Primary health care

In 1992 the district general practitioner's system was replaced with the family practitioner?s service, with two main objectives. One of the objectives was the change the relationship between the physician and patient with the introduction of the option to choose the family practitioner freely, and linking the remuneration of family practitioner to the number of patients on their lists. From 1992 residents of other districts could also apply into the practice of a particular family practitioner, while a patient living in the district of a family practitioner may choose the family practitioner of another district too. As a result of this change, family practitioners have to compete for patients and for retaining their patients, and trust and satisfaction of patients with medical activities have become more and more important. Although free selection of the family practitioner can practically not take place in sparsely inhabited rural areas, the impact for the majority of the country's population was clearly positive. The other main objective was to make family practitioners responsible for what is known as gatekeeper functions, as they became the first meeting point between the patient and the health care system, providing as much definitive care as possible, enabling family practitioners (in agreement with the patient) to decide on the use of the specialist services, thus making patient pathways more rational. For the time being the family practitioners' system cannot effectively fulfil its gatekeeper functions. Practices which have joined the managed health care model experiment are exceptions from this general rule (see below).

Social insurance funds and their managers

In Hungary social insurance - consisting of health and pension insurance - was part of the central budget until 1988. On 1 January 1989, a Social Insurance Fund was established separately from the central budget, together with its manager, the National Social Insurance Fund Administration. In 1993 the Social Insurance Fund split into Pension Insurance Fund and Health Insurance Fund and the National Social Insurance Fund Administration was divided into National Pension Insurance General Directorate and National Health Insurance Fund Administration. The Pension Insurance Fund and Health Insurance Fund are supervised by the Government, and the National Pension Insurance General Directorate and National Health Insurance Fund Administration are managed by the Government through the Minister of Health, Social and Family Affairs (line minister).

Managed care pilot program

The health reform aims at the improvement of primary health care to a considerable extent. One of the potential ways to do so is tested within the framework of the managed care model experiment (Hungarian abbreviation: IBM). The objective of IBM is to provide care of a higher standard with more effective use of available resources. The model experiment started in 1999 on the basis of a Parliament decision adopted at the end of 1998, stating that the National Health Insurance Fund may enter into financing contracts, for maximum 200,000 population, with health care providers (managers of care), which agree to provide the full range of health services to the population concerned free of charge or, against co-payment in the statutory health insurance system, and to organise services that are not provided by them. In 2001 the limit number was extended to 500,000. In 2002, 7 care managers served on average 476,053 individuals, with 298 family practitioner practices participating in the pilot. In 2002, in total HUF 2,579.4 million savings were paid out to the care managers, of which HUF 1,949.5 million was paid out from the curative-preventive fund. On average savings amounted to 10%.

Seeing the results, the limit was increased to 1 million population in 2003, and to 2 million population in 2004.

Outpatient care

The middle level of the health care system is outpatient specialist care. It has two types: general and more specialised outpatient care. General outpatient care must be provided for patients near their place of residence, so that they can have access to it without endangering their health, and using public transport. In the framework of general outpatient care the patient, upon family practitioner referral (or referral by another physician providing continuing care to the patient), or upon patient self-referral, receives single or occasional specialist health care, involving continuous specialist care in the case of chronic diseases not requiring inpatient care. Special outpatient care is a health service organised for the treatment of diseases, that require special expertise or special financial, material and professional skills (special diagnostic background).

One of the most important objectives of the health reform is to reduce the flow of patients to hospitals through definitive services provided in primary care, and specialist outpatient care. However, the increase of performance of outpatient care has not reduced the use of inpatient care, which cannot be explained with changes in the age composition of the population, with the reasons being in the special features of the financing system. Not only hospitals operate ambulatory units, but facilities qualifying as outpatient institutions can also provide inpatient care services, or one-day surgery interventions.
Home care, which involves skilled nursing care by the physician's order in the patient's home or place of residence, has been financed by the National Health Insurance Fund since 1996, and it has generally spread since 1998-99. The health policy objective of its development is to replace much more expensive hospital care.

