics in Capital Region except Mosfellsbaer, January-June 2010 © Copyright Source: Ministry of Welfare data, Heilsugaeslan, interviews with Heilsugaeslan and Ministry of Welfare, BCG analysis Iceland HCS-Final report-extended version.pptx 84 3 Laeknavaktin large private provider in Capital Region After hour service as complement to ER

Laeknavaktin is owned by ~70 -80 GPs and are operating under a service agreement with the Ministry of Welfare Organization & financing Current agreement saying Laeknavaktin should provide X visits on fixed fee of Y • Individual doctors paid an hourly salary plus a fee-for-service that make up larger part of the compensation

Læknavaktin operates weekdays at. 17:00 to 23:30 and on weekends at. 09:00 to 23: 30 Service Received 61,356 visits in 2010 • An estimated 3-4% are referred to Landspítali emergency ward ll rights reserved. rights ll AA

Cost per visit • Children 0-18 years for free

Patient payment Group, Inc. nsulting

• 18-67 2,600 ISK/visit (w/o rebate card) ~16 EUR oo • Retirees 1,300 ISK/visit (w/o rebate card) ~8 EUR 011 by The Boston C Boston by The 011 22 Copyright © Copyright Source: Laeknavaktin website, Ministry of Welfare, Heilsugaeslan, Directorate of Health "Contacts with Health Centers 2005-2010" data file, BCG analysis Iceland HCS-Final report-extended version.pptx 85 3 Budget allocation mainly based on staffing Not possible to weigh in patient diagnosis in budgeting process

Decisions on staffing made in cooperation between clinics and central office Staffing Budgeting is based on calculating all salaries, taking into account known changes in pay due to wage agreements and other reasons 70% Fee-for-service allocation based on formula that calculates each areas need,,g factoring in: Fee-for- • population in that area, no. of doctors to cover population, historical throughput, opening hours service Small adjustments may be made by the board based on qualitative assessments

Allocation based on calculation of effort and number of tasks performed at each clinic Consumables during the previous year

Medical Fixed sum (2.2 MISK in 2011) allocated for each doctor at clinic ll rights reserved. rights ll tttests AA

Clinics have different rental agreements and gets funding accordingly 30% Rent nsulting Group, Inc. nsulting oo Expenses for re-education, including travel abroad, based on number of employees at each clinic, primarily the number of doctors Other

Clinics makinggg house calls receives additional funding for travellingC Boston by The 011 22

All funding for services provided by third parties funded accordingly Copyright © Copyright Source: Interviews with Heilsugaeslan Iceland HCS-Final report-extended version.pptx 86 3 Heilsugaeslan model also showing differences 40% productivity difference even when adjusting for house calls, teaching effort, etc.

Every factor has a weight to make Comparison of cost per visit comparable with doctors visits Weights shows a 39% difference in 2009

Visits 1 Doctor 0.33 Phone call Grafarvogur 6,782 House call 2 Mosfellsumdæmi 66326,632 Glæsibær 6,521 Visits 0.5 Miðbær 6,160 Phone call 0.17 Efstaleiti 6,079 Home care 0.7 Efra-BiðhltBreiðholt 57855,785 Nurse Home care infant 1.51 Total Hvammur 5,768 1.01 effort per Visit infant care Sólvangur 5,690 -39% Visit elderly care 0.5 Hlíðar 5,683 clinic reserved. rights ll AA Visit teenager care 0.5 Fjörður 5,618 measured in Árbær 5,588 visits Visit prenatal care 0.5 Mjódd 5,419 Midwife Phone call prenatal care 0.25 Hamraborg 5,402 Group, Inc. nsulting oo No. of school children Seltjarnarnes 4,229 Clinical teaching Garðabær 4,130 Other very detailed Occupational therapy weights 0 5,000 10,000

factors C Boston by The 011

available 22 PtilPractical nurse Net expenditure per calculated effort, 20091 Secretary

1. No data available for teaching effort 2010. Fees collected from patients included, but excluding costs for medical tests © Copyright Source: Heilsugaeslan Reykjavik Iceland HCS-Final report-extended version.pptx 87 4 Differences in ALOS needs to be investigated further Small volumes makes comparison sensitive, but there are large differences between hospitals

Average length of stay General medicine, number of admissions General medicine Rehabilitation

Stykkisholmur 260 Stykkisholmur 13.0 Stykkisholmur 10.2 Höfn 8 Höfn 11.6 Höfn 25.7 Husavik 339 Husavik 11.4 Husavik 19.0 Saudarkrokur 236 Saudarkrokur 8.2 Saudarkrokur 10.1 Blönduos 78 Blönduos 8.0 Blönduos 53.8 Vestmannaeyar 237 Vestmannaeyar 7.3 -64% Vestmannaeyar 47.3 LSH 3,909 LSH 6.5 LSH 34.1 ll rights reserved. rights ll

Neskaupsstad 383 Neskaupsstad 5.4 Neskaupsstad 21.3 AA Akranes 666 Akranes 5.2 Akranes Selfoss 772 Selfoss 4.9 Selfoss FSA 1,342 FSA 4.7 FSA 33.7 nsulting Group, Inc. nsulting oo 0 2,000 4,000 50 1510 0 604020 No. of admissions ALOS ALOS Countryside hospitals

sometimes used as C Boston by The 011 22 rehabilitation wards for other hospitals Copyright © Copyright Source: Data collected from each institution by Data Group during September 2011, BCG analysis Iceland HCS-Final report-extended version.pptx 88 Key findings of direct expenditure and pharma

• Excluding VAT Iceland currently has lower spend per capita measured in EUR than Sweden and Denmark Overall pharma • Overall pharma sppyend has increased by 7% per year 2008-10 measured in spend ISK but been reduced by 6% per year measured in EUR development – Outpatient: 2% per year – Inpatient: 9% per year (dominated by S-labelled) – Outpatient co -payment: 12% per year • Inpatient pharma spend, increased 9% per annum despite reforms ll rights reserved. rights ll • 44% hi gh er De fine d Da ily Dosage per capita in psychltihoanaleptics AA Spend on driven by 173% higher consumption of ADHD drugs neurological • 48% higher consumption of psychoeptics primarily for antianxiety

drugs is still high Group, Inc. nsulting medication and sedatives oo driven by high • If Sweden's level of consumption would be achieved, a yearly consumption reduction in spend of 2 B ISK would be feasible 011 by The Boston C Boston by The 011 22 Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 89 5 Iceland has lowered its relative pharmaceutical spend Now lowest in Nordics due to deflation of currency and reforms

Spend in ISK have increased 14% since'08 but Excludinggy VAT Iceland currently have lower declined 12% converted to EUR EUR spend than Sweden and Denmark

2008 2010 Total pharma spend1 (B ISK) Total pharma spend (M EUR) 0200,20 30 +7% -6% 1 3 Sweden 341 341 394 394 0,15

20 2 2

0,10 Denmark 364 121 485 383 128 510 176 26.5 25.7 155 153 reserved. rights ll

22. 5 AA 10 0,05 3 1 Iceland 413 141 554 364 488 nsulting Group, Inc. nsulting 0 0000,00 oo 2008 2009 2010 2008 2009 2010 0 200 400 600 0 200 400 600 EUR per capita EUR per capita 011 by The Boston C Boston by The 011

