Health care system in Estonia has seen profound reform since early 1990s. Among the main objectives of the health care reform were reorganising the public funding system and the overextended hospital system, improving the quality and accessibility of general medical care service, and a more efficient use of resources, including reform of primary care, which began in 1991, and was successfully completed by 2003. The training and introduction of family doctors was central to this reform.

Health care Financing

The main source of health care finance are the public health insurance, accounting approximately 66% and people’s own contribution, 21% of total expenditure on health care over last years. Other public sources include state and municipal budgets, accounting approximately 8% and 2% of total health care expenditure respectively. So, health care in Estonia is mainly financed publicly. The total costs of health care in Estonia in recent years have been 5.0-5.4% of GDP (5.1% in 2005). If the real growth of total costs of health care was 34% during the period 1998-2003, then the share of public sector grew by 14% and people’s own contribution by over 100%.

In Estonia public healt insurance is a social insurance and relies on the principle of solidarity. The purposes of health insurance are to: cover the costs of health services provided to insured people, prevent and cure diseases, finance the purchase of medicinal products and medicinal technical aids and provide benefits for temporary incapacity for work and other benefits. The health insurance is organised by the Health Insurance Fund (EHIF), which covers the costs of health services required by people in the event of illness, regardless of the amount of social tax paid in respect of the person concerned. The Fund uses the social tax paid for the working population also to cover the cost of health services provided to peole who have no income from work activities. Employers are required to pay social tax for all people employed, at a rate of 33% of the taxable amount, of which 20% is allocated for pension insurance and 13% for health insurance.

In recent years the share of state and municipal budget financing for health care has fallen, leading to an overall decline in public expenditure as a proportion of total expenditure on health care. It has not fallen due to any change in government responsibilities or functions, but allocations to health care have not increased at the same rates as overall budget increases. To maintain the level of the total expenditure of health care as a ratio of GDP, the increase of state and local governments’ expenditure on the health care should keep the pace with the growth of the GDP. In other words, the ratio of health care expenditure in the total public expenditure (approximately 10-11%) should be preserved.

1. Hospital reform and Long-term care development

An important change in health care management in recent years has been the preparation and gradual implementation of the Estonian Hospital Network Development Plan 2015 and a trend towards the increasing proportion of outpatient treatment.

At the beginning of independence, Estonia had an extensive network of health facilities, which was created in the Soviet period based on the strategic-military interests of the region. This network largely exceeded the needs of Estonian population. In 1991 there were 120 hospitals with 18,000 beds in a country with 1.5 million people. During 1992- 2000, the number of hospitals decreased by one-third (from 118 to 68), largely due to closing down small hospitals, which were inefficient, both in medical and monetary terms. At the same time the number of patients in hospital care stayed at the same level. This has happened primarily at the expense of shortening the stay enabled primarily by the introduction of more effective methods of treatment. New technologies broaden the possibilities of medical interventions, but limited resources created waiting lists and economic considerations were to be taken into account in equal terms with medical indications. Most of the hospital buildings in Estonia were built more than 25 years ago and their technical condition has deteriorated, with facilities that are functionally inefficient or unsuitable for a hospital today. Prior to 2000, these costs were the responsibility of hospital owners - usually the state or the municipalities. However, as capital funding competed with other claims on state and municipal budget spending, it was not easy access. Due to that, growing numbers of providers started to take out bank loans to finance renovation, repaying them with their income from the EHIF. This resulted in a loss of central control over capital investment. The problem was acknowledged by government, and in 2001 a new system for capital investment was established. Among the main principles were that investments should be the responsibility of the autonomous institutional provider, the EHIF price-list should cover capital costs and capital investment decisions in public hospitals need to come under central control.

Notwithstanding the smaller number of hospitals and beds, a new reform - Estonian Hospital Development Plan 2015 (HNDP) was initiated in 2000 (updated 2003) for 15 years - to reorganise the hospital network with the underlying idea of concentrating high-technology specialist care into major centers to raise the efficiency and quality of the services.The Plan determined the list of regional, central, general, local and specialty hospitals based on the access criteria to ensure sufficient population pools with necessary service volume (at most 60 minutes travel by car to reach a hospital). The number of hospitals was thus reduced to 51 by the end of 2002. Also the list included investments for building, renovating and re-profiling the hospitals, which has and still is a critical area for Estonian policy-makers.

At the same time new regulations for health care organizations were established under the 2001 Health Care Services Organization Act which required all public hospitals in Estonia to be incorporated under private law as foundations (trusts) or joint-stock companies by 2003. This led to a situation where hospitals remain in the public sector but are being run as companies according to private law, granting them full managerial rights over assets, full residual claimant status and access to financial markets.

