For over a year, Iceland Health has assisted The Icelandic National Audit Office and worked on disclosures to the Office, which was very extensive.

Iceland Health welcomes the findings of The Icelandic National Audit Office and agrees in principle with the focus and findings of the report. The findings of The Icelandic National Audit Office are useful for the Iceland Health as well as other governments in the work that is going ahead.

The Iceland Health considers there to be great opportunities to improve contracting and supervision of the agency. It is also worth mentioning that the Iceland Health has already started implementing some of the recommendations of The Icelandic National Audit Office. In this context, there are extensive structural changes that have just been made, among other things, with the aim of strengthening the contracting field of the agency.

Like the Ministry of Health, Iceland Health also accepts the assessment of The Icelandic National Audit Office that it is important to strengthen the Iceland Health as a buyer of healthcare, and the Ministry has already decided to strengthen the contracts and supervisory scope of Iceland Health permanently by ISK 60m annually.

The following is the official response of Iceland Health to the results and recommendations of The Icelandic National Audit Office:

Tip 1: The position of Iceland Health needs to be strengthened in negotiations

Iceland Health has been working to strengthen the areas of contracts and coordination in order to strengthen professional competence and increase efficiency. Alongside this, more detailed job descriptions, key areas of competence and responsibilities have been defined, creating a clear division of work and strengthening internal cooperation. This has resulted in the formation of strong multi-disciplinary contracting teams, where the diverse expertise of the institution’s professional areas is used in the preparation and processing of contracts. It is clear, however, that the institution’s contracting process still needs to be strengthened, both by increasing the number of specialists and by developing the methodology of contracts and procurement in a concrete manner. It is important to clarify the interaction between the law on health insurance and the law on public procurement.

Tip 2: Preparing contracts and carrying out the necessary analyses for them needs to be thorough

Iceland Health recognises the importance of strengthening the preparation of contracts and related analyses. In recent years, work has been done to strengthen the analytical capacity of the Institute by introducing a data warehouse, establishing a special economic department (now a team of data and analysis in the field of finance and analysis) and making more detailed preparations for contract awards. It is clear that both cost and need analysis needs to be strengthened, but this is a major task that the Institute has not had sufficient financial resources to carry out in an adequate manner. It is however justified to point out that in the run-up to contract awards and during contract awards, extensive analytical work is carried out, which is useful, but it is necessary to further strengthen the analytical capacity of the Institute.

Tip 3: Clear procurement processes need to be established

Iceland Health accepts the suggestion to establish a clearer and more formal framework for procurement procedures. It is also important to consider that due to the nature of the services for which the Iceland Health is responsible, it is necessary for the institution to have certain flexibility in choosing procurement procedures, as it may prove necessary to adapt the purchase of services at any given time to the circumstances and needs of the users of the service. A process that is too fixed reduces flexibility and may even act as an obstacle. The institution must therefore have certain scope to choose from the procurement procedures that are available to it by law, as it is best suited to ensure quality, safety and access to necessary healthcare at any given time.

Tip 4: Increase the monitoring of contract costs and use them in contracting

Iceland Health recognises the importance of strengthening cost control. Iceland Health has detailed data on most large contracts and is actively using it when awarding contracts. The cost development of all contracts is closely monitored during the financial year and proposals for action are submitted if the cost development of contracts exceeds the assumptions. It is clear, however, that the institution's ability to analyse costs in more detail needs to be strengthened. There are great opportunities to increase and deepen cost control, but such control requires high-quality cost analysis. In this context, in various cases there has been a significant lack of cost data being accessible, consistent and in the necessary detail to be used for cost analysis. In light of this, new contracts contain provisions that provide Iceland Health with access to cost data of operators in a much more detailed manner than the unstandardized annual accounts do now. It is clear that the ability of Iceland Health to carry out cost analysis and control and ensure that data and analytical competence are available in a greater scope than at present needs to be further strengthened.

Tip 5: Effective monitoring of contracting parties must be ensured

Iceland Health covers this indication. A comprehensive review of all arrangements for both external and internal supervision is currently underway at the institution. Work is underway to strengthen regular follow-up with contracts and implement risk-based and data-driven supervision. In this context, increased emphasis must be placed on a wide range of aspects of supervision, such as supervision against fraud, supervision focused on reducing waste (reducing the scope of so-called low-value services) and supervision of quality of services. A risk policy and framework for risk assessment are under development. A risk assessment has already been carried out for the main areas of policy managed by Iceland Health. A risk assessment for individual contracts and payments is also underway and new procedures have been prepared for the supervision. Special supervisory teams have been established for the main areas of policy.

Tip 6: Strengthened internal controls and implement internal audit

Iceland Health accepts the State Audit Office’s indication that internal controls need to be strengthened and internal audits implemented. A special audit has just been completed covering the risk management and internal supervision of Icelandic Health. On the basis of that audit, an action plan is being prepared that will include a significant strengthening of the risk management and internal supervision of the institution. In this context, the institution will also develop internal audit arrangements.