Spend excl VAT VAT 22

1. Data refer to total spend i.e inpatient and outpatient, state spend and patient co-payment

Note: Original data in local currencies. Used OANDA's 2008 and 2010 yearly average fx rate © Copyright Source: Swedish national board of health and Welfare, Icelandic Medicines agency, Danish medicines agency Iceland HCS-Final report-extended version.pptx 90 5 State spend on outpatient have successfully been curbed A result of increased co -payment and reforming reimbursement

New syygstem for selecting drugs to reimburse Highest increase in patient co-payment has realized most of the savings

B ISK Annual State expenditure has remained low due to implementation of new system where only the low 30 +7% growth '08-'10 cost drug analog are reimbursed 26,5 • Monthly revision of pharmaceuticals eligible for 25,7 reimbursement 25 22,5 7,7 7,2 Inpatient 9% Patient co-payment was increased 10% 2009 to ~6000 ISK per ordination 20 6,1 • Had not been adjusted since 2000 despite high inflation Outpatient: 12% • There is currently a proposal in the Parliament to 15 8,0 Co-payment ll rights reserved. rights ll

8,9 convert to yearly ceiling of co-payment rather than AA 7,1 per ordination basis – Not expected to decrease co-payment overall but 10 protect high consumers nsulting Group, Inc. nsulting

Outpatient: oo 10, 7 2% Inpatient costs have also been reviewed 5 9,6 State financed 9,3 • S-labelled represent 4.9 B ISK (68 %) increasing at a high rate 0 • List price for pharmaceuticals must be lower than in the rest of Nordics 2008 2009 200010 C Boston by The 011 • Landspítali reduced prices 1% '09-'10 however DDD 22 was also reduced 10%

1. Defined Daily Dosage © Copyright Source: Ministry of Welfare, expert interview, Icelandic Meidicine Agency Iceland HCS-Final report-extended version.pptx 91 5 State outpatient spend reduced primarily for cardiovascular Lower impact in dermatological and sensory organs ATC

% reduction in state spend 2010-2009 Size of the ball indicate size of 40 state spend

Cardiovascular system

Musculo-skeletal system Antiparasitica

Genito urinary system and sex hormones ll rights reserved. rights ll

Respiratory system AA Nervous system Antineoplastic and immunomodulating agents 10

Sensory organs Group, Inc. nsulting oo Dermatologicals Systemic hormonal preparations Antiinfectives for systemic use Alimentary tract and metabolism Blood and blood forming organs 0 -10 -5 0510 15 20 011 by The Boston C Boston by The 011 22 % change in DDD consumption 2010-2009

Note: DDD refer to Defined Daily Dosage © Copyright Source: Ministry of Welfare, Icelandic Medicinal Control Agency Iceland HCS-Final report-extended version.pptx 92 5

Efforts to curb expenditure not addressing all root causes

Since 2008 Iceland has lowered its The previously high cost level was driven by three pharmaceutical spend despite increasing usage factors

Addressed DDD/1,000 inhabitants and day Root cause '08-'10 1600 A Market approval is Limited required and the Yes, but EU availablility of Sweden ’10 associated cost is policy needed 1500 generic discouraging to smaller drugs generic companies Sweden ’08 Iceland ’10 Denmark ’10 1400 B Higher inpatient Lower procurement Yes Denmark ’08 and outpatient volume and Iceland ’08 (primarily for druggp prices monopoly of supplier reserved. rights ll 1300 outtit)tpatient) AA

C 0 Overall higher History of high 0 200 400 600 dosage of

dosage in cost No Group, Inc. nsulting EUR/inh abit ant excl VAT intensive neurological oo diseases (inpatient Note: Icelands pharma spend has increased 14% p.a since 2008 but disease areas due to the deflation of the currency costs in EUR have been decreased and outpatient) 011 by The Boston C Boston by The 011 There is s till b e room for cost redtiduction 22

Note: Original data in local currencies. Used OANDA's 2008 and 2010 yearly average fx rate © Copyright Source: Swedish national board of health and Welfare, Icelandic Medicines agency, Danish medicines agency Iceland HCS-Final report-extended version.pptx 93 5 High dosage in nervous system drive costs Nervous system has by far the largest share of the pharmaceutical sales

Sweden Denmark Iceland (All data from 2010) Drug High drug spend per 100 spend in capita neurogical (kEUR) 0 Alimentary Blood Cardio- Genito/ Hormonal Anti- Musculo- Nervous Respiratory ÷ tract/metab.1 vascular urinary infectives skeltal system system 500 No.Dosage of daily Driven by high doses(DDD) per dosage capita 0 = 300 ll rights reserved. rights ll Prices AA Price per 200 aligned with Sweden dose and (EUR) 100 Denmark nsulting Group, Inc. nsulting oo 0

Share of Neurological drugs big Iceland 8.2% 5.1% 7.5% 5.9% 2.4% 8.6% 4.8% 26.5% 6.9% C Boston by The 011 22 pharma sales didriver of cost s 1. A: Alimentary tract and metabolism. B-Blood and blood forming organs. C-Cardiovascular system. G-Genito urinary system and sex hormones. H-Systemic hormonal preparations, excluding sex hormones and insulins. J-Antiinfectives for systemic use. M-Musculo-skeletal system. N-Nervous system. R-Respiratory system

Note: All prices and spend is excluding VAT from 2010 © Copyright Source: Swedish national board of health and Welfare, Icelandic Medicines agency, Danish medicines agency Iceland HCS-Final report-extended version.pptx 94 5 Efforts should focus on psychoeptics and psychoanaleptics Represent >50% of spend and dosage differ dramatically between Sweden and Iceland

DDD per 1,000 inhabitants and day 2010 Sweden Iceland 150 +44% +48%

100

13%

50 +42% +520% ll rights reserved. rights ll AA 0 N01 N02 Analgesics N03 N04 Anti- N05 N06 N07 Other Anesthestics Antiepileptics parkinson drugs Psycholeptics Psychoanaleptics nsulting Group, Inc. nsulting oo

% of Neuro 3% 15% 13% 4% 22% 31% 12% spend 011 by The Boston C Boston by The 011 22 Copyright © Copyright Source:Swedish National Board of Health and Welfare, Icelandic Medicines agency Iceland HCS-Final report-extended version.pptx 95 5 Within the two areas three categories stand out Large spending, high dosage and very large difference in dosage compared to Sweden

% difference in consumption ( positive indicate higher use in Iceland) 2010 200 N06BA Centrally acting sympathomimetics (ADHD) N06AF N05CF Benzodiazepine related (sedative) N05AA N05CD Benzodiazepine derivatives 100

N05AB N06AA N05BA Benzodiazepine derivatives (anti anxiety) 50 N05AE Size of the ball N05AH indicate size of state spend N05AX N05AF 0 N06DX N06AX Other antidepressants N05AN N06AB Selective serotonin reuptake

N06DA reserved. rights ll

inhibitors (antidepressants) AA N05AD -50 N06BC N05BB N05BE nsulting Group, Inc. nsulting

N05CM oo -100 0 5 10 15 20 70 75 DDD/1000 inhabitants and day 011 by The Boston C Boston by The 011 173% high er dosage for ADHD medicati on 22