A number of problems have arisen in the realsation of this plan, which hamper implementation of the plan:

• Focusing of the ultimate goal and the ensuring insufficient attention to transition
• Focusing only on acute care and neglecting other kinds of care
• Focusing only on the quality of care and economic efficiency
• Possible regional interests in maintaining the existing hospitals have not been taken into consideration.

In April 2006 the Minister of Social Affairs launched the revision of HNDP to make amendments to the plan. The main purpose of the revision of HNDP is to change the set of principles and indicators used for planning of hospital sector, but also to propose the Ministry of Social affairs to change legislative acts which regulate the hospital sector. Previously there have been discussions about changing the remuneration system of hospitals and implementing the budget-based (or capitation-based) payment system instead of the contracting of volume and price of health care services. Most of the stakeholders have expressed their confusion about the need for commission and the purpose of the HNDP revision as the objectives are not very well clarified by the Ministry of Social Affairs. The general understanding is that there is needed only fine-tuning in planning of specialty services rather than change of basic principles of hospital development. The conflict is not on the level of structural planning of hospital sector but need for additional resources for hospital capital investments and development. As rational objectives of the revision of HNDP have not been defined then it would be rather difficult to evaluate the outcome or impact of the commission work.The results are planned to be presented on an annual Health Care Conference in November 2006.

Nursing care

The main part of the target group of nursing care consists of people aged 65 years and above, who also account for 25% of the current in-patients. In 2004, there were about 218,658 people aged 65 or older in Estonia, comprising 16.2% of the population, but according to a demographic prognosis the number of elderly people in Estonia will continue to grow until the year 2050, and the share of over-65-year-olds among them will grow by 25%.

In 2001, the Ministry of Social Affairs prepared the Nursing Care Master Plan 2015 (NCMP) to provide nursing care targets set out in the HNDP. The main changes recommended by the plan were to turn small hospitals (mainly owned by municipal governments) into nursing care homes, and to develop non-institutional nursing care services to provide both home nursing and day care nursing in institutions.

Financing the planned changes has been difficult, expenditures on nursing care have grown over the years, while striving to offer better health services at home.The aim of the EHIF is to utilise effectively the Funds freed for the needs of nursing care as a result of the reorganisation of the acute treatment system. In 2004, the EHIF paid for nursing care 99% of the planned budget or 27% more than in 2003. The funds for nursing care in 2005 were allocated 85% to inpatient (92% in 2004) and 15% to out-patient treatment (8% in 2004).

In order to improve the accessibility of nursing care the number of hospital beds for active treatment has been and will be decrease in the future. Instead of that, the proportion of nursing care beds financed by EHIF will be increased. According to the calculations based on regional development plans (10 bed per 1000 habitants aged 65 and older), 2220 nursing care beds are needed in Estonia by 2015, the total number of beds financed by the EHF in 2005 was 795. The latter covers slightly over 1/3 of the need for nursing care beds by 2015 indicated in regional development plans.

One way of meeting the need for nursing care was to develop non-institutional services. The EHIF recognized the key role of nursing care in optimizing the efficient use of acute care, and from 2003 it has covered home nursing. In 2004, geriatric assessment was offered as a new service. It is based on a single assessment system for the health care, nursing care and welfare systems. An international standardised tool is used for the assessment of the geriatric condition by a geriatric assessment team composed of a physician, a nurse and a social worker. Thus a more exact assessment of the needs helps to secure the expediency and cost-efficiency of services. Geriatric teams assessed 621 cases in 2004. In 2005 he number of cases was 1250.

The changes in the Estonian health care and nursing care systems are closely linked to the social welfare system, thus securing a smooth transfer of a person needing assistance from the health care system to the social welfare system. Coo-operation with health care system and assessment of a person’s need for care are essential in organising proper care. Assessment is provided by local municipalities’ social workers together with family doctor or family nurse. In more complicated cases rehabilitation team or geriatric team steps in. The envisaged model forsees movement of a patient between different services according to the different care needs. Arrows point from active care at the top towards home nursing care at the base, indicating the change in the focus of development planned for the coming decade.

Active care ▼ Rehabilitation ▼ Nursing care hospital ▼ Daytime nursing services ▼ Home nursing services ▼ Care home ▼ Home

It is predicted that by the year 2015 an effective network of nursing care has been created according to the objectives set with the national strategy and the need for services is uniformly covered everywhere in Estonia.

2. Facilitation of quality health services

The growing role of the patient as the user of health care services and the promotion of the concept of patient’s rights have increased the importance of issues regarding the quality of management of the health care system. In relation to the change of principles of financing the health care system and implementation of the mandatory health insurance, the quality of health care in relation to resource utilisation came under assessment.

The principles of quality requirements were set with the Health Services Organisation Act passed in 2001, enabling to establish requirements to the quality of health care services and minimum requirements to health care workers and providers of health care services. With the act that was enforced in 2002 all health care workers and providers of health care services were given three years (until 31.12.2004) for aligning their activities with current requirements.

