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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 high quality; 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, but also have tasks related to specialized social care and coordination. The regions own, manage, and finance hospitals and the majority of services delivered by 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. 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 2013 accounted for 84 percent of total health spending, representing 10.4 percent of GDP in 2013 (OECD, 2015a). 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) (Søgaard 2014).

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 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 (Sygeforsikringen “Danmark,” 2014).

In addition, nearly 1.5 million people hold supplementary insurance to gain expanded access to private providers (CEPOS, 2014). 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 (OECD, 2015a).

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 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. There is no defined benefits package, 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 (OECD 2014), covering mostly outpatient drugs, corrective lenses, hearing aids, and doctor and dental care. Patients with outpatient drug expenses of more than 3,045 DKK (USD394) per year receive the highest reimbursement rate—85 percent. Private specialists, hospitals, and dentists are free to set their own fees for patients not covered by public funding.

(Please note that throughout this profile, all figures in USD were converted from DKK at a rate of about DKK7.59 per USD, the purchasing power parity conversion rate for GDP in 2014 reported by OECD (2015b) for Denmark.

Safety net: There are cost-sharing caps for children, and municipalities provide means-tested social assistance to older people. If personal assets are DKK77,500 (USD10,217) or less, 85 percent of all prescription drug costs are covered. Chronically ill people with high drug usage and costs can apply for full reimbursement above an annual out-of-pocket ceiling of DKK3,775 (USD498). The terminally ill can also 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. All general practitioners (GPs) are self-employed and paid by the regions via capitation (about 30% of income) and fee-for-service (70% of income). Rates are set through national agreements with the 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 DKK1.1M (USD145,000) in 2011. The average salary for senior hospital doctors was DKK1M (USD132,000) (Danske Regioner, 2012).

The practice structure is gradually shifting from solo to group practices, typically consisting of two to four GPs and two to three nurses (Danske Regioner, 2007). 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 also receive patients paying out-of-pocket or covered by voluntary insurance. As a result of legislation guaranteeing patients the right to diagnostic assessment within 30 days of referral, private practitioners 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 (Strandberg-Larsen, et al., 2007).

After-hours care: After-hours care is organized by the regions, mainly by agreement with GPs on a collective basis. 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), where the fixed budget makes 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 (Danske Regioner, 2015). Bundled payments are not yet used extensively. 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 general practitioners 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 two months of referral was introduced in 2014 (shortened to one month as of September 2015). Assessment is followed by a right to treatment 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 allow 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 (Frederiksberg Kommune, 2015). Municipalities are obliged to organize markets with open access for both public and private providers of home care, and patients may choose between public or private providers. While this 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 have also 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 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 plus 10 percent of their income (20% of income above DKK188,700, or USD24,880), as well as heating and electricity charges (Rudersdal Kommune, 2015).

Relatives of seriously ill individuals may 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 regions and are funded by regions and municipalities. There is free choice of hospice upon referral.

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 Ministry of Health and the Danish Health Authority, Danish Medicines Agency, and Danish Patient Safety Authority. The national authorities are responsible for 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 making 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 on a regular basis, allowing regions and hospital managers to benchmark performance of individual hospital departments (Danske Regioner, 2015).

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 (sundhed.dk) supports patient choice (see below). Organized patient groups engage in policymaking at the national, regional, and municipal levels. A patient ombudsman handles patient complaints and compensation claims, collects information about errors for systematic learning, and provides information about treatment abroad.

Aspects of care that are affected by regional benchmarking results, which are published online, include expenditures for administration; expenditures for support functions (washing and cleaning); organization and handling of free choice (of private provider); and psychiatry, obesity operations, selected medical treatments, knee operations, shoulder operations, heat treatment, and back operations (Danske Regioner, 2014c).

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 (DDKM). It is currently being replaced in hospitals with a new program featuring fewer standards and more emphasis on clinical and local dimensions (due partially 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 published online for institutions, but not for individual health providers at the hospital level (sundhedskvalitet.dk). General quality and efficiency data are also published regularly in national level reports as a follow-up to national budget agreements between the state and the regions (Ministry of Health, 2013). Patient experiences are collected though 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 at which patients are diagnosed and treated. DDKM standards enforce the use of pathway programs and national clinical guidelines for all major disease types. 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 several regions are experimenting with such schemes. In general, regions are obliged to take action in case of poor results, and may fire hospital managers or introduce other measures to support quality improvement. The Danish Health Authority can step in if entire 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 (Sundhedsstyrelsen, 2015). 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 hospitals)
  • 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 municipalities and regions on coordination of care address a number of topics related to admission and discharge from hospitals, rehabilitation, prevention, psychiatric care, 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 the patient journey in the system, and must be approved by the Danish Health Authority. The agreements are partially supported by IT systems with information that is shared between different caregivers. The performance of regions and municipalities in reaching the goals is measured by national indicators published online (esundhed.dk).