Not adjusted for prevalence as prevalence data of the these conditions typically mostly reflect treatment patterns and cultural aspects © Copyright Source:Swedish National Board of Health and Welfare, Icelandic Medicines agency Iceland HCS-Final report-extended version.pptx 96 5 Reducing DDD use to Sweden's level could save 2 B ISK Of which 1 B ISK is estimated to be state savings

Adjusting consumption in ...could realize 2 B ISK in Of which 1 B ISK is neurology to Swedens level... savings on total expenditure estimated to be co-payment

DDD/1,000 inhabitants • Neurology pharmaceuticals B ISK are primarily outpatient 400 6,81 2,15 medica tion an d su bjec t to Est. state saving 1,12 332 6 patient co-payment Est. co-payment • On average, for all disease 300 1,03 saving (48%) -32% 4,66 areas, co-payment for outpatient is 48% 227 4 – However, co-payment 200 for neurology is likely lower than average as ll rights reserved. rights ll the price per dose is AA 2 100 higher and patients only pay up to a fixed amount regardless of the cost of nsulting Group, Inc. nsulting pharmaceutical oo 0 0 DDD consumption Current Total New total total spend reduction spend

Current With Swedens dosage 011 by The Boston C Boston by The 011 22 Copyright © Copyright Source: Icelandic Medicine Agency, Swedish national board of health and Welfare, , BCG analysis Iceland HCS-Final report-extended version.pptx 97 5 Iceland with overcapacity in CT and MR machines High number of exams per capita but still low utilization

CT MR

Luxembourg 187 Iceland 76 Belgium 179 Luxembourg 74 Iceland 156 France 55 Exams per Estonia 153 Belgium 53 capita France 139 Netherlands 44 (scans per Canada 125 Canada 43 Australia 94 Denmark 38 1,000) Denmark 84 Estonia 37 Sweden 72 Sweden 30 NL 66 Australia 23

0 50 100 150 200 0 20 40 60 80

France 12483 France 8564 Canada 9017 Canada 5393 Luxembourg 6770 Estonia 4985 Scans per United States 6647 Luxembourg 4969 Netherlands 5795 reserved. rights ll

camera AA Iceland 4532 Netherlands 3983 Denmark 3898 Australia 3957 Australia 2428 Iceland 3445

0 5000 10000 15000 0 5000 10000 nsulting Group, Inc. nsulting Equip- Iceland 41 Iceland 22 oo Italy 30 Italy 18 ment Portugal 27 Austria 17 Belgium 25 density Denmark 25 Luxembourg 15 Denmark 14 (MR/CT per Luxembourg 21 Spain 15 Portugal 10

1,000,000) Canada 13 Canada 7 C Boston by The 011 22 030405010 20 0510 15 20 25

Note: Other OECD countries not reporting CT and MR use © Copyright Source: OECD Statistics, Sweden: Strålsäkerhetsmyndigheten, SCB, WHO Iceland HCS-Final report-extended version.pptx 98 5 Low usage of some MR /CT machines Several of the machines have been donations to the hospitals

There are 13 CT and 6 MR concentrated in capital region... ..with large differences in utilization '08

Isafjarðarbær Fossvogi 50 (1/0) Hringbaut 45 Læknisfræðilegri 25 Íslenskri 17 Akureyri Neskaupsstað Akureyri 12

(1/0) CT (1/1) Akranes 4 Reykjanesbaer 41 Estimation - started 2010 Akranes Hjartavernd2 3 (1/0) Neskaupstað 2

Landspítali (2/2) Isafjördi 2 Private (4/3) Vestmannaeyja 2 ll rights reserved. rights ll A Selfoss NNdto data avail ilblable- start ed 2010 A Selfoss CT 13 Reykjanesbær (1/0) MR 6 (1/0) Læknisfræðilegri 24 Vestmannaeyjar (X/X) # CT/MR Fossvour 22 (1/0) ( Group, Inc. nsulting o Capital Region o R R Hringbraut 16 Landspítali: MR CT M Fossvogi 1 1 Íslenskri 12 Hringbraut 1 1 Akureyri 11 Private: Hjartavernd 3

Læknisfræðilegri Myygndgreinin gu, 1 2 C Boston by The 011 1 1 22 Íslenskri Myndgreiningu 03010 20 Hjartavernd 1 1 No of exams per weekday & machine 1. 2011 estimation. 2. Hjartavernd mainly research institution. Note: Location of scanners 2011 data number of scans per machine from 2008. © Copyright Source: Icelandic Radiation Safety Authority, Ministry of Welfare, BCG analysis Iceland HCS-Final report-extended version.pptx 99 6 Lean: There has been extensive cost cutting in hospitals, but unclear if Lean process has been implemented

BCG lean methodology focuses not only Unclear to what extent lean work on efficiency methods have implemented

Quality

"As far as I know very little Lean work has Value-Based been done in the hospitals" Healthcare

Ministry of Welfare representative ll rights reserved. rights ll AA Lean for Quality "We have implemented Lean in smaller areas of the hospital but not on a broad front! nsulting Group, Inc. nsulting CstomerCustomer oo Emergency Touchpoint Cost Reduction Analysis Patient Costs/ Hospital CFO focus Efficiency 011 by The Boston C Boston by The 011 22 Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 100 7

Purchasing: Potential savings in centralizing purchasing

Moving forward there are initiatives which Current purchasing landscape could lower cost

Landspítali negotiate tendering agreements 1 Centralize purchasing through Landspítali with suppliers organization • Other care providers are free to join in on • Savings from standardization and contracts but it is not a general rule consolidation • Currently Landspítali has closer collaboration • Scale effect potential with some regional hospitals • Would free up resources in smaller – Collaboration still taking form but intention institutions is that Landspítali to a large degree will "I believe handling smaller units purchasing would be relatively manage joint purchasing easy for our organization at Landspítali. Our operations are increasingly professional and we are optimizing methods and

processes" reserved. rights ll AA - Purchasing department Landspítali

2 Join Nordic tendering agreements

• Thorough price comparison required Group, Inc. nsulting oo • Feasible with new law passed 2010 – first initiatives already taken by Landspítali 011 by The Boston C Boston by The 011 22 Copyright © Copyright Source:Interviews, BCG analysis Iceland HCS-Final report-extended version.pptx 101 7 Good data gathering, budgeting and performance management is lacking

Quotes from the Iceland situation organization A • No clear accountabilities for data delivered "There is no protocol for how to • Limited input guidance for the institutions in how to code enter data in a correct way and Data sourcing – allocation principals for financials varying mistakes are constantly made" – coding o f proce dures an d care vo lumes vary ing and analysis • Limited user friendliness of input interface "I spend 20% extracting data and • Large degree of manual analysis of data needed when then 80% adjusting it and analyzing extracting data from system it in excel"

B • Budget is only set one year at a time and is communicated Budget and late to each institution "We can't build good budget as we planning • As the input data is of poor quality it is very difficult to don't know what things really cost" develop a good budget which incentivizes the organizations ll rights reserved. rights ll AA C • No joint report structure that everyone uses so each "There is no standard reports that unit has their own model everyone uses" Performance • Limited transparency on data between units hence no

management pressure to make sure input data is correct Group, Inc. nsulting • Bi-weekly follow-ups with the large institutions and "There is no rea l accoun ta bility for oo 2/year with the smaller institutions the numbers in the organization"

