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The Danish Health Care System

by Karsten Vrangbaek, University of Copenhagen

What is the role of government?

Universal access to health care is the underlying principle inscribed in Denmark’s Health Law, which sets out the government’s obligation to promote population health and prevent and treat illness, suffering, and functional limitations. Other core principles include ensuring: a high quality of care; easy and equal access to care; service integration; choice; transparency; access to information; and short waiting times for care. The law also assigns responsibility to regions and municipalities for delivering health services.

The national government sets the regulatory framework for health services and is in charge of general planning and supervision. Five administrative regions governed by democratically elected councils are responsible for the planning and delivery of specialized services and also have tasks related to specialized social care and coordination. The regions own, manage, and finance hospitals and finance the majority of services delivered by private general practitioners (GPs), office-based specialists, physiotherapists, dentists, and pharmacists. Municipalities are responsible for financing and delivering nursing home care, home nurses, health visitors, some dental services, school health services, home help, and treatment for drug and alcohol abuse. The municipalities are also responsible for general prevention and rehabilitation tasks; the regions are responsible for specialized rehabilitation.

Who is covered and how is insurance financed?

Publicly financed health care: Public expenditures in 2015 accounted for 84.2 percent of total health spending, representing 10.6 percent of GDP in 2015.1 It should be noted, however, that Danish cost reporting with regard to the “gray zone” of long-term care tends to include more activities (services) than reporting requirements do in many other member countries of the Organisation for Economic Co-operation and Development (OECD).2

All registered Danish residents are automatically entitled to publicly financed health care, which is largely free at the point of use. In principle, undocumented immigrants and visitors are not covered, but a voluntary, privately funded initiative by Danish doctors, supported by the Danish Red Cross and Danish Refugee Aid, provides this population with access to care.

Health care is financed mainly through a national health tax, set at 8 percent of taxable income. Revenues are allocated to regions and municipalities, mostly as block grants, with amounts adjusted for demographic and social differences; these grants finance 77 percent of regional activities. A minor portion of state funding for regional and municipal services is activity-based or tied to specific priority areas, usually defined in the annual economic agreements between the national government and the municipalities or regions. The remaining 20 percent of financing for regional services comes from municipal activity-based payments, which are financed through a combination of local taxes and block grants.

Private health insurance: Complementary voluntary insurance, purchased on an individual basis, covers statutory copayments—mainly for pharmaceuticals and dental care—and services not fully covered by the state (e.g., physiotherapy). Some 2.2 million Danes have such coverage, which is provided almost exclusively by the not-for-profit organization Danmark.3

In addition, nearly 1.5 million people hold supplementary insurance to gain expanded access to private providers.4 Policies are purchased mostly from among seven for-profit insurers and are provided mainly through private employers as a fringe benefit, although some public-sector employees are also covered. Students, pensioners, the unemployed, and others outside the job market are generally not covered by supplementary insurance.

Private expenditures accounted for nearly 16 percent of health care spending in 2013, and private insurance accounted for about 12 percent of total private expenditures.5

What is covered?

Services: Publicly financed health care covers all primary, specialist, hospital, and preventive care, as well as mental health and long-term care services. Dental services are fully covered for children under age 18. Outpatient prescription drugs, adult dental care, physiotherapy, and optometry services are subsidized. Home care and hospice care are organized and financed by the regions, as described below.

Decisions about levels of service and new medical treatments are made by the regions, within a framework of national laws, agreements, guidelines, and standards. Municipalities decide on the service level for most other welfare services, within a framework of national regulation. There is no defined benefit package for health care, but very few restrictions exist for treatments that are evidence-based and clinically proven.

Cost-sharing: There is no cost-sharing for hospital and primary care services. Cost-sharing is applied to dental care for those age 18 and older (coinsurance of 35% to 60% of total cost), outpatient prescriptions, and corrective lenses. Out-of-pocket payments represented 12.4 percent of total health expenditures in 2013,6 covering mostly outpatient drugs, corrective lenses, hearing aids, and doctor and dental care. Patients with outpatient drug expenses of more than DKK3,045 (USD406) per year receive the highest reimbursement rate—85 percent.7 Private specialists, hospitals, and dentists are free to set their own fees for patients not covered by public funding.

