Zakos DrossopoulosClient Account Manager

Munich Reinsurance Company( Germany )

Saturday, 4 September 2010

Cost Containment in Ηealth business–Public & Private Partnerships (PPPs)

Zakos Drossopoulos

•Introduction: public-private partnerships

•Abu Dhabi: DAMAN’s set-up and structure

•Abu Dhabi: DAMAN – Review and outlook

•Denia (Spain) project overview

•Denia (Spain) project model

•Conclusion

Content

private or public systems?

Aging society and changing

morbidity; e.g. “prosperity diseases”

Scientific and technical progress

Supplier-induced demand, Moral

hazard etc.

Dependency on economic cycles:

public (tax-based and income-

dependent) sources of finance face

basic questioning

More and more private sources fill

the gaps of public systems

Concepts of public / private

partnerships to finance healthcare

expenses

health care expenditures

Existing systems are not prepared

Inflationary spiral or

cost control / rationing

The main question: financing health care expenditures

Healthcare system in Abu Dhabi:DAMAN’s set-up and structure

Public-Private Partnerships Dr.Franz Benstetter

United Arab Emirates – Daman project

Abu Dhabi – the (hi)story behind

Abu Dhabi‘s previous healthcare system

Free healthcare for nationals Heavily subsidized healthcare for expats

Challenges regarding access, transparency, quality, costs and efficiency

September 2005 - Law: Compulsory health insurance for expatsSet-up of DAMAN

Guaranteed sustainability of the healthcare system Reduction of costs, Increase of quality of care

Access to Healthcare

Ensure affordableaccess to essential healthcare for all people living and working in the Emirate of Abu Dhabi

Quality of Healthcare

Improve the quality ofhealthcare across the Emirate of Abu Dhabi byproviding a fair and reliable funding system

Subsidies

Gradually reduce the need for governmentsubsidies over thecoming years

Abu Dhabi – The objectives of the health insurance law

Partnering with private insurer (Munich Re) allowed for access to management team and existing systems to accomplish fast transfer of skills

Management company (and management) can properly be incentivized in private, insurance-based system to assist in fast build-up of coverage

Money follows patients (as it does in social insurance based systems) and serves as proper incentive to providers

Competition keeps monopolistic tendencies under control

Source: HAAD

Abu Dhabi’s answers to healthcare’s top issues

Basic Product

< 4,000 AED/month

Insurer DAMAN

Subsidized, standard policy of 600 AED p.a.

Enhanced Product

≥ 4,000 AED/month

27 insurers

Risk-based pricing (individual and group policies)

Source: DAMAN, March 2008

“Risk” privatized (Daman and reinsurer Munich Re)

Governmental support (claims cap and subsidization)

Abu Dhabi health insurance products

DAMAN

* Future wise new “Insurance Authority”

100% owned

by Munich Re

DAMAN – the structure around

ProductInformation

systems

Customer service

Data analysis Network management

OperationsUnderwriting

Medicalmanagement

Actuaryservices

Product design is key that has interactions with all functions

Preparation Set-up Phase 1 Phase 2 Phase 3

“Rollout” “Nationals”

Feb. – Aug. 2005Selection ofinternational partner (tender):several internationalcompaniesapproached

Nov. 2005Start of project inAbu Dhabi

Dec. 2005Signing of contractsbetween Damanand Munich Re

1st May 2006Start pilot phase

1st July 2006All „expats“ ofgovernment andcompanies with>1,000 employees

1st January 2007Health insurancecompulsory for all “Expats“

2008Compulsory health insurance for Nationals. Risk carrier government;

DAMAN TPA.

Source: DAMAN

DAMAN’s development in a dynamic market

Source: DAMAN

Development of DAMAN Membership

6.849

303.872

714.433973.749

1.246.7081.654.932

April-091,760,615

0

250.000

500.000

750.000

1.000.000

1.250.000

1.500.000

1.750.000

2.000.000

Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09

Daman Membership (since July 2006)

DAMAN – review and outlook

Public-Private Partnerships Dr.Franz Benstetter

Spain – Denia project

BarcelonaMadrid

Valencia

Area of Area of Marina Marina

AltaAlta

Denia projectLocation

HEALTCARE NETWORK IN MARINA SALUD

• 1 Hospital in Denia• 12 Primary Healthcare centers

• 32 Part time medical offices (Primary healthcare)

• 3 Outpatient especialities centers

Mixed

Providing Benefits under

risk arrangements

Individual

GroupsLow

growth

Private Financial Initiative

Probably High

growth opportunit

y

Insurers

Private Spanish Private Spanish Health MarketsHealth Markets11

FunctionsFunctions Client typesClient typesMarket Market

dynamicsdynamics

New way

Public Public financingfinancing

28,6%28,6%

Private Private financingfinancing

71,4%71,4%

Insured:1.942.686Premiums:1.181,6 M €

Insured:5.969.300 Premiums:3.412,4 M €

1.- 2006 Health Spanish insurance markets study. ICEA April, 2007.

Our strategic vision of the Spanish healthcare markets

>15 years contract for 158.000 people based on an per capita insurance contract.

>Capital growth indexed to public health cost within the Regional Government of Valencia.

A public health insurance contract

… … through:through:

To achieve:To achieve:

> Construction of a new hospital in Denia: 285 beds and 42.500 m2.

> To build two news ambulatory center in Calpe and Denia.

Investment to improve public health services

• 12 Primary care centres• 32 ambulatory point of care• New Denia Hospital

Management of all public health services

Definition of the Denia project

Basic Characteristics: All of the management of health and auxiliary services are

under the control of one private health care operator, to whom all the

responsibility for service provision is passed to.

Applicable areas, 2009: in four Health areas of the Valencia Community (Denia,

Alzira, Torrevieja and Manises), around 720.000 hab..

Mixed Concessionary Administration which brings together:

• A contract of health care coverage guarantee to all the population assigned to

the concessionaire through the Population Information System.

• Investment in the construction and equipping of all the assets as defined by

the Public administration as necessary for the provision of the health service.

• The management of integrated health care: Primary and Specialised Care in all

health areas.

• The integration of all the existing health care resources under the control of the

concessionaire: all the assigned personnel, speciality centres and health

centres.

Valencia model for the Concession of Integrated Health Care. Definition (I).

Public Administration payment system

1. Capitation insurance premium for the assigned population.

2. Compensation Balance:

• payments for service provision to the non-protected part of the population

• charges for provision of services to the protected population in public heath services outside of the health area.

• The payment system (only for specialised attention) is decided by virtue of prices set by the Health Ministry and with a correction coefficient of 0.85.

3. 30% of the savings generated less than the average of the Valencia Community in pharmaceuticals.

Other income : The invoicing of non-protected clients or for services not included in the SNS will be an additional income, the same as those from non-health services.

Duration of the concession: 15 years, extendable for 5 more years.

Valencia model for the Concession of Integrated Health Care. Definition (II).

Public-Private Partnering in Health Care: A strong partner with know-how is prerequisite for success

Lessons learnt from UAE market and other markets assure success: Market challenges consequences countermeasures

Gradual introduction of effective competition is key for health care access, quality of care and efficiency

Daman and Denia experiences: a role model for other markets

Conclusions

Thank you very much for your attention.

(slides developed by Dr. Franz Benstetter)