D • Given new organizational model roles and cooperation Organization model not comppyletely defined yet "There is a lack of IT and finance C Boston by The 011 22 and skill level • Lack of financial and IT skill throughout all organizations skills in the organizations" Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 102 7 We have used BCG IT health check framework to do a quick outside in assesment

BCG IT health check framework

1 IT st rat egy and b usi ness ali gnment

2 3 4 5 6 7 8

IT IT sourcing IT IT IT projects & IT service IT cost investment & & vendor organisation architecture development management management prioritisation management & skills ll rights reserved. rights ll AA nsulting Group, Inc. nsulting

9 IT governance oo

Iceland HCS-Final report-extended version.pptx 103 7 e-Health: Iceland system lacking central strategic alignment and integration between regions

1 IT strategy and • Limited/no strategic direction on national level business alignment 2 • Gaps in architecture for payors, providers and patients e.g. current EPR is the IT architecture same in each region but regions not linked • Difficult for payor to gather data, no patient interfaces • Strateggqic question: "continuing clean u p" vs "invest in ppyroven system" 3 IT investment & • E-health has not been a prioritized investment area prioritisation • Unclear how prioritizations are made

4 IT sourcing & • Selective use of outsourcing, e. g. technical infrastructure, maintenance of vendor management medical equipment. ~30% outsourced today 5 IT organisation & • Varied skill level across country organizations due to size skills ll rights reserved. rights ll AA 6 IT projects & • Difficult to run new initiatives with current savings target and budget development constraints

7 IT service Group, Inc. nsulting • IT servicer management decentralized oo management

8 IT cost • Cost transparency high at Landspítali, not at all same level in other units management 011 by The Boston C Boston by The 011 22 9 • IT governance model unclear IT governance Copyright © Copyright

Source: Interview with CIO Landspítali, interview with Western Health region Iceland HCS-Final report-extended version.pptx 104 7 Three drivers for value creation of health care IT will be taken into account for the development of the business case

Population health Productivity Quality Achieve benefits through Reduce operating costs and wellness care quality and efficiency Increase productivity, reduce HC costs Lower healthcare More efficient Fewer errors workflows Fewer adverse drug events, paperwork costs Disease management reduces long-term Reduction in labor, increase in hroughput delays care costs Better optimization Smarter care of existing resources utilization Higher productivity CAPEX avoidance, Better load balancing, Lower costs due to evidence-based Employees more efficient while at work care in most cost-effective setting medicine, previous procedure checks ll rights reserved. rights ll AA Improved materials Better patient Less absenteeism management outcomes Shorter waiting times, faster discharge, Fewer sick days

Medication, devices, supplies Group, Inc. nsulting

lower readmission rates oo Direct cost avoidance Second-order value Population-level value Precision of benefit estimates 011 by The Boston C Boston by The 011 Magnitu de of val ue 22 Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 105 7 Swedish example: Vårdguiden Provides medical advice and guidance on optimal care facility to turn to

Operate thorough 3 channels

24 h telephone line with trained nurses • For medical advice • Direction on opening hours and capabilities of care facilities • Also available for other languages

Webpage with medical advice and care access information • Medically reviewed advice on specific disease – diagnosis, treatment and pharmaceuticals • Information available in a number of languages ll rights reserved. rights ll

• Personal stories ege.g stop smoking blogs AA

Magazine distributed to households 4 times a year nsulting Group, Inc. nsulting • Purpose is to promote health issues and provide advice on self care oo • Includes comprehensive list of care facilities including opening hours, phone numbers etc • Distributed since 2002 011 by The Boston C Boston by The 011 22 Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 106 Agenda

Description of the Icelandic health care system

Current performance of the system

Iceland HCS-Final report-extended version.pptx 107 Iceland needs to balance short and long-term initiatives

Short term savings target for 2012 Long term reform need

To afford escalating costs in S -labelled drugs The c urrent s ystem has a nu mber of areas (0.8 B ISK), treatment abroad (0.6 B ISK) and where it's not performing in an optimal which private specialists (1.1 B ISK) reductions of will require more mid- to long-term initiatives the other budget post amounting to 2.2 B ISK to address ll rights reserved. rights ll is required AA Some will require substantial investment e.g. Translating budget savings into resources E-health and some less so but larger change could hypothetically mean1 programs e.g. primary care reform, reform of nsulting Group, Inc. nsulting • Cutting 28% of outpatient pharmaceutical private specialized care provision oo budget, or • Completely stop reimbursing medical aids • Laying off 157 doctors, corresponding to 12% 011 by The Boston C Boston by The 011 of total number of doctors and surgeons, or 22 • Laying of 314 nurses, corresponding to 12%

Iceland HCS-Final report-extended version.pptx 108 Five type of levers to improve Health Care System

1 • Levers governing structure among payors and Structural providers levers

2 • Lev er s f or adjustin g com peti ti on betw een Market rule providers through adjusting rules of the levers market; demand, supply, etc.

3 • Levers directing patient flow between providers Patient flow directly or indirectly levers ll rights reserved. rights ll AA 4 Direct • Levers for adjusting spend levels for providers expenditure and payors nsulting Group, Inc. nsulting

levers oo

5 • Levels to improve quality governance, use of Other

Iceland HCS-Final report-extended version.pptx 109 Improvement levers with different effects

Short term Trend / lever Description Example financial effect 1 Payor restructuring • Mergers of payors to increase synergies • UK SttlStructural • Shifting owners of care budget e. g. GPs become payor • Norway, Denmark levers Provider restructuring • Mergers of large hospitals situated fairly close • Sweden / Norway • Resizing/re-profiling of hospitals • Netherlands

2 Reimbursement changes • Adjust reimbursement levels and create incentives for efficiency • Sweden • Introduce DRGs Market Competition among provider • Providers competing over patients through e.g. increased freedom of • Sweden, Norway (and payors) choice for patient rule levers Only contract specific • Certification or authorization of providers with right to reimbursement • Sweden providers etc. Gate keeping • Gate keepers used to direct patients through system , e. g. family • Most tax -based doctor systems, e.g. Demark 3 Increase care integration • Incentives and processes in place to improve care integration • Sweden Patient flow levers Patient guidance e.g. disease • Programs profiling risk groups with personalized guidance in the HC • US ll rights reserved. rights ll

management system to decrease care needs • Sweden AA

4 Drug & medtech purchasing • Professionalize drug & medtech purchasing and change prescription • UK and prescription guidelines

Direct Limit coverage/increase co- • No payment/co-payment of certain products or services • Sweden expenditure pay nsulting Group, Inc. nsulting oo levers Hospital operational • Improve efficiency resulting in lower LOS, higher throughput • Belgium improvements/cost cutting • Increase waiting times, reduce staffing levels , postpone investments, • France reduce service levels etc • Sweden 5 Prevention • Reducing obesity, reduce smoking and drinking, getting patients to • Nordics take the right drugs, etc. 011 by The Boston C Boston by The 011 22 OhOther Quality focus • Use of data and outcomes measurement leading to improved care • Sweden levers E-Health • Introduction of e-health solutions to make care more efficient • US Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 110 First order of Iceland needs a strategic plan to address long term priorities

The system today Areas for further investigation

• Current hospital structure not developed • Top down structure redesign Structural top down based on patient needs – Quick fixes e.g. ambulances 1c levers • Unequal and likely inefficient elderly care – Long term design 3 with limited quality performance mgmt • Elderly care review 2