Safety net: There are cost-sharing caps of DKK22,115 (USD2,949)8 for children and DKK17,975 (USD2,397) for adults, and the municipalities provide means-tested social assistance to older people. Chronically ill people with high drug usage and costs can apply for full reimbursement above an annual out-of-pocket ceiling of DKK3,775 (USD503). The terminally ill also can apply for full coverage of prescriptions. Municipalities may grant financial assistance to individuals certified as otherwise unable to pay for needed medicine.

How is the delivery system organized and financed?

Primary care: Around 22 percent of all doctors work in general practice. Almost all GPs are self-employed and are paid by the regions via capitation (about 30% of income) and fee-for-service (70% of income). Rates are set through national agreements with doctors’ associations. Service-based fees are used as financial incentives to prioritize services. National fees are paid per consultation, whether for office visits, e-consults, or home visits. The average income for a GP was DKK1.1 million (USD146,000) in 2011. The average salary for senior hospital doctors was DKK1 million (USD133,000).9

The practice structure is gradually shifting from solo to group practices, typically consisting of two to four GPs and two to three nurses.10 The number of nurses employed has increased in the past decade; they are paid by the practice and have gradually assumed responsibility for such tasks as blood sampling and vaccination. Colocation of various clinicians is also on the rise, with GPs, physiotherapists, and office-based specialists operating out of the same facilities but under separate management.

Anyone who chooses the “group 1” coverage option (98% of the population), under which GPs act as gatekeepers for secondary care, is required to register with a GP. People can register with any available local GP. “Group 2” coverage provides free choice of GP and access to practicing specialists without referral, though a copayment is required. Under both groups, access to hospitals requires referral.

Outpatient specialist care: Outpatient specialist care is delivered through hospital-based ambulatory clinics (fully integrated and funded, as are other public hospital services) or by self-employed specialists in privately owned facilities. Private self-employed specialists can be full-time or part-time; full-timers may not have other full-time jobs. Part-timers may also work in the hospital sector, subject to codes of conduct, with their activity level monitored and their incomes limited by the regions. Practices may be colocated but normally do not operate in formal multispecialty groups.

Services from self-employed private providers are paid by the regions on a fee-for-service basis for referred public patients. Fees are set through negotiations with the regions and are based on regional priorities and resource assessments. Private specialists and hospitals also receive patients paying out-of-pocket or covered by voluntary insurance. Fees for patients without referral are set by the specialists. As a result of legislation introduced in 2013 guaranteeing patients the right to diagnostic assessment within 30 days of referral, private practitioners and hospitals may also receive patients referred from public-sector providers; they are paid for these services through specific agreements with the regions.

Patients have a choice of private outpatient specialists upon referral (group 1) or without referral (group 2).

Administrative mechanisms for direct patient payments to providers: There is no out-of-pocket payment for medical services for patients in group 1. Primary care doctors and specialists are paid directly by the regions when registering provision of services electronically. Group 2 patients make a copayment to supplement the automatic payment.11

After-hours care: After-hours care is organized by the regions, mainly by collective agreement with GPs. The Copenhagen region employs staff including specialized nurses, who do the initial screening of calls. GPs can volunteer to take on more or less responsibility within this scheme and receive a higher rate of payment for after-hours than for normal care. Capitation does not apply to after-hours care. The first line of contact is a regional telephone service, with a GP (or a nurse, in the Copenhagen region) deciding whether to refer the patient for a home visit or to an after-hours clinic, which is usually colocated with a hospital emergency department. Information on patient visits is sent routinely to GPs. There are walk-in emergency units in larger hospitals.