In 2005, a document called “Securing the quality of health services in Estonia“ was prepared and it will be used as a basis for the continued development of the quality system strategy for health services for the years 2006-2010. The quality policy of Estonian health care was prepared with the help of experts from the health care quality organisation CBO of the Netherlands. In the second half of 1990s, satisfaction surveys of patients and employees were launched.

Network of Health Promoting Hospitals uniting 21 hospitals (63%). It has been planned to extend this network all over Estonia and to align its presence in different regions. Health promoting hospitals pay more attention to patients, their relatives and to health education of the personnel, and to designing a health-supporting environment on the organisational level. Beside local activities the Estonian network takes active participation in international co-operation, e.g. by training Estonian nurses on matters of health promotion and geriatric rehabilitation.

3. Human resources

Access to and quality of health services is based on a sufficient amount of exisisting health care professionals.

The University of Tartu Faculty of Medicine is the only academic medical training institution in Estonia. It is responsible for undergraduate medical training, postgraduate specialization and master’s- and doctoral-level training (for all areas including nursing and public health). Estonia’s three nursing schools are recognized as vocational higher education institutions for basic and special training for nurses and midwives. They also offer a health protection programme and train other lower- and mid-level health specialists (care-nurses). After independence, underinvestment in health facilities and human resources was a major source of cost savings, resulting in low salaries and poor morale among doctors and nurses. Between 1991 and 2000, the number of doctors fell by 24%, and the number of nurses by 14%. Although the number of doctors and nurses continued to decrease after 1998, the ratio per 1000 inhabitants has remained more or less the same due to a parallel fall in the size of the population.

When health care reforms began to take place in the early 1990s, it was assumed that there was an oversupply of doctors, particularly in certain specialties. Thus, it was planned to fund the admission of 100-110 new residents and 90-100 new medical specialists residents every year to ensure the set target - 3,0 doctors per 1000 people by the year 2015.

Currently we already have 3,7 doctors per 1000 people, but continuing the training of doctors at the level of present output with taking into consideration the current age distribution of doctors, it is not possible to maintain even the existing number of doctors sufficiently. The further fall of 12%, (about 500 doctors) is expected already by 2010.

The migration of young doctors has became growing problem for Estonian health care system today. The reasons for that are relatively low pay and poor working conditions. For example, from 106 graduates in 2005, 56 continue their medical career in Estonia.

Between 1991-2000 the number of nurses fell by 14%. Reasons for shortfall include poor salaries, high levels work-related stress, low job satisfication and low professional status.

Currently there are about 7 nurses per 1000 people.57% of them work in hospitals and the greatest need is in specialist areas. The Ministry of Social Affairs has already recognized that the increasing shortage of nurses threatens the further implementation of hospital reforms, which include major increases in long-term and nursing care capacity. In 2004, it put forward a proposal to the Ministry of Education to fund training for 500 basic nurses plus 200 specialist nurses, also the extra training was needed due to the fact that 28% of nurses are 50 years or older. The proposal was based to meet the target of 8-9 nurses per 1000 people by the year 2015. However, while there is political will to increase the number of nurses being trained, according to the most optimistic prognosis and not taking into account the possible emigration we could reach a level where there are only 7,5 nurses per 1000 people by the year 2015.

In addition to money deficit, capacity of schools and shortage of possible candidates to student places hinder increase of state-commissioned education. In 1991, a master’s course in nursing was established at the University of Tartu Faculty of Medicine for nurses with some work experience who today are seen as the main resource for further training of basic and specialist nurses.

Nurses’ professional associations have been working to standardize the different nursing specialties. The Ministry of Education approved their standards in 2003. These standards and terms of reference are compatible with similar requirements elsewhere in the European Union, thus enabling the free movement of nursing professionals within the EU. For example in 2005, 300 nurses took the documents for working abroad.

Some efforts have been made to raise the status of nurses by increasing their responsibilities and introducing continuing education to the profession. The new Health Services Organization Act (2001) gived nursing care a legally well-defined status on a par with primary, specialist and emergency care.At the present in hospitals, nurses and nursing step by step are being acknowledged independently, by doctors as well as by patients.

Most of nurse-assistants, working in Estonian hospitals, do not have a medical education and they are not legally recognized as medical professionals in Estonian health care system. Thus, they are also not registered as other health professionals (doctors, nurses, dentists and midwifes) in Estonia. So, we can only assume that a number of working care-assistants reaches approximately to 3000 today. Even if there exist a basic training for care-nurses in 3 nursing schools in Estonia, about 43% of graduates, soon after completing their main courses in nursing school, go to work abroad due to poor wages and working conditions.