• Current reimbursement model gives the • Primary care reform incl. reimbursement 1a Market rule wrong incentives • Review of private specialist model levers • Overall lack of strong GP system • Privatization strategy not thought through • Review of overall reimbursement of public specialized care Patient flow

• Pockets of innovation in integrating care • Continue to improve integration model reserved. rights ll levers AA e.g. home care

Direct • Unclear purchasing strategy • Implement best practice purchasing

expenditure • Further improvements in drug spend • Launch drug spend savings in nervous Group, Inc. nsulting 1d oo levers management system drugs

• Weak central planning function • Re-design central planning & 1b Other • Very weak E-health performance mgmt C Boston by The 011 levers • Areas for improved preventive efforts • Develop E-health strategy 22 e.g. obesity • Launch aggressive obesity prevention • Limited Value Based Health Care focus • Continued focus on building registries © Copyright Iceland HCS-Final report-extended version.pptx 111 Proposal for next steps: Primary care & private care Primary focus is capital region

Proposed next step Timeline

• Further detail analysis of current situation • Initial analysis & international Nov-Dec – Further detail internal challenges in the examples Nov-Dec public pr imary care organiza tion throug h • MdldModel deve lopmen t&t & ga ther Jan-Mar interviews and analysis input from stakeholders – Analyze current patients flows by patient • Launch model April type for both private and public • Evaluation of model Jan 2012 (diagnos tics, age, frequency ) Team • Gather international examples of primary care reform ll rights reserved. rights ll • Steering Group consisting of representatives AA • Develop own proposal for future reform of from Ministry of Welfare, Landspítali and the primary care in the capital region primary care sector in the capital region nsulting Group, Inc. nsulting • Launch initiative • Working group: Strong project leader with oo unbiased view, team of key primary care • Evaluate results of model after 6 months people and selected specialist 011 by The Boston C Boston by The 011 • Investigate relevance of capital model for 22 other regions in Iceland Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 112 Example:Swedish: Swedish primary care reform "Vårdval"

• Even though patient choice already exist in most of the Patient choice counties its under this umbrella most of the ongoing reforms are undertaken. The aim is to improve the functionality of patient choice

• Redo the financing to follow the patients choice of GP Financing practice. This can either be done in a performance based system (fee -for-service) or a capitation based system

• Strengthen the gatekeeping function by incentivizing the ll rights reserved. rights ll RlRoleofGPf GP GPs to become first point of contact (through increasing AA opening hours, broadening the service and expertise offering) nsulting Group, Inc. nsulting • Increase nu mber of su ppliers throu gh more private oo Ownership provision 011 by The Boston C Boston by The 011 22 Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 113 Effects from Vårdval Stockholm: More visits at lower cost

Real cost for primarily care/inhabitant 28 % more visits has only increased sinking 1 % yearly total cost by 2.8 % Cost per inhabitant, prices fixed on 2010 level • GP visits have increased by 28 % 2006 – 2009 20002,000 • Total cost have increased by 2.8 % • Decreased cost per patient and GP visit • 37 new GP centers have opened, many of them 1,960 within low and middle income areas 1,950 19371,937 -104%1.04% • In 2006 the inhabitants in high income areas did the most GP visits but in 2009 it was instead the 1,919 inhabitants in low income areas • Patients with diseases demanding a lot of care

1,900 reserved. rights ll have increased their GP visits more than the AA 1,882 1,880 average citizen • Quality perceived by patients have increased • GP centers have increased their share of the total

1,850 Group, Inc. nsulting ppyrimary care visits and the ppyrimary care visits to oo ERs have decreased • Decreased prescription of antibiotics per GP visit • As before the reform, most resources are used in 1,800 low income areas but the differences between the C Boston by The 011 22 2006 2007 20082009 2010 areas have decreased Copyright © Copyright Source: Utvärdering Vårdval Stockholm 2010, Karolinska Institutets Folkhälsoakademi Iceland HCS-Final report-extended version.pptx 114 Appendix • Region deep-dive • VBHC Appendix • Region deep-dive • VBHC ll rights reserved. rights ll AA nsulting Group, Inc. nsulting oo 011 by The Boston C Boston by The 011 22 Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 116 Details on care provision by region Capital Health Region

Distribution of health care provision in Capital region Key facts

Hospital beds: 714 (654 LSH) Elderly care: • Nursing home beds (RAI): 1366 • Hospital beds used for nursing (RAI): 0 • Other long term nursing beds: 186 • Home care provision: ~275,000 visits, apacity ~4,100 individuals served C Emergency rooms: 1 (LSH) (+1 Laeknavaktin) Ambulances: 14 LSH Laeknavaktin

1 reserved. rights ll s

Surgeries : ~12,500 AA • Top 3: 19% muscles and bones, 15% digestive system and spleen, 12% female genitals Volume Deliveries: 3,420 nsulting Group, Inc. nsulting Regional hospital oo 2 Physicians (AWU): 592 Health Care Institution for visibility, nursing • Of whom practicing at Health care clinics Primary Care Clinic homes excluded in the (AWU): 125

map ources Nurses (AWU): 1,232 011 by The Boston C Boston by The 011 ss

Nursing home 22 Other medical personnel (AWU): 879 Re 1. Only including surgeries done in OR. 2. Public Health care resources

Note: Capacity and resource data from 2011, except no. of ambulances (2009). Volume data from 2010 © Copyright Source: Ministry of Welfare data market 2011, slide checked and confirmed by each institution Iceland HCS-Final report-extended version.pptx 117 Backup

Opening hours of primary care centers in Capital Region

Operating hours of Primary Care centers Distribution of health care AbArbaer, Efra-BidhltBreidholt, EftlitiEfstaleiti, Fjord ur, Glaesib aer, Midbaer, Mjodd , provision in Capital region Seltjarnarnes • Weekdays: 8:00 - 16:00. Afternoon reception : 16:00 - 18:00 all weekdays. Gardabaer • Weekdays: 8:00 - 17:00. Afternoon reception : 16:00 - 18:00 all weekdays. Grafarvogur • Weekdays: 8:00 - 17:00. Afternoon reception Monday-Thursday: 16:00 - 18:00. Hamraborg • Weekdays: 8:00 - 16:00. No afternoon reception from 10 June to 31 Aug lic

bb on Fridays. Other weekdays: 16:00 - 17:00. Hlidar Pu • Weekdays: kl. 8:00 - 17:00. Afternoon reception kl. 16:00 - 18:00, except Fridays 16:00 - 17:00. Hvammur ll rights reserved. rights ll

Laeknavaktin • Weekdays: 8:00 - 16:00. Afternoon reception 16:00 - 18:00 Monday- AA Thursday Mosfell • Weekdays: 8:00 - 17:00. Physician on call from 17.00 and on weekends Solvangur nsulting Group, Inc. nsulting

• Weekdays:8:00: 8:00 - 17:00. Evening reception: 16:00 - 20:00 all weekdays oo

Salahverfi • Weekdays: 8:00 - 16:00. Afternoon reception : 16:00 - 18:00 all weekdays. Private primary care provider Lágmúli ate 011 by The Boston C Boston by The 011 vv • Weekdays: 8:00 - 16:00. Afternoon reception 16:00 - 18:00 Monday- 22 HlthCHealth Care Clin ic Thursday Pri Laeknavaktin