Hospitals: Approximately 97 percent of hospital beds are publicly owned. Regions decide on budgeting mechanisms, generally using a combination of fixed-budget and activity-based funding based on diagnosis-related groups (DRGs), with the fixed budget making up the bulk of the funding (although significant fluctuations occur among specialties and hospitals). DRG rates are calculated by the Ministry of Health at the national level, based on average costs. Activity-based funding is usually combined with target levels of activity and declining rates of payment to control expenditure. This strategy succeeded in increasing activity and productivity by an average of 5 percent annually from 2009 to 2011 and by 1.4 percent from 2011 to 2012.12 Bundled payments are not yet used extensively, but experiments are being carried out in all five regions. Hospital physicians are salaried and employed by regional hospitals, which bear the attendant costs, as are other health care professionals in hospitals and in most municipal health services. Patients can choose among public hospitals upon referral, and payment follows the patient to the receiving hospital if it is located in another region. Physicians at public hospitals are not allowed to see private patients within the hospital.

Mental health care: There is no cost-sharing for inpatient psychiatric care, but there is some cost-sharing (which may be covered by voluntary health insurance) for psychologists in private practice. Some GPs offer specific therapeutic consultations, but their main role is early detection and referral.

Social psychiatry and care are a responsibility of the municipalities, which can choose to contract with a combination of private and public service providers, but most providers are public and salaried. A right to diagnostic assessment for psychiatry within one month of referral was introduced in 2014. Treatment must be commenced within two months for less serious conditions and one month for more serious conditions. There are walk-in units for acute psychiatric care in all regions.

Long-term care: Responsibility for chronic care is shared between regional hospitals, general practitioners, and providers of municipal institutional and home-based services. Hospital-based ambulatory chronic care is financed in the same way as other hospital services. Long-term care outside of hospitals is needs-based and is organized and funded by municipalities. Most municipal long-term care is provided at home, in line with a policy initiative to enable people to remain at home as long as possible. Home nursing is fully funded after medical referral. Permanent home care is free of charge, while temporary home care can be subject to cost-sharing if the recipient’s income is above DKK143,300 (USD18,890) for single individuals and DKK215,300 (USD28,380) for couples.13 Municipalities are obliged to organize markets with open access for both public and private providers of home care (personal and practical care such as cleaning and shopping), and patients may choose between public or private providers. While this system functions relatively well in most municipalities, it has been difficult to attract private providers to remote areas. A considerable number of the elderly choose private providers. Some municipalities also have contracted with private institutions for institutional care of older people, but more than 90 percent of residential care institutions (nursing homes) remain public.

Providers are paid directly by the municipalities, and no cash benefits are paid to patients. Public providers are employed by the municipalities. For staying in residential care institutions, patients pay according to the facility’s costs, the size of the dwelling, and their income and savings; patients also are responsible for heating and electricity charges.14

Relatives of seriously ill individuals are allowed to take paid leaves of absence from their jobs for up to nine months. These can be incremental and may be divided among several relatives. A similar scheme exists for relatives of terminally ill patients who no longer receive treatment.

Hospices, which may be public or private, are organized by the regions and are funded by regions and municipalities. There is free choice of hospice upon referral.

diagram of health care system

What are the key entities for health system governance?

The general regulation, planning, and supervision of health services, including cost-control mechanisms, take place at the national level through the Parliament, the Ministry of Health, the Danish Health Authority, the Danish Medicines Agency, and the Danish Patient Safety Authority. The national authorities are responsible for the general supervision of health personnel and for development of quality management in line with national clinical guidelines and standards, usually in close collaboration with representatives from medical societies. These authorities also have important roles in planning the location of specialist services, approving regional hospital plans, and approving mandatory “health agreements” between regions and municipalities to coordinate service delivery. Health technology assessments are developed at the regional level, while the national authorities do comparative-effectiveness (productivity) studies that are published regularly, allowing regions and hospital managers to benchmark performance of individual hospital departments.15

The regions are in charge of defining and running hospital services and supervising and paying general practitioners and specialists. Municipalities have important roles in prevention, health promotion, and long-term care. Rates for general practitioners and practicing specialists are set through national agreements. Doctors’ associations negotiate with a collective body of the regions, also including state representatives. Regions may enter into additional regional agreements for specific services.

