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Luís Centeno e Luís Viana

Luís Centeno, Head of Staff, and Luís Viana, analist, at the Portuguese Public Finance Council  were the invited speakers on the conference "Principles of Good Finance in the National Health Service", organized by the Portuguese Association of Engineering and Management of Health (APEGSAUDE) and held at the Palácio Nacional de Queluz.

 

The two authors of Portuguese Public Finance Council report “Programme Contracts with State Owned Enterprises in the National Health System”, published in December, highlighted the complexity of the problems of the Health sector, notably because it has thousands of prescribers who intervene in both financial and operational management processes.

 

During the roundtable, which was attended by some of the main stakeholders of the sector in Portugal, the CFP's Head of Staff stated that it is necessary “predictability, transparency and planning tools that allow us to look into the future». All «reports from the Portuguese Public Finance Council insist that it is necessary to deal with the issues of public activities funding, of public finances, in a multi-annual, medium-term logic», he added, referring that "the budgets for the year, quarter, of the semester are absolutely indispensable, but not sufficient.»

 

This need is further reinforced by demographic changes, one of the main challenges the sector is facing. According to the authors, «all our sustainability instruments are based on the principle that there is an age pyramid and have always been more those who pay than those who receive. But there will be a shift». From a Health systems point of view it means «a transformation of morbidity, epidemiology, which pose significant challenges. If we add all this to innovation in the sector, we can be sure that health costs will be increasing, in a sector where productivity gains tend to be slower».

 

According to Luís Centeno, there is therefore «an imperative need to have efficiency gains. This is the challenge facing the health sector already and will continue to struggle in the coming years," he said.

 

The importance of public financial management instruments

 

According to the analysis carried out by the two authors, there are four essential problems in the sector that restrain an efficient financial management: the complexity of the governance system, with numerous actors, overlapping performances, different institutional logics, coordination costs, conflicting incentives; Ineffectiveness/lack of accountability mechanisms; a soft budget constraint syndrome; and waste. These problems, says Luís Viana, could be mitigated «with the implementation of three essential financial management instruments», namely: multiannual budgeting; performance budgeting; and costing and management accounting.

 

The implementation of the appropriate financial management instruments in the sector is therefore a key part for the sustainability of the Health System in Portugal.

 

The authors stress that their views and the report do not necessarily represent the position of the Portuguese Public Finance Council.

News . 13 February 2020