According to the study, carried out late in 2003 among health care professionals in Estonia, only 5% had definite plans to go to work abroad and 56% had intentions to go. However, it has been stated that the migration of health care workers is not a biggest problem in the Estonian health care sector. The major problem is that 6% of registered doctors and 13% of registered nurses do not actually work in the health care sector.

Health care sector wages in Estonia have attracted attention for several years, as employees in sector are not satisfied with their relatively low wages.

Money for hospitals or other health care institutions is provided by the EHIF based on agreed reference prices for medical services, plus the negotiated wage level. Hospital managers’ ability depends on how much money the Fund contributes in the particular budget year.

Wage negotiation process in health care sector is generally lenghty, with the public cociliator becoming involved in most cases. The first collective agreement on pay for the health care sector was concluded in 1996 for doctors and nurses. The next one was concluded in 2003 for doctors and care assistants. It was not extended to the whole sector, as EHIF claimed that it could not quarantee that all hospitals would applay the new minimum wage rates. In order to quarantee the fulfilment of the new collective agreement the EHIF increased the reference prices for medical services and an additional budget for the Fund was approved by the government.

Parties involved in social dialogue: • the Estonian Medical association (EAL) - represents doctors. More than 2600 members; • the Federation of Estonian Healthcare Professonals Unions (ETTAL) -represents interests of workers in whole hospital sector, including kichen personnel, drivers, cleaners, departmental secretaries, customer staff and so on. 2113 members; • the Estonian Nurses Union (EÕL) - represents approximately 2300 members; • the Trade Union Association of Health Care Officers of Estonia (EKTK), which organizes nurses and other health officers.

There is 1 employers organisation - the Estonian Hospitals Association (EHL), which represents 19 major hospitals. The government is represented by the Ministry of Social Affairs. Until recently, representatives of the EHIF were rather passive in these negotiations. The last wage negotiations in health care sector, started in spring 2004. In addition to the demand to increase the minimum hourly pay for health care workers the trade unions also proposed the idea of concluding a long-term agreement, whereby minimum hourly wages will increase by 25%, 25% and 23% respectively in the coming years. Negotiations assissted by the public conciliator continued through the summer and in September 2004, after the complicated negotiations, the two-year agreement for health care workers was signed. It provided minimum wage increases for 2005 and 2006, in total of 50% for doctors, 56% for nurses and 43,7% for care-assistants. To meet this agreements’ obligations the EHIF had to raise the reference prices for medical services again. In addition, the reference prices were adjusted by increase in consumer price index and costs related to changes in inflation level.However, in January 2005, the council of the EHIF approved its budget for 2005, which for the first time in the history of the Fund showed a negative balance. Althought, in 2005, the signed collective agreement on pay for health care workers was fulfilled by excess income from health insurance payments. At the very end of the year employers in the hospital sector stated that they cannot afford to pay the 2006 wage increases as they face a shortfall of EEK 100 million (about 6million EUR). Situation was disputed between social partners and EHIF, several solutions were gived, and finally, through difficulties the agreement for health care workers in Estonia was fullfilled for 2006 too. In June of this year, new negotiations between social partners over increasing hourly minimum pay in Estonian health care sector have already started, but in the light of the scarcity of financial means of the EHIF it is questionable how they will end. The main problem in health care wage bargaining is that the negotiations are held between employers and employees, but the financial means for fulfilling these agreements are provided by a government agency, the EHIF, whose representatives have not been very actively involved in negotiations. Therefore there is need to rethink the roles and responsibilities of the social partners, the involvement of other parties and the process of social dialogue in the health care sector. Furthermore, previous negotiations in health care sector have shown that the social partners have different understanding of the negotiation process, and that their levels of preparation, knowledge and negotiating experiences are very different. Challenges The present challenges reaching the objectives of the national strategy are related to the quality and accessibility of the guaranteed health care services. The development and sustainability of the health care system in Estonia is significantly influenced by the ageing population. It is evident that a decrease of working age (15-64 years) population from 2015 will result in the pressure to fund the health care through the taxing of the population in the working age or increase their own contribution. Moreover an important challenge is preservation of the employment and the total costs of health care at the present level of 5.4% of the GDP. Further, along with the growing revenues from the collection of health insurance, the private sector, central government and local municipalities should increase their expenditure on health care in pace with the growth in the GDP, in the future. The Local Governments’ Act, however, does not set the requirement to the latter to finance health care.

Keeping health expenditure under public control has forced the health sector to increase their inner efficiency (e.g. the reform of family physicians, reform of hospitals). The expectations of the public towards medical services and expectations of the health personnel towards wages have grown and, to satisfy these, the health care system will have to continue to increase its inner efficiency, expand the supply of services and raise the funding of health care. The additional resources received due to increased costs will have to help to improve the health and quality of life for people.