A national website (esundhed.dk) provides access to benchmarking data related to service, quality, and number of treatments performed. Users can compare performance at the hospital department level but not at the individual doctor level. The website also provides access to data from a number of Danish health registries (see below) and information about developments in pharmaceutical prices and reimbursement levels.16 Selected performance data are published annually by regional governments.17

Organized patient groups engage in policymaking at the national, regional, and municipal levels. The Danish Patient Safety Authority handles patient complaints and compensation claims, collects information about errors for systematic learning, and provides information about treatment abroad.

What are the major strategies to ensure quality of care?

The Danish Healthcare Quality Programme (DDKM), based on accreditation and a set of accreditation standards, was in operation at the hospital level through 2015.18 It is currently being replaced in hospitals with a new program featuring fewer standards and more emphasis on clinical and local dimensions (due in part to pressure from the medical profession). The DDKM continues to be rolled out in primary and municipal health care.

Quality data for a number of treatment areas are captured in clinical registries and made available online for institutions but not for individual health providers at the hospital level.19 General quality and efficiency data are published regularly in national-level reports as a follow-up to national budget agreements between the state and the regions.20 Patient experiences are collected through biannual national, regional, and local surveys.

The Danish Health Authority has laid out standard treatment pathways, with priorities including chronic disease prevention and follow-up interventions. Pathways for 34 cancers have been in place since 2008, covering nearly all cancer patients. The authority monitors pathways and the speed with which patients are diagnosed and treated. DDKM standards enforce the use of pathway programs and national clinical guidelines for all major disease types. The regions develop more specific practice guidelines for hospitals and other organizations, based on general national recommendations. There are no explicit national economic incentives tied to quality, but all five regions are experimenting with such schemes. In general, regions are obliged to take action in the event of poor results. The Danish Health Authority can step in if regions fail to live up to standards.

The Danish Patient Safety Authority was created in 2015 when the former Danish Health and Medicines Authority was split into separate agencies. It receives anonymized reports of accidents and near-accidents that health care professionals at all levels are obliged to submit to regional authorities, which evaluate the incidents. The information is published in an annually updated database, with the intention of fostering learning rather than sanctioning.

What is being done to reduce disparities?

Regular reports are published on variations in health and health care access.21 These have prompted the formulation of action plans, with initiatives including:

  • higher taxes on tobacco
  • targeted interventions to promote smoking cessation
  • prohibition of the sale of strong alcohol to young people
  • establishment of anti-alcohol policies in all educational institutions
  • further encouragement of municipal disease prevention activities (e.g., through increased municipal cofinancing of hospitals, thus creating economic incentives for municipalities to keep citizens healthy and out of the hospital)
  • improved psychiatric care
  • a mapping of health profiles in all municipalities, to be used as a tool for targeting municipal disease-prevention and health-promotion activities

The introduction of pathway descriptions (see above) is reported to have increased equity.

What is being done to promote delivery system integration and care coordination?

Current mandatory health agreements between the municipalities and regions on coordination of care address a number of topics related to admission and discharge from hospitals, rehabilitation, prevention, psychiatric care, information technology (IT) support systems, and formal progress targets. Agreements are formalized for municipal and regional councils at least once per four-year election term, generally take the form of shared standards for action in different phases of a patient’s journey within the system, and must be approved by the Danish Health Authority. The agreements are partially supported by IT systems with information that is shared among caregivers. The degree to which the regions and municipalities succeed in reaching the goals is measured by national indicators published online.22

Regions and municipalities have implemented various measures to promote care integration. Examples include the use of outreach teams from hospitals doing follow-up home visits; training programs for nursing and care staff; the establishment of municipal units located within hospitals to facilitate communication, particularly in regard to discharge; and the use of “general practitioner practice coordinators.” Many coordination initiatives place an emphasis on people with chronic care needs, multimorbidity, or frailty resulting from aging or mental health conditions.23 The municipalities are in charge of a range of services, including social care, elder care, and employment services; most are currently working on models for better integration of these services, such as through joint administration with shared budgets and formalized communication procedures.