Inpatient care

In Hungary there are three levels of inpatient care. The lowest level of hospital care includes municipal hospitals with basic departments, available for everyone within a 25-30 km range from their place of residence. The next level consists of county hospitals which, together with several Budapest hospitals, operate as regional centres for some disciplines. The national institutes and university clinical departments have both regional and national competences. The national institutes of health are responsible for curative, methodology and health policy tasks. The national medical institutes and university clinical departments are tertiary care facilities in their special areas.

The most important structural problem of the Hungarian health care system is its hospital centred structure: very often and without any specific reason, care often takes places at the highest and most costly level of the whole system instead of primary health care and/or outpatient care, as if bypassing them. Apart from their costly nature, the hospitals' uneven population geographic location is also a source of problems. The most frequently, but not exclusively, mentioned problem is the concentration of hospital capacities in Budapest: nearly 40% of all hospital beds are situated in Budapest, with its 2-million population, which is less than one-fifth of the total population of the country. The absorbing capacity of Budapest and the fact that national tertiary-care inpatient institutions are situated in Budapest explain the high volume of hospital beds exceeding the proportion of population, but the figures are definitely excessive.

Inpatient specialist care institutions: owners and capacities

Hospitals are primary owned by local governments, and secondly by the state, on behalf of which the Ministry exercises the ownership right over university clinical departments and national institutes. In Hungary a large number of hospitals are run by churches, foundations and private owners, although the bed volume in such hospitals is low.

In a European comparison, Hungary has relatively few but large hospitals, with an average number of 458 beds per hospital. In the 1960s and 1970s the level of development of the health system was measured with the number of hospital beds, in addition to the doctor/population ratio, both in the western and eastern parts of the world. However, in the 1980s in was recognised in the west but the number of beds is higher than the required number, and the surplus capacity only increased expenditure, therefore they began to reduce the number of hospital beds. Hungary started to follow the same trend only after the change of the political system, in the middle of the 1990s. Although one-fifth of the hospital beds have disappeared, the number of hospital beds is still higher than in several EU Member States (e.g. Austria, Germany).

Since the middle of the 1990s there was a staff reduction parallel with the reduction of the number of beds in inpatient care, which stopped in 2001-2002, followed by even a moderate increase. It was related to wage increases in 2002, which made it easier to fill part of the vacant jobs.

Ambulance service, patient transportation

According to the Health Act the state is responsible for providing and organising the conditions required for safe, standard and coordinated operation of an ambulance service, which is a task performed by the National Ambulance Service, which is a state task (Hungarian abbreviation: OMSZ) in the entire territory of the country. Beside OMSZ private organisations are active only in the transportation of patients for the time being. Apart from rescue activities and transportation of patients, OMSZ is also responsible for oxyology training (emergency medical care), national supervision of first aid, participation in responding to natural disasters and mass accidents. The National Ambulance Service is supervised by the Ministry. According to the norms of the European Union the ambulance services of Member States must be capable of reaching any point of their country within 15 minutes. This requirement is met on 90% of the territory of the EU, and on 78% of the territory of Hungary.

Provision of medicinal products and medical appliances

In 1990, medicinal products were supplied in Hungary by 1,449 state owned public retail pharmacies and 30 private retail pharmacies. As a result of liberalisation the number of market actors multiplied in a short time, and with the privatisation of wholesale pharmacy supply centres state and local government ownership finally disappeared. The second half of 1990s was characterised with concentration and market cleansing, and after the turn of the Millennium the wholesale of medicinal products is dominated by only a few key companies. State-owned pharmacies were privatised and, together with newly established pharmacies, their number stabilised around two thousand. In line with continental traditions, the operation of public retail pharmacies is based on personal rights, and the pharmacies can only be owned by pharmacists operating the pharmacy.

The number of registered medicinal products increased from 1,620 at the end of 1989 to 4,924 by the end of 2002. The number of medicinal products is higher than 8,000, and together with the homeopathic products the total number of Hungarian medicinal products is close to 20,000. Despite the significant increase, the choice is still behind the choice offered in developed countries, although all active substances required for medical treatment are available.

The market of medicinal products is strictly regulated even under the conditions of a market economy, following the practice of developed countries. The law states that medicinal products can only be sold by public retail pharmacies, and legal regulations determined retail price, and retail and wholesale margin, but the ex-manufacturer?s price of medicinal products are liberated. (The relevant legislation has been in effect since 1997 and 1999.) The price margin system is digressive: the more expensive a medical drug, the smaller the margin.