Note: not counting the facilities offering adult day care • Weekdays: 17-23.30, weekends: 9.00-23.00 © Copyright Source: Ministry of Welfare data market 2011 Iceland HCS-Final report-extended version.pptx 118 Details on care provision by region Southwest Peninsula Health Region

Distribution of health care provision in Southwest region Key facts

Hospital beds: 33 Elderly care: Gardvangur • Nursing home beds (RAI): 71 • Hospital beds used for nursing (RAI): 431 Reykjanesbær • Other long term nursing beds: 0 • Home care provision: ~26,000 visits, ~340 apacity individuals served Hlévangur CC Primary care physicians on call: 2 Emergency rooms: 1 (Reykjanesbær) Ambulances: Grindavík 4 ll rights reserved. rights ll s

Surgeries: No surgeries AA Deliveries: 172 Volume nsulting Group, Inc. nsulting o Regional hospital o 2 Physicians (AWU): 21 Health Care Institution • Of whom practicing at Health care clinics Primary Care Clinic (AWU): 15

ources Nurses (AWU): 50 011 by The Boston C Boston by The 011 ss

Nursing home 22 Other medical personnel (AWU): 58 1. 18 beds in Reykjanesbaer and 25 in Grindavík (counts as healthcare facility) 2. Public Health care resources Re Note: Capacity and resource data from 2011, except no. of ambulances (2009). Volume data from 2010

Primary care also available in Health Care Institutions and Regional Hospitals © Copyright Source: Ministry of Welfare data market 2011, slide checked and confirmed by each institution Iceland HCS-Final report-extended version.pptx 119 Details on care provision by region Northern Health Region

Distribution of health care provision in Northern region Key facts

Hospital beds: 152 (131 FSA) Kópasker Þórshöfn Elderly care: Siglufjörður • Nursing home beds (RAI): 252 Ólafsfjörður Húsavik • Hospital beds used for nursing (RAI): 108 Skagaströnd • Other long term nursing beds: 98 Grenivík • Home care provision: ~17,400 visits, ~450 Dalvík apacity individuals served CC Akureyri Primary care physicians on call: 8 Sauðárkrókur Blönduós Emergency rooms: 1 (Akureyri) Ambulances: 18 ll rights reserved. rights ll s

Surgeries: ~4,400 (4,300 in FSA) AA • Top 3: 22% muscles and bones, 19% other 1, 9% female genitals Deliveries: 515 Volume nsulting Group, Inc. nsulting o Regional hospital o Physicians (AWU): 88 Health Care Institution • Of whom practicing at Health care clinics Primary Care Clinic (AWU): 29 Nurses (AWU):

sources 220 011 by The Boston C Boston by The 011

Nursing home 22 ee Other medical personnel (AWU): 210 R 1. Coded as Z: General qualifiers pertaining to all other chapters Note: Capacity and resource data from 2011, except no. of ambulances (2009). Volume data from 2010

Primary care also available in Health Care Institutions and Regional Hospitals © Copyright Source: Ministry of Welfare data market 2011, slide checked and confirmed by each institution Iceland HCS-Final report-extended version.pptx 120 Details on care provision by region Eastern Health Region

Distribution of health care provision in Eastern region Key facts

Hospital beds: 27 Elderly care: • Nursing home beds (RAI): 32 Vopnafjördur • Hospital beds used for nursing (RAI): 582 • Other long term nursing beds: 27 • Home care provision: ~5,700 visits, ~310 apacity individuals served CC SdifjödSeydisfjördur Primary care physicians on call: 10 Egilsstadir Emergency rooms: 1 (Neskaupsstaður) Neskaupstadur Ambulances: 11 Eskifjördur ll rights reserved. rights ll s

Reyyjdarfjördur Surgeries: ~600 AA Fáskrúdsfjördur • Top 3: 42% scopes, 27% other 3, 13% digestive system and spleen Volume Djúpivogur Deliveries: 87

Regional hospital Group, Inc. nsulting o o

Health Care Institution 1 Physicians (AWU): 17 Primary Care Clinic • Of whom practicing at Health care clinics (AWU): 11

Nursing home ources Nurses (AWU): 46 011 by The Boston C Boston by The 011 ss 1. Public Health care resources. 2. Including 3 beds in Egilsstaðir, 24 in Neskaupstaður, Other medical personnel (AWU): 57 22 18 in Seyðisfjörður and 11 in Vopnafjörður. 3. 'Procedures coded as W: Procedures affecting several organ system. Re Note: Capacity and resource data from 2011, except no. of ambulances (2009). Volume data from 2010

Primary care also available in Health Care Institutions and Regional Hospitals © Copyright Source: Ministry of Welfare data market 2011, slide checked and confirmed by each institution Iceland HCS-Final report-extended version.pptx 121 Details on care provision by region Southern Health Region

Distribution of health care provision in Southern region Key facts

Hospital beds: 48 Elderly care: • Nursing home beds (RAI): 175 • Hospital beds used for nursing (RAI): 69 • Other long term nursing beds: 129 Höfn • Home care provision: ~17,400 visits, ~450 Laugarás apacity individuals serviced

Hveragerdi CC Primary care physicians on call: 9 Selfoss Emergency rooms: 2 (Selfoss, Vestmannaeyar) Þorlákshöfn Kirkjubaerjarklaustur Hella Ambulances: 11 Eyrarbakki Hvolsvöllur

Stokkseyri reserved. rights ll s

Surgeries: ~680 AA Vik i Mýrdal • Top 3: 22% ENT, 19% teeth, jaw and mouth, 15% female genitals Vestmannaeyar Deliveries: 136 Volume nsulting Group, Inc. nsulting o Regional hospital o Physicians (AWU): 34 Health Care Institution • Of whom practicing at Health care clinics Primary Care Clinic (AWU): 28 Nurses (AWU):

sources 70 011 by The Boston C Boston by The 011

Nursing home 22 ee Other medical personnel (AWU): 140 R

Note: Capacity and resource data from 2011, except no. of ambulances (2009). Volume data from 2010

Primary care also available in Health Care Institutions and Regional Hospitals © Copyright Source: Ministry of Welfare data market 2011, slide checked and confirmed by each institution Iceland HCS-Final report-extended version.pptx 122 Details on care provision by region Westfjords Health Region

Distribution of health care provision in Westfjords region Key facts

Hospital beds: 18 Elderly care: • Nursing home beds (RAI): 0 • Hospital beds used for nursing (RAI): 491 Bolungarvík • Other long term nursing beds: 0 • Home care provision: ~24,300 visits apacity Primary care physicians on call: 4 CC Emergency rooms: 1 (Ísafjörður) Ísafjörður Ambulances: 6

Patreksfjörður

1 reserved. rights ll s

Surgeries: n/a AA Deliveries: 55 Volume nsulting Group, Inc. nsulting o Regional hospital o Physicians (AWU): 8 Health Care Institution • Of whom practicing at Health care clinics Primary Care Clinic (AWU): 3 Nurses (AWU):

sources 24 011 by The Boston C Boston by The 011

Nursing home 22 ee Other medical personnel (AWU): 38

1. Including 11 beds in Patreksfjörður, 25 beds in Ísafjörður and 13 in Bolungarvík. 2. Due to system R change in 2010 and lack of uniform data collection, no data on surgeries for 2010 could be provided Note: Capacity and resource data from 2011, except no. of ambulances (2009). Volume data from 2010