Practices increasingly employ specialized nurses, and several municipalities and regions have set up joint multispecialty facilities, commonly called “health houses.” Models vary, but often include GPs, practicing specialists, and physiotherapists, among others. GPs in medical homes are encouraged to function as coordinators of care for patients and to develop a comprehensive view of their patients’ individual needs in terms of prevention and care. This principle is supported by the general national-level agreements between GPs and regions. GPs participate in various formal and informal network structures and are included in the health service agreements made between regions and municipalities to facilitate cooperation and improve patient pathways. All GPs use electronic information systems as a conduit for discharge letters, electronic referrals, and prescriptions.

What is the status of electronic health records?

Information technology (IT) is used at all levels of the health system as part of a national strategy supported by the National Agency for Health IT. Each region uses its own electronic patient record system for hospitals, with adherence to national standards for compatibility. Danish general practitioners were ranked first in an assessment of overall implementation of electronic health records in 2014.24 All citizens in Denmark have a unique electronic personal identifier, which is used in all public registries, including health databases. The government has implemented an electronic medical card containing encoded information about each patient’s prescriptions and medication use; this information is accessible by the patient and all relevant health professionals. General practitioners also have access to an online medical handbook with updated information on diagnosis and treatment recommendations. Attempts to develop national clinical databases to monitor quality in primary care (DataFangst) were aborted in 2015, as they were found to violate privacy rights and to endanger the trust between GPs and their patients.

Sundhed.dk is a national IT portal with differentiated access for health staff and the wider public.25 It provides general information on health and treatment options and access to individuals’ own medical records and history. For professionals, the site serves as an entry to medical handbooks, scientific articles, treatment guidelines, hospital waiting times, treatments offered, and patients’ laboratory test results. The portal also provides access to available quality-of-care data for primary care clinics, all of which use IT for electronic records and communication with regions, hospitals, and pharmacies.

How are costs contained?

The overall framework for controlling health care expenditures is outlined in a “budget law,” which sets budgets for regions and municipalities and specifies automatic sanctions if they are exceeded. The budget law is supplemented by annual agreements among regions, municipalities, and government to coordinate policy initiatives aimed at limiting spending, including direct controls of supply.

Block grants to the regions are conditional on annual increases in productivity of 2 percent on the basis of diagnosis-related groups and are withheld if productivity falls short of targets. Even though the activity-based portion is small, it makes up regions’ marginal income and presents a strong incentive.26 Furthermore, regions are under pressure to deliver good performance, as they can be reformed if they do not deliver.

At the regional level, hospital cost control includes a combination of global budgets and activity-related incentives (see above).

Inpatient pharmaceutical expenditure is controlled through national guidelines and clinical monitoring combined with collective purchasing. The purchase of medicine takes place through tendering by the joint regional organization Amgros. A new regional “medicines council” will be established in 2017 to provide information to Amgros and other decision-makers on the cost-effectiveness of new pharmaceuticals.

Policies to control outpatient pharmaceutical expenditure include generic substitution, prescribing guidelines, and assessment by the regions of deviations in prescribing behavior. Pharmaceutical companies report a monthly price list to the Danish Health Authority, and pharmacies are obliged to choose the cheapest alternative with the same active ingredient, unless a specific drug is prescribed. Patients may choose more expensive drugs, but they have to pay the difference.

Collective agreements with general practitioners and specialists include various clauses about rate reductions if overall expenditures exceed given levels. Regions also monitor the activity level of individual practices and may intervene if they deviate significantly from the average.

Health technology assessment and cost-effectiveness information provide input to decision-making on new treatments and guidelines.

