From Iceland — Iceland's University Hospital: The Director Speaks

Iceland’s University Hospital: The Director Speaks

Published December 9, 2014

Páll Matthíasson runs this ship...

Iceland’s University Hospital: The Director Speaks
Gabríel Benjamin
Photo by
Hörður Sveinsson

Páll Matthíasson runs this ship...

Throughout the whole healthcare debacle, one man has consistently remained focused on the big picture: the National University Hospital of Iceland (LSH) director Dr. Páll Matthíasson, PhD. Educated as a psychiatrist, Páll worked in London, England, from 1997-2007 before returning to Iceland, where he served as a senior physician before becoming the Chief Psychiatry Executive at LSH in 2009—and director at the end of 2013. Despite the tremendous pressure he faces with the ongoing strike, Páll still finds time to sit down with me in his office to discuss LSH and the future of medicine in Iceland.

“Off the cliff”

Up until the second draft of the government’s budget was announced, Páll was looking at having to employ hefty cost-saving exercises, which he likens to having to put on a T-shirt that’s a size too small. “Either you tear it by trying to do too much at once, or you have to downsize so you fit into it.”

This problem has been affecting the director’s work since the 2008 collapse. His predecessor, Björn Zoëga, retired in protest a year ago, when the state yet again failed to raise the hospital’s budget. At the time, he remarked: “if the budget is not changed, it will be very difficult to run the hospital in a safe way. I will not partake in driving the hospital off the cliff.”

Páll celebrates the newly allocated funds earmarked for medical equipment renewal, the plans for a new state-of-the-art hospital (more on that below), and the extra one billion ISK that will make its way to LSH’s operational budget. He says that it’s as if those in charge have finally woken up from a bad dream and realised how dire the situation had become. “We were able to cut costs efficiently for about two years, but we knew we’d need more funds,” he says. “It’s a bit like holding your breath. You can do it for half a minute, but not five, so if we had gotten this money in 2012, we’d have a lot less work to catch up on.”

A quick billion

The current strike presents to him a two-fold challenge; on the one hand, the longer it persists, the more of the operational budget will be eaten up by procedures that the strike places on hold, and on the other it is demoralising for staff, and may spur hospital employees to seek gainful employment elsewhere. He stresses that people have to be paid well enough to enjoy their work.

LSH Fossvogur

At present, Páll has the task of allocating that one billion ISK, which he says is a good start, though more funds are needed. “Just replacing the old backup power generators at the Fossvogur branch will cost up to 200 million ISK,” he says, “and our computer systems are in dire need of upgrades. We suffered a crash not long ago that resulted in the entire network being down for two hours. That will also cost around 200 million ISK.”

His work requires him to look even further than that, though, and getting the long-promised state-of-the-art hospital built is one of his top priorities. The building is slated for completion in 2020, and Páll deems it to be paramount to patient safety. He says that the facilities at their Fossvogur branch haven’t been properly cared for in decades, and as a result black mould has festered, among other things. Overcrowding is also an issue, with up to six people at a time sharing a room and toilet facilities.

“Building the new hospital also allows us to centralise many of our services, such as our A&E departments, which will cuts costs considerably,” he says. At present, the hospital operates two operational emergency departments along with numerous specialised care departments spread over a large area, both of which present risk factors for patients. “We move 9,000 patients between departments and buildings annually,” he says. “Just the act of moving a critically ill patient between floors presents a risk—ferrying them across town is both costly and hazardous, and will lengthen their recovery time by about a day.”

Páll estimates that operating out of the new hospital will save around 2.63 billion ISK per year, once it’s completed.

Iceland share GDP

Every little bit helps

Páll admits that the hospital staff has managed to work wonders with very little money, but that for any meaningful change to happen, more funds need to be funnelled into the healthcare sector. Iceland’s health expenditure went from being 10.05% of its GDP in 2003, down to 8.81% in 2013, which is a development that Páll wants to reverse. Only two other Western countries have cut their healthcare expenditures proportionally more than Iceland: Greece and Ireland.

grapevine OECD healthcare GDP graph

OECD health expenditure as a share of GDP, 2011 (or nearest year)

In comparison to the other Nordic nations, Iceland spends a lot less on its healthcare system. A 2013 OECD report shows that Norway spends 9.3% of its GDP on health expenditures, Sweden 9.5%, and Denmark 10.9%—these countries also out-earn Iceland’s $54,000 GDP per capita, with $100,000, $58,000 and $59,000 respectively. “Each percentage of our GDP is worth 18 billion ISK,” Páll says, “so if we were to match Germany’s 11.3%, that would be an addition of 40 billion ISK or so.”

The McKinsey & Company consultancy group compared the cost of procedures at LSH and Karolinska University Hospital in Stockholm, Sweden, which is a facility three times as big as its Icelandic counterpart. Carrying out a single unit of procedure, such as curing pneumonia, was found to cost 50% less in Iceland than in Sweden. This efficiency is to be celebrated in Páll’s opinion, but the hospital needs to be run in a sustainable manner where people feel good about their work and don’t risk burning out. “If you routinely have to call in one or two people to cover a shift, you’ll cut costs by just creating more positions and giving your staff a bit of breathing room.”

If it were up to him, Páll says that he would adopt a Diagnostic-Related Group system, one that’s popular in other Western countries. In it, the hospital would have a certain budget earmarked for regular upkeep, but would then earn additional funds related to its output. This would help shortening long waiting lists, and in the long run cut costs for society as a whole.

Until the funds increase and the strike is resolved, he’ll keep doing what he does, and try to make LSH the best hospital it can be with the resources at hand.

This article is a part of our feature on the country’s healthcare system, Squeezing Blood From A Turnip: Iceland’s Universal Healthcare At Risk. You may be interested in also reading:

LSH Down To The BoneDown To The Bone: The Healthcare System, Post-Austerity

The current shape and financial situation of Iceland’s healthcare system, and how the previous and current Minister of Health views the situation.


LSH May Day MaydayMay Day Mayday: Iceland’s Ongoing Doctor Strike

An in-depth account of the doctor strike, and what might happen if it isn’t resolved soon.



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