Primary care also available in Health Care Institutions and Regional Hospitals © Copyright Source: Ministry of Welfare data market 2011, slide checked and confirmed by each institution Iceland HCS-Final report-extended version.pptx 123 Appendix • Region deep-dive • VBHC ll rights reserved. rights ll AA nsulting Group, Inc. nsulting oo 011 by The Boston C Boston by The 011 22 Copyright © Copyright

Iceland HCS-Final report-extended version.pptx 124 Analysis of Iceland's VBHC maturity level identify lack of data collection and sophistication of use

Average on national enablers for outcome data collection but scores low on data richness and sophistication of use A countries maturity level guides areas for national focus

reimbursement, accreditation oo 152 3 4 National enablers Data is currently primarily used in research applications • Low level of reporting to clinicians, public and payers • IceBio registry is an exception with a platform used as a clinical

tool and data shared with clinicians on a monthly basis C Boston by The 011 22

engagement is not included in this overall assessment. Singapore data is desk base research only interviews scheduled for 26th August -2nd September , Austria Data is still not finalised © Copyright Source: BCG interviews and analysis 2011 Iceland HCS-Final report-extended version.pptx 125 National enablers scores Iceland score high on many of the national enablers but a strategic direction is missing

Immature Mature Criteria Level 1 Level 2 Level 3 Level 4 Level 5

Do clinicians support collection and use of outcomes data at a national level?

Are outcomes results compared, reported and made available to the public in useful form?

To what extent is health care quality or outcomes part of the public discourse (e.g., in popular press, politician announcements, public demand for comparison information)?

Is there an established principle of using performance data to determine reimbursements? Does the government invest adequately in collectcollectinging and using health outcomes data or do other groups provide this funding?

Is there strategic direction for outcomes based measurements from governments?

To what extent has IT been adopted by clinicians and is a part of the clinical culture reserved. rights ll (including electronic health records)? AA

To what extent does interoperability exist between systems nationally?

Do national standards exist for terminology and outcome measurement and are these applied? nsulting Group, Inc. nsulting oo

Are there national standards or frameworks for consent?

Does a unique personal identifier exist and is this used across the health system? 011 by The Boston C Boston by The 011 Can th e cos t of ft treat ment s b e li likdtnked to each cli liilnical event record ddithed in the repos itory ? 22

Iceland USA Sweden OECD

Note: National foundation scores, 1 (all) © Copyright Source: BCG analysis Iceland HCS-Final report-extended version.pptx 126 There are registries for six conditions within BCG framework

Score Score Disease Registry Description Data Richness Application

1 • AdAdministeredministered by HeartHeart AssociationAssociation AtAcute myocardi diliftial infarction 3.0 141.4 • Sprung out of OECD large MONICA research project 2 • Icelandic Cancer Registry nationally funded Breast cancer 3.1 1.4 • Initiated 1954 by the Icelandic Cancer Society

3 • Icelandic Cancer Registry nationally funded Digestive tract cancers 313.1 1.3 • Initi at ed 1954 by the Ice lan dic Cancer Soc ie ty 4 Chronic renal failure • Local registry at Landspítali if or patients receiving 2.9 1.2 dialysis 5 • No registry Stroke N/a N/a • A reggyistry was started 1996-1997 but is not in use 6 Knee arthroplasty • Local registry at Landspítali • Available only in paper form N/a N/a 7 Hip arthroplasty • Local registry at Landspítali • Available only in paper form N/a N/a ll rights reserved. rights ll AA 8 Cataract • No registry • A list of patients which have undergone surgery is kept N/a N/a

9 Diabetes • No • Data protection authority declined Landspítali application N/a N/a nsulting Group, Inc. nsulting oo 10 Leukemia & lymphoma • IldiCIcelandic Cancer RitRegistry na tillfddtionally funded • Initiated 1954 run by the Icelandic Cancer Society 3.1 1 11 • IceSpine initiated 2011, funded by Landspítali Spine surgery 3.7 1 • Platform purchased from SweSpine, 12 011 by The Boston C Boston by The 011 Schizophrenia • Initiatives have been made at Landspítali but not N/a N/a 22 formalized Score description 1 5 1 5

Incidence & mortality Comprehensive Only Extensive © Copyright Source: Registry owner interviews, publications, BCG analysis only, limited process data collected academic usage of data Iceland HCS-Final report-extended version.pptx measures application 127 Best Practice: The IceBio registry Interactive and used for learning and clinical development

Registration of Rheumatoid Arthritis patients Score receiving biologic drugs • Register complications, re- • Only patients seeing an rheumatologist are included in the High operations, care induced illness etc. sophistication registry • Capture patient perspective at each 4 of data appointment captured • Comprehensive process measures stored

Registry just • National coverage of 100% of started patients on biologic drugs treated by 2 to be an chness populated

Based on DanBio registry in Denmark Data ri Strategy • Manually during consultation data collection • All data according to standards 3

& validation reserved. rights ll • Started 2002 with platform from DanBio however data from AA previous paper registry has been inferred and tracking of patients since 1998 is possible • Initiated and governed by leading • Interactive tool where patients before consultation fill out Strong clinical 4 engagement clinicians form about their perceived health • Funded by Landspítali nsulting Group, Inc. nsulting

• Lab data is inferred and a Stas 28 disease score is oo calculated and tracked over time Average: 3.7 • During the consultation the patient and doctor discus Data primarily • Monthly performance reporting to development of the score and decide on treatment plan used in clinicians where potential learning's • Patients and doctors are very satisfied with the tool as it clinical setting are discussed

ication 1 011 by The Boston C Boston by The 011 standardize care and has pppproved to improve patient ll not influencing • Physicians see their results but no 22 compliance policy or public reporting

App reimbursement • Interest from medical agency but no yet formal input to reimbursement, Copyright © Copyright Source: Interviews, BCG analysis guidelines etc yet Iceland HCS-Final report-extended version.pptx 128 1 Quality of myocardial infarction treatment in Iceland

Signifi can tly improve d surv iva l Lowest post 30 days mortality and incidence rate 1981-2006 Hypothesis on quality driver

Strong public, clinical and Spain 8,1 CHD mortality rate per 100,000 governmental engagement to improve Czech Republic 7,6 Korea 666,6 400 care Slovak Republic 6,6 1981 • Icelandic heart association founded Luxembourg (2006) 6,3 1964 U.K 6,1 Netherlands (2005) 5,3 300 – Active in a number of large U.S 5,1 international research project Ireland 5,1 and developed a "risk calculator" OECD 494,9 assessing individual risks of Finland 4,9 200 Poland 4,5 coronary disease Austria 4,5 Canada 4,2 1981 Preventive measures and increased Italy 4,0 100 Women awareness reduced risk factors across

New Zeeland 3,3 reserved. rights ll

population AA Norway 323,2 2006 2006 Men Denmark 2,9 • Study 2010 concluded 75% of Sweden 2,9 0 mortality decrease was attributable to Iceland 2,1 0 700600500400300200100 reductions in cardiovascular risk 0 246810 factors (total serum cholesterol, MI incidence rate (fatal and non-fatal) per 100,000 smoking and blood pressure levels) nsulting Group, Inc. nsulting • Rema in ing 25% was a ttr ibu te d to oo treatments of individuals including secondary prevention and heart failure treatment Registry data • Yes-administered by the Icelandic Incidence • Incidence: ~200 cases /year availability Heart Association 011 by The Boston C Boston by The 011