Regions may enter into contracts with private providers to deliver diagnostic and curative procedures. Prices for those services are negotiated among regions and private providers and can be lower than rates in the public sector.

Together, these measures have been relatively successful in controlling expenditures and driving up activity levels. General productivity in the hospital sector increased almost 20 percent from 2008 to 2012, while maintaining high patient satisfaction and reducing standardized hospital mortality rates.27

What major innovations and reforms have been introduced?

A plan for reorganization of the central governance structure was implemented by the incoming government in the fall of 2015. The reorganization created four agencies, dealing with health, medicines, patient safety, and IT, to replace the previous Health and Medicines Agency. The intent is to provide a clearer division of labor and more transparency and to improve the overall surveillance and accountability structure.

A new regional “medicines council” will be established in 2017 to evaluate the cost-effectiveness of new pharmaceuticals. The council will replace the existing assessment structure, which does not include economic evaluation. The council will provide guidance for regional decision-making and the administration of tenders within Amgros, the joint regional purchasing organization.

The Danish government and the regions have agreed to implement a new quality management scheme for hospitals in 2017 to replace the existing accreditation-based model. The new scheme includes a set of national indicators to be published annually and will allow more freedom for the regions and hospitals in designing their internal quality procedures and standards. The new model accommodates input from health professionals and hospitals that considered the accreditation-based scheme too burdensome and inflexible. The new scheme is based on the ideas of “permanent improvement culture” and “value-based health care.” The existing accreditation-based scheme will continue to operate for primary care and municipalities.

References

1Organisation for Economic Co-operation and Development, OECD Health Statistics 2016.

2J. Søgaard, How High Are Health Expenditures in Denmark? Report for Danish Regions (2014), accessed Oct. 3, 2014.

3Health Insurance Denmark, Annual Report 2014.

4Center for Politiske Studier (CEPOS), Half of Danes Now Have Private Health Insurance (April 2014).

5Organisation for Economic Co-operation and Development, OECD.Stat (database). DOI: 10.1787/data-00285-en; accessed July 2, 2015.

6Organisation for Economic Co-operation and Development, OECD.Stat, (database). DOI: 10.1787/data-00285-en; accessed Oct. 6, 2014.

7Danish Medicines Agency.

8Please note that throughout this profile, all figures in USD were converted from DKK at a rate of about DKK7.5 per USD, the purchasing power parity conversion rate for GDP in 2015 reported by OECD (2016) for Denmark.

9Danish Regions, Facts About Economy and Activity in General Practice (2012).

10Danish Regions, Organization of General Practice (2007).

11M. Olejaz, A. Juul Nielsen, A. Rudkjøbing et al., “Denmark: Health System Review,” in Health Systems in Transition, 2012, 14(2):1?–?192.

12Danish Regions, Ongoing Publication of Productivity in the Hospital Sector, Interim Report 10 (2015).

13Frederiksberg Kommune (2015).

14Aeldresagen.

15Danish Regions, Ongoing Publication of Productivity in the Hospital Sector, Interim Report 10 (2015).

16See www.esundhed.dk/sundhedsaktivitet/sundhedsaftaler/Sider/Sundhedsaftaler.aspx.

17Danish Regions, Regional Performance 2016 (2016).

18Danish Healthcare Quality Program (DDKM).

19See www.esundhed.dk/Sider/Forside.aspx.

20Ministry of Health, Increased Focus on Good Results at Hospitals (2013).

21Danish Health Authority, National Health Profile (Jan. 2014).

22See http://www.esundhed.dk/Sider/Forside.aspx.

23Økonomi og Indenrigsministeriet Evaluation of the Structural Reform (2013).

24HimSS Europe, Electronic Medical Record Adoption in Denmark (2014).

25See www.sundhed.dk.

26Danish Regions, Financial Guidance 2013.

27Danish Regions, Styr på regionernes økonomi, Danish Regions, Quality and management, facts and figures about the health care sector.