Pharmaceutical reimbursements represent the second largest item in the budget of the health care system (after inpatient care), for whose containment both the Ministry of Health and Ministry of Finance take serious efforts. Despite the efforts the nominal pharmaceutical expenses of the social insurance system increased five times during the last 10 years, while the co-payment by the population grew more than ten times in nominal terms. With the annual 6-8% increase of the pharmaceutical market seen all over the world, Hungary was characterised by an even greater expansion of the market because of the otherwise (at least partially) necessary increase of the number of medicinal products, and by the fact that drug treatment shifted more and more to new (generally more costly) products.

The pharmaceutical expenses of the National Health Insurance Fund have increased significantly in real terms since 2001. However, the revenues of pharmaceutical producers continuously increased, and in 2003 they increased their revenues by 20% in terms of drugs covered by the social insurance scheme. The corresponding figure in the EU Member States is 5-8%. In addition, the increase of the price of over-the-counter medicinal products, which is not influenced by the state, also generated a considerable amount of revenue for manufacturers, which was significantly above inflation both in 2002 and 2003. In Hungary the rate of pharmaceutical expenditure is 30.7% from the total health expenditure, while, according to WHO data, the respective rate is 14.3% in Germany, 15.5% in Austria, 21% in France, and it is only 24.5% even in the Czech Republic. Only Slovakia spent more than Hungary.

According to WHO data, a Hungarian individual spends USD 280 on medicinal products at purchasing power parity, while in the wealthier Netherlands an individual spends USD 266, in Denmark USD 223, in the UK USD 240, and in the Czech Republic USD 242. Pharmaceutical expenditures keep increasing, but the increase of drug reimbursement cannot be tolerated. It can no longer be maintained that we spent as much on drug reimbursement as much as on active inpatient care throughout the whole year. During the last two years, but even before there, was an unbelievable dynamic increase in the pharmaceutical market without any professional reasons. While this increase is 6-8% in EU Member States annually, it is 24-26% in Hungary. This difference cannot be explained with any professional reasons. The Hungarian pharmaceutical market prices contain a huge reserve for drug promotion, and we definitely would like to put a stop to that.

The 3-year agreement concluded in 2001 did not prevent the increase of pharmaceutical prices, or the drastic increase of the pharmaceutical expenditures of the social insurance scheme. It allowed for an automatic price increase for all products, irrespective of word market price changes. It allowed 20% higher prices for manufacturers in the case of products that were newly put on the market. Consequently, it was clearly unfavourable for contribution payers. In 2002 drug prices would have grown up by 6.3% according to the agreement, which would have been much higher than the rate of inflation, but the Government, which entered into office did not allow the manufacturers the promised price increase, therefore in 2003 only 3.4% increase in the price of medicinal products for the population took place.

Manufacturers reacted to the measures reducing the price increases by boosting sales promotions, aggressive promotion, significant increase of advertisements, influencing the prescription practices of physicians, i.e. shifting medicinal product consumption towards more and more expensive products.

The increase of the population's drug expenditures and the dynamic increase of the expenses of the Health Insurance Fund on drug reimbursement forced the Government to introduce effective and strict measures. Upon the initiative of the Ministry, the Government decided to "freeze" drug prices at a fifteen per cent lower level in the middle of March 2004. As of 1 April, the co-payment for about 10,000 products of the approximately 12,000 medicinal products marketed in Hungary decreased by 10-15%. As a result of this measure, 42 manufacturers signed agreements with the National Health Insurance Fund to pay 15% of their turnover into the Health Insurance Fund. In the case of manufacturers - approximately 120 - which refused to enter into an agreement with the Government, the Government exercised its option provided in the Act on Prices, and froze of the ex-manufacturer's prices at 85% of the price prevailing on 31 March for 180 days from 1 April. Consequently, the co-payment for medicinal products has dropped by 10-15%.
Subsequently, the Government took appropriate steps in order to increase the safety of the provision of pharmaceutical care. It provides interest-free loan to pharmacies to compensate them for the depreciation of stock arising from the price decrease. It is in the interest of the Government to agree with pharmaceutical manufacturers as soon as possible in order to keep population drug expenditure under control in the future. The negotiations are in progress in that respect.