Health insurers rarely reward hospitals financially or cut their reimbursements based on the performance delivered. Although quality and efficiency have been parameters for years when purchasing care, few changes in funding allocation have been made in practice. A financial analysis of the annual reports of Dutch hospitals has shown that only 2 - 3 percent of the total budget was reallocated in 2007-2014. This was the conclusion of PhD research by Niek Stadhouders of Radboudumc, which he defended on 15 April.
Stadhouders’ PhD study focused on cost control policy for the healthcare sector: which measures are effective for containing ever-increasing healthcare costs? To answer this question, he analyzed 2250 policy options from 710 scientific publications. Regarding budget reallocations, the study showed that the the Social Support Act (WMO) and the Individual Care Budget (PGB) are subject to a relatively high amount of market dynamics. During the period studied, up to 10 percent of the total budget for these programs was allocated to a different healthcare provider.The fact that this percentage was much lower for hospitals can be explained by factors such as the high market concentration and market power of hospitals, lack of transparency of outcomes and limitations in selective contracting. In addition, health insurers have other options besides financial incentives to improve quality and efficiency in hospitals, such as making contractual agreements on volume and quality or encouraging healthcare providers to adopt best practices from each other.
According to Stadhouders, the results of his study indicate that the system of ‘regulated competition’ in the Netherlands leads to less market dynamics in hospital care than expected. He suggests increased transparency at all levels. The could be achieved by carefully monitoring and evaluating policies designed to contain costs, identifying the effects of healthcare purchasing by insurers and publishing the quality assessments of healthcare providers.
Leakage
Cost-containment measures are often counteracted by ‘leakage’ of the resulting savings via a different route, stated Stadhouders. “As soon as the government makes an individual contribution compulsory for an intervention, the demand decreases,” he cites as an example. “This leads to a reduction in healthcare costs. But for a healthcare provider, fewer patients also means a drop in income. This ‘gap in the budget’ can be filled by increasing the treatment intensity of the remaining patients. As a result, the policy measure may ultimately be ineffective. If you want cost-containment measures to be effective, you also have to look at how you can prevent this ‘leakage’.”
Public or private
Stadhouders' macro-economic research was based on studies from a large number of countries. For example, he compared the efficiency, quality and effectiveness of public and private hospitals. Based on 45 European studies, Stadhouders concluded that there are few clear differences between public and private hospitals in terms of efficiency or quality of care. Some studies have shown that public hospitals are generally more accessible to people with low incomes and/or a high need for healthcare. But private hospitals in some countries score better on accessibility because they have shorter waiting lists. “Other factors, such as how healthcare is funded, seem to have more influence than public or private ownership,” said the PhD student.
Budget cuts are expressed in fewer healthy years of life
With the help of various mathematical models, Stadhouders also calculated what a healthy year of life actually costs. The models were based on insurance claims data from Dutch hospitals, patient data (quality of life, illness and mortality) and changes in the expenditure patterns of hospitals. This analysis showed that a budget reduction on hospital care of 73,600 euros costs one healthy year of life. Stadhouders noted that his calculations are probably insufficiently precise. He argues for more data collection, which would enable more accurate analysis. The improved model could be used to make hospital spending more effective.
Niek Stadhouders is member of theme Healthcare improvement science.