Introduction

Sweden, with about nine million inhabitants, has a decentralized public health care system. Three political and administrative levels – central government, county councils and local municipalities – are involved in financing, providing and evaluating health care activities. The central government has only a legislative supervisory role, while county councils and municipalities are responsible both for financing and providing health services (Figure 4.1). The county councils are entitled to collect direct income tax revenues as their major financial source, but they are also politically accountable through their directly elected political assemblies. The vast majority of Swedish hospitals are public, owned and financed by the county councils. Primary care settings are also financed by the county councils but they are both publicly and privately owned.

Swedish hospitals have traditionally been financed via global budgeting. This is due to the fact that Sweden has a tradition of publicly owned hospitals and that cost control has been an important issue. Moreover, before the introduction of DRGs, there was no accepted system in use to describe performance. The counties had poor knowledge of hospital activity and productivity. There was a great need to find ways to measure productivity.

In Sweden, DRGs have been used as a prospective payment system, to describe performance and increase the transparency of hospital activities, as an analyzing tool and to measure productivity.