If people will travel to Belgium to buy a new car, why can't they do the same for a hip operation? Is a European health market about to open up? And if so, how will the NHS fare in the stormy waters of competition? Martin Wakeley reports

Many of us have welcomed consumer power and the recent reduction in car prices. But how would we view the same reduction in healthcare prices? What if patients decided that they did not wish to wait for their operations in the UK? Or if they decided that they would opt for Portugal for their balloon angioplasty - and, because it was cheaper, they would expect the NHS to foot the bill?

There are significant differences between the costs of elective surgery across Europe which could become even greater as movement between countries increases.

These differences relate to the cost to the insurer or governmental agency of healthcare services both within the UK and across Europe. Additionally, there are differences in access rates, information, quality of service provided and so on.

These cost differences have not been of any great importance so far because most healthcare systems have been provided only for the resident population, and issues such as cost and quality were irrelevant as the systems were virtual monopolies.

But this position is beginning to change as the EU starts to become more open and there is a real flow of goods and services across borders.

The impact of this liberalisation has not yet influenced healthcare provision. A brief study of European systems, prices and the mobility of patients suggests that it will be cost and the quality of care rather than the level of funding that will become the primary comparitor of healthcare systems in the future.

Most European systems are funded through some form of insurance scheme which has resulted in competition between hospitals, with patients being the primary decision-makers of how and when they access secondary care. As a result there is overcapacity in many hospitals with many considering how they can increase bed use, which is in stark contrast to the NHS.

As deregulation starts to take place in some of the once heavily regulated social insurance schemes, some countries are beginning to experience competition between insurers. Premiums are beginning to reflect the level of risk associated with the patient. Some insurance schemes are also beginning to offer lower premiums in return for reduced patient choice.

The end point of this competition is likely to mean that patients will have greater choice in how they insure themselves for healthcare services and that markets will evolve for differing patient groups.

Why is this relevant to the NHS? Competition already exists between hospitals in the same geographical area, but as patients and some insurers mature in their awareness of the competition that exists, they may well begin to consider quite radical alternatives to locally provided services.

Rulings on two Luxembourgers' claims for reimbursement, made by the European Court of Justice in April 1998, maintained the right of the patient to decide where they seek their healthcare at the expense of insurers, and were widely regarded as landmarks for European healthcare systems.

Raymond Kohll had taken his daughter to Germany for orthodontic treatment and wanted a Luxembourg insurance fund to reimburse that proportion of the cost to which he would have been entitled in Luxembourg.

In the second case, Nicolas Decker wanted his insurer to reimburse, at Luxembourg rates of entitlement, the cost of a pair of spectacles bought in Belgium. In each case the Luxembourg insurance fund responsible had refused to reimburse the claimants on the grounds that under European regulations regarding the co-ordination of member states' social security systems, they should have obtained authorisation before seeking treatment outside Luxembourg. The European Court of Justice upheld Mr Kohll's and Mr Decker's claims under provisions governing the free movement of services and goods.

The European Court of Justice has so far ruled out the extension of single-market principles to hospital care. But the Kohll and Decker rulings have left some ambiguity about reimbursement.

Health economist Lyndsay Mountford concluded in a recent report that while the Decker and Kohll judgements provoked fears of an explosion of cross-border activity by patients seeking unauthorised care abroad, in practice this was very unlikely, given the restraints of language and travel costs.

3The report pointed out that cross-border patient flows in the EU remained a tiny proportion of healthcare expenditures - an average of 0.3-0.5 per cent.

Even this scenario would have most of us concerned at the destabilisation of the local healthcare economy, but a study of prices for routine operations across Europe indicates that the NHS could actually save money by encouraging a cross-border market for elective surgery. The crucial determinants of such a market developing will not be the providers of healthcare but patients and the purchasers of healthcare.

The NHS plan requires that hospitals compare their costs within the UK, but as the table suggests there are significant variances across Europe for many elective procedures which cannot be explained merely as functions of cost apportionment.

The NHS plan underpins the rights of patients to have high-quality, effective and timely healthcare.

As the plan is implemented and UK patients begin to expect the same levels of healthcare provision as the rest of the European community has experienced, it is likely that patient expectations will rise once again.

At some point it will be the affordability of healthcare that will become key in assessing the differences between healthcare systems within the EU. The table of prices demonstrates that there are clear and significant price differentials that exist across European states for essentially the same service.

As healthcare systems attempt to keep pace with raising patient expectations - and access rates and clinical outcomes are no longer significantly different - it will be the price of healthcare that influences how services are bought and provided.

Clearly there is a need to differentiate between elective and emergency care which must be maintained at a local level. But the provision of elective services is already changing with the adoption of ambulatory facilities and the use of minimally invasive surgery in a non-hospital setting.

This split, between the need to maintain high-cost facilities to provide emergency care and lower-cost ambulatory facilities, will begin to impact on pricing strategies. It is in this area that the variance of price is most likely to be exploited by entrepreneurial healthcare managers.

The examples in this brief study suggest that as the markets for healthcare provision across Europe become more liberalised, there are significant financial benefits that can be derived from taking advantage of price differentials between different healthcare providers. The only real question is who will start taking advantage first: the patients or the purchasers of healthcare?

Competition already exists between hospital providers at a local level and in some European states across national boundaries, as patients and health organisations increase their understanding of the market. Competition is likely to increase and a key component of that will be price.

The provision of healthcare services across Europe is about to enter into a new and challenging phase unlike anything it has encountered previously. There could be dramatic political consequences.Which politician will challenge the right of the patient to choose?

REFERENCES

1 European Court Judgement Case C-158/96. Raymond Kohll vs Union des Caisses de Maladie.

2 European Court Judgement Case C-120/95. Nicolas Decker vs Caisse de Maladie des Employes Prives.

3 Mountford L. Health Care Without Frontiers? Office of Health Economics. December 2000.