• Limited sophistication of data 22 Copyright © Copyright Source: OECD, "Analysing the Large Decline in Coronary Heart Disease Mortality in the Icelandic Population Aged 25-74 between the Years 1981 and 2006", Aspelund et al 2010 Iceland HCS-Final report-extended version.pptx 129 2 Quality of breast cancer treatment in Iceland

IldtOECDIceland top OECD count tiries on Signifi can tly improve d surv iva l survival (age adj) since 70s (not age adj) Hypothesis on quality driver

"No waiting time" policy for United States 90,5 5 year survival rate Iceland 88,3 cancer diagnosis and treatment 100 Canada 87,1 • No waiting time for specialist Japan 86,1 80 appointment Sweden 86,1 78 80 Finland 86,0 70 • Prioritized group for treatment Netherlands 85,2 and no delay between France 82,6 60 diagnosis and treatment Denmark 82,4 51 New Zealand 82,1 Norway 81,9 Screening process in place 40 OECD14 81,2 since1987 United Kingdom 78,5

Ireland 76,2 reserved. rights ll 20 Females AA Korea 75,5 Czech Republic 75,4 Poland 61,6 0 0 50 100 1966-1975 1976-1985 1986-1996 1996-2005 nsulting Group, Inc. nsulting oo

• Prevalence: 2434 patients Registry data Prevalence/ • Yes- Cancer registry since 1954 (0.78% of population) availability • Limited sophistication of data Incidence • Incidence: ~600 cases /year C Boston by The 011 • IidIncidence an d surv iltival rate pr imar ily 22 Copyright © Copyright Source: OECD statistics, Icelandic cancer registry Iceland HCS-Final report-extended version.pptx 130 3 Quality of digestive tract cancer treatment in Iceland

IldtOECDIceland top OECD count tiries on 5 Signifi can tly improve d surv iva l year survival (age adj) since 70s (not age adj) Hypothesis on quality driver

"No waiting time" policy for Japan 67,3 5 year survival rate (%) Iceland 66,1 cancer diagnosis and treatment 100 U.S 65,5 • No waiting time for specialist Finland 62,0 appointment New Zealand 60,9 80 Canada 60,7 • Prioritized group for treatment Sweden 59,8 60 and no delay between Korea 58,1 60 diagnosis and treatment Netherlands 58,1 52 57 Norway 57,8 40 4242 OECD 57,3 40 50 France 57,1 Denmark 54,4 25

Ireland 52,3 reserved. rights ll 20 Females AA U.K 51,6 Males Poland 46,8 Czech Republic 38,1 0 0 80604020 1966-1975 1976-1985 1986-1996 1996-2005 nsulting Group, Inc. nsulting oo

• Prevalence: 695 patients Registry data Prevalence/ • Yes- Cancer registry since 1954 (0.23% of population) availability • Limited sophistication of data Incidence • Incidence: ~41 cases /year C Boston by The 011 22 Copyright © Copyright Source: OECD statistics, Icelandic cancer registry Iceland HCS-Final report-extended version.pptx 131 9 Quality of diabetes treatment in Iceland

High number of acute admissions1 Large year-to-year difference and mortalit y Positive trend for short term complications Hy pothesis on lo w q ualit y

Acute complications admission/100,000 Lack of awareness of poor results Admissions per 100,000 (adj for prevalence) ´08 • Different divisions appear to measure U.K 14,2 quality in different ways and often Ireland 13,5 30 appear to have different views on Iceland 10,0 their performance Norway 8,9 • A sense of urgency is missing as the U.S 8,9 performance appears fine if not Finland 8,7 20 adjusted for the low prevalence Sweden 5,8 • Lack of agreement on what to Denmark 575,7 measure OECD 5,3 • Landspítali measure retina Spain 4,4 complications with good results Canada 4,0 10 Korea 3,4 As the disease is treated and managed

Italy 3,0 reserved. rights ll

across the country a national approach AA Germany 2,5 for quality evaluation is required N.Z 0,3 0 Mortality per 100, 000 '03'04'05 '06 '07 '08 '09 (adj for prevalence) '08 Acute complications admissions

Denmark 2,9 Group, Inc. nsulting Long-term complications oo SdSweden 222,2 Iceland 2,0 Uncontrolled diabetes Norway 1,8 Finland 1,4 Lower extremity amputation

• Prevalence: 1.6% of Registry data • Child registry only 011 by The Boston C Boston by The 011

Prevalence population 22 availability • Attempts made by lead physician • OECD average: 6.3% Very low

1. All data is indexed and adjusted for prevalence © Copyright Source:OECD, Nordic statistics 2008 Iceland HCS-Final report-extended version.pptx 132 Registry Example: The Icelandic Cancer Registry High coverage but low sophistication of data

Registration of diagnosed cancer patients Score

• Register diagnosis and mortality Low sophistication • Does not capture patient perspective of data • Few process measures included 1 captured • No risk adjusters in registry • Treating physician recorded

High coverage • High coverage ~100% & long history • Data collected 50 years 5 • Trending of specific patients possible chness Good strategy • Mainly electronic data collection Oldest registry initiated 1954 primarily for data • Fully standardized

Data ri 4 tracking incidence & mortality collection • Data is regularly cross checked and &validation validated but not in real time ll rights reserved. rights ll

• Half of the budget is national funding and the other half is AA from the Cancer Society (~40 M ISK in total) • Little is required from clinicians • Run with 6 FTE Strong clinical 5 • Actively supported and used for • Register data from pathology and receives information engagement publications from all death certificates mentioning malignant disease

Average: 3.1 Group, Inc. nsulting

from Statistics Iceland oo • Ongoing discussion with Swedish counterpart to leverage INCA platform where parameters including patient Data used • National data published yearly experience and adverse events is recorded mainly for • ~20 publications per year with • Expected to pilot INCA for lung cancer under 2012 research and international focus 1 plication • Mortalityyy tracked for +40 years and notable imp rovements international • No imppgact on guidelines/ C Boston by The 011 22 pp comparison

Iceland HCS-Final report-extended version.pptx 133 Registry Example: IceSpine Sophisticated platform but lack data as it was initiated 2011

Registration of spine surgery Score

• Register complications, re- High operations, care induced illness etc. sophistication • Will capture patient perspective 4 of data • Key process measures stored captured • Risk adjusters including smoking, type of work captured

Registry just • Low penetration this year but 100% started expected 2012 2 to be • Trending of specific patients will be chness populated possible Registry based on Swedish platform initiated

2011 Data ri Strategy • Manually by operating surgeons data collection • All data according to standards 3

& validation • No real time input controls reserved. rights ll • Platform purchased from SweSpine with funding from AA Landspítali • Fully operative Jan 1st 2012 • Initiated by leading clinicians • Intended as a national registry but currently only Strong clinical • Governed by orthopedics department 4 engagement Landspítali perform surgeries • Funded by Landspítali nsulting Group, Inc. nsulting

– If Akureri would resume spine surgical practice the oo platform would be extended Average: 3.7

• Intended to be used for outcome No data yet comparison with Nordic's particularly

ication thus no usage 1 011 by The Boston C Boston by The 011 ll

Sweden 22 of statistics • Individual physicians will be able to

Iceland HCS-Final report-extended version.pptx 134