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; 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 have a special emphasis on citizens with chronic care needs, multi-morbidity, or frailty due to aging or mental health conditions (Økonomiog Indenrigsministeriet, 2013). Municipalities are in charge of a range of services, including social care, elder care, and employment services; most are currently working on models for integrating these services better, such as through joint administration with shared budgets and formalized communication procedures.

Practices increasingly employ specialized nurses, and several municipalities and regions have provided financial support to set up 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 commonly accepted and 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 (HimSS Europe, 2014). All citizens in Denmark have a unique electronic personal identifier, which is used in all public registries, including health databases. A shared medical card—accessible by all relevant health professionals—has been implemented. It contains encoded information about each patient’s prescriptions and medication use. 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. 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 between regions, municipalities, and government that coordinate policy initiatives to control expenditures. These include direct controls of supply.

Block grants to regions are conditional on annual increases in productivity of 2 percent on the basis of diagnosis-related groups, and are withheld if productivity demands are not met. Even though the activity-based portion is small, it makes up regions’ marginal income and presents a strong incentive (Danske Regioner, 2014). 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. Two specific units have been established to evaluate and coordinate the introduction of expensive pharmaceutical products—the Council for the Use of Expensive Hospital Medicines (RADS) and the Coordinating Council for the First Use of Hospital Medicines (KRIS).

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 types of 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, produced nationally and regionally, is an integrated part of the decision-making process for new treatments and guidelines for professionals.

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

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 also reducing hospital standardized mortality rates (Danske Regioner, 2014b and 2014c).

What major innovations and reforms have been introduced?

A reorganization of the hospital infrastructure is currently under way. All five regions are in the process of closing or amalgamating small hospitals and building new hospitals, at a total cost of DKK40.0 billion (USD5.3 bilion). A central part of this process is the reorganization of acute care, with stronger pre-hospital services and larger specialized emergency departments with senior medical specialists at the front end.

The third generation of mandatory “health agreements” for coordination between municipalities and regions came into force in 2014. These agreements cover 2015–2018, and are based on a slightly revised format that resulted from a formal evaluation published in 2011.

Upscaling of municipal health services with “temporary care units” and various types of health centers is occurring, with colocation of municipal, private, and regional health providers. At the same time, municipalities are employing more nursing staff and public health specialists to provide more systematic services for population health (Rigsrevisionen, 2013).

A plan for reorganization of the central governance structure was decided on by the incoming government in August 2015, and was implemented in the fall of 2015. The reorganization will split the existing Health and Medicines Agency into four separate agencies, dealing with health, medicines, patient safety, and IT/data, to provide more clarity and improve the overall surveillance and accountability structure.

References

CEPOS (2014). Halvdelen af danskerne har nu en privat sundhedsforsikring.

Danish Healthcare Quality Programme (DDKM).

Danske Regioner (2007). Organisering af almen praksis. Delrapport.

Danske Regioner (2012). Fakta om økonomi og aktivitet i almen praksis. Notat.

Danske Regioner (2014). Økonomisk Vejledning 2013.

Danske Regioner (2014b). Styr på regionernes økonomi.

Danske Regioner (2014c). Høj produktivitet, øget kvalitet og tilfredse patienter.

Danske Regioner (2015). LØBENDE OFFENTLIGGØRELSE AF PRODUKTIVITET I SYGEHUSSEKTOREN. 10. delrapport.

Esundhed.dk. National website with interactive quality information.

Frederiksberg Kommune (2015).

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

Ministry of Health, 2013. Øget fokus på gode resultater på sygehusene.

Økonomi‐ og Indenrigsministeriet (2013). Evaluering af Strukturreformen.

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

Organisation for Economic Co-operation and Development (OECD) Health Data, 2015a.

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

Rigsrevisionen (2013). “Beretning om borgerrettet forebyggelse på sundhedsområdet.” Accessed June 20, 2013.

Rudersdal Kommune (2015).

Sundhedsstyrelsen (2014). Den nationale sundhedsprofil.

Sygeforsikring “danmark” (2014). Årsrapport 2014.

Søgaard, J. (2014). Hvor høje er sundhedsudgifterne i Danmark? (How high are health expenditures in Denmark?). Report for Danish Regions. Copenhagen. Accessed Oct. 3, 2014.

Strandberg-Larsen, M., Nielsen, M.B., Vallgårda, S., Krasnik, A., Vrangbæk, K., and Mossialos, E. (2007). “Denmark: Health System Review,” Health Systems in Transition 9(6):1–164.

Sundhed.dk. National portal for patients and providers.

Forsikring og Pension (2014). Sundhedsforsikringer – hovedtal 2003–2014.