Choice in Europe

Published May 1, 2003

European governments have struggled to combine their traditional ethos of equity in health care with the demands of a more sophisticated, consumer-driven society.

Few expected their inspiration for reform might come from Sweden. Yet this country, known for its deeply rooted belief in the welfare state, has changed as it has come under pressure from both patients and health service workers.

Swiss Model

The shift from a health care system characterised by public service monopoly, hierarchy, and top-down attitudes to one having diverse providers, networks, and consumer power has been most striking in Stockholm.

All over Sweden, consumers have gained access to a health care market that allows individuals to use public funding for treatment throughout the country. The number of contracted private health care providers has risen, reflecting consumer choice and the apparent preference of many young doctors and nurses to work for private contractors.

Stockholm’s approach–public funding, public-private cooperation, and freedom of choice–has begun attracting international attention. National and regional officials from Canada, Norway, the Netherlands, Germany, Japan, and the UK have visited Stockholm to analyse the outcomes.

Britain Follows Suit

The most striking consequence so far has been the British government’s recent decision to modify its National Health Service (NHS). The NHS is slowly being reformed from a monopolistic and bureaucratic entity into a more decentralised agency with greater consumer focus.

Much of New Labour’s plan will have a familiar ring to Stockholmers. Waiting periods for treatment are to be reduced to three months at most (equivalent to those in the Stockholm region), though not until 2008. “Perverse incentives” within the NHS are to be replaced with constructive ones. Hospitals are to be paid for what they actually deliver–as is the case with Stockholm’s Diagnosis Related Groups (DRG) system (which is itself akin to that of the U.S. Medicare programme).

The DRG system allocates a price to every diagnosis or treatment and compensates hospitals only once the service has been delivered. In Stockholm, this step has dramatically reduced waiting lists. British patients will be able to choose freely among health care providers, in order to reduce waiting times and improve quality.

As in Stockholm, health care authorities will be required to inform people of the options available to them. To strengthen freedom of choice and expand supply, publicly funded private care providers are to be contracted, as in the Stockholm County Council (Sweden’s elected regional authority responsible for funding and delivery of health services).

Independent hospitals are also to be introduced under NHS auspices, as is already the case in Stockholm. With this combination of decentralisation, consumer influence, and productivity incentives, the UK government hopes to remould the NHS.

Switching from Government Care

But the Stockholm County Council is not the only source of inspiration. Elements of Sweden’s national model are now also being exported. Local authorities, for example, are to be made financially responsible for so-called “bed-blockers” (elderly patients who remain in hospital beds longer than is medically necessary because they do not have access to long-term care).

Budgeting responsibility is to be moved down to Primary Care Trusts, freestanding bodies within the NHS responsible for commissioning and providing community health care services. These Trusts will in the future control 75 percent of all NHS funding allocations, along the same lines as Swedish County Councils.

Norway, Denmark, and Finland could also benefit from the Stockholm approach. Basic financial incentives and options for workers to start their own businesses could revolutionise the delivery of health care in eastern Europe. Sweden’s independent hospitals are already attracting interest in the Netherlands and Germany.

In the future, health care consumers in the developed world will become less and less tolerant of long waiting lists, inadequate information, and lack of influence. The new Swedish model–consumer-driven, and incorporating positive economic incentives–is the future of health care. Governments neglect it at their peril.

Johan Hjertqvist is director of the Timbro Health Policy Unit. Timbro ( is a free-market think tank based in Stockholm, Sweden. A longer version of this article was first published in the Pfizer Forum,