LSE / NHS Confederation Seminar Series 25 May 2010

Siok Swan Taninstitute for Medical Technology Assessment

tan@bmg.eur.nl

Structural reforms of the Dutch healthcare sector (1)

Reasons for structural reforms:

• improve the efficiency of hospital care• increase transparency of hospital costs • introduce fundamental incentive mechanisms

transition from supply-led system to demand-led system

2

Structural reforms of the Dutch healthcare sector (2)

transition from supply-led system to demand-led system

1. Integration of social and private insurance schemes

increasing competition between health insurers

2. Free access to the hospital care market

increasing competition between healthcare providers

3. Introduction of the DBC casemix system

financing the primary care chain based on quality

3

Integration of social and private insurance schemes (1)

increasing competition between health insurers

• mandatory scheme • coverage to the whole population• customers’ free choice of health insurer • risk equalization fund

 

Insurers are to compete by critically purchasing care for their customers.

Market power of insurers would be determined by willingness of customers:• to switch between insurers • to go to hospitals which are contracted by their insurer

4

Free access to the hospital care market (1)

increasing competition between healthcare providers

Number of hospitals:• university hospitals: 8

• general hospitals: 86

• specialised hospitals: 35

• revalidation centers: 17

Independent treatment centers and private clinics allowed to freely access hospital care market

Hospitals Independent treatment centers

Private clinics

Not-for-profit Not-for-profit For-profit

Mandatory scheme Mandatory scheme (non-acute outpatient care)

Non-insured care

5

Introduction of the DBC casemix system (1)

DBC = Diagnosis Treatment Combination

A DBCs includes:

whole set of hospital services

from first consultation

until treatment completion

6

Introduction of the DBC casemix system (2)

Features of the DBC casemix system:

• patient classification: diagnosis and treatment– medical specialty– type of care– demand for care – diagnosis – treatment axis (setting and nature)

• clinical and resource use data• care intensity is not (yet) used• about 30,000 DBCs • all hospitals and independent treatment centers • inpatient and outpatient care • mental healthcare • distinction between list A and list B

7

financing the primary care chain based on quality

Share list A Share list B

2006 90% 10%

2008 80% 20%

2009 67% 33%

? 50% 50%

? 40% 60%

? 30% 70%

Introduction of the DBC casemix system (3)

List A DBCs List B DBCs

fixed national DBC prices negotiable prices

production volume quality

67% 33%

8

Introduction of the DBC casemix system (4)

List B DBCs *:

• sufficiently homogeneous• sufficiently high incidence/ production volume• predictable non-acute inpatient/ outpatient care• freely accessible for (new) healthcare providers

Transfer from list A to B:

• supported by the ‘field’• technically realisable

9

* Note conformity independent treatment centers, slide 5

Introduction of the DBC casemix system (5)

List B DBCs:– mean to encourage insurers and hospitals to negotiate on quality – deficiencies/ earnings responsibility of hospital

10

Health insurers Hospitals

not obliged to contract all hospitals not obliged to contract all insurers

may employ different prices for different hospitals

may employ different prices for different insurers

may set maximum to number of DBCs they want to reimburse

may agree upon lower/ higher price if production exceeds predetermined figure

determine frequency/ terms of agreements

Evaluation of structural reforms

11

transition from supply-led system to demand-led system ???

1. Integration of social and private insurance schemes

increasing competition between health insurers

2. Free access to the hospital care market

increasing competition between healthcare providers

3. Introduction of the DBC casemix system

financing the primary care chain based on quality

Integration of social and private insurance schemes (2)

increasing competition between health insurers

Insurers were to compete by critically purchasing care for their customers.

However, insurers reluctant to selectively contract with hospitals and to offer

preferred hospital contracts to their customers.

• Lack of high-quality information

• Afraid of losing reputation

• Limited financial risk

12

Source: van de Ven WPMM, Schut FT (2009). Managed competition in the Netherlands: still work-in-progress. Health Econ 18:253–255.

Integration of social and private insurance schemes (3)

increasing competition between health insurers

Market power of insurers would be determined by willingness of customers:• to switch between insurers • to go to hospitals which are contracted by their insurer

In 2006, 18% of the population switched to another insurer.

After 2006, annually 4% of the population switched.

13

Source: van de Ven WPMM, Schut FT (2009). Managed competition in the Netherlands: still work-in-progress. Health Econ 18:253–255.

Free access to the hospital care market (2)

increasing competition between healthcare providers

• many hospitals established independent treatment centers

• number independent treatment centers increased from 79 to 135

• relatively high-quality care due to:

• the routine delivery of specific treatments

• easy response to changes in the needs of the patients

• reduced waiting lists of competing hospitals

• encouraged competition quality/ efficiency

higher accessibility for patients, especially for straightforward non-acute

outpatient care (list B DBCs)

14

Introduction of the DBC casemix system (6)

financing the primary care chain based on quality

List B DBCs meant to encourage insurers and hospitals to negotiate on quality

However, health insurers and hospitals predominantly negotiate on production

volume and/ or prices

production volume list B increased at a higher rate than list A

prices list B increased at a lower rate than list A

15

Introduction of the DBC casemix system (7)

financing the primary care chain based on quality

 

2004 price (€)

Minimum 2007 price (€)

Maximum 2007 price (€)

Mean 2007price (€)

% price increase

Hip replacement 8,561 7,603 11,370 9,097 6.3%

Knee replacement 10,228 9,097 13,000 10,746 5.1%

Inguinal hernia repair 2,163 1,529 3,088 2,254 4.2%

Diabetes 409 385 1,027 483 18.1%

Tonsillectomy 740 433 1,498 800 8.1%

Cataract 1,317 1,044 1,599 1,381 4.8%

Spinal disc herniation 3,046 2,413 5,778 3,308 8.6%

16

Source: Nederlandse Zorgautoriteit, 2005

Introduction of the DBC casemix system (8)

financing the primary care chain based on quality

negotiations take place annually

either party re-opens negotiations if required by circumstances

great negotiated price deviations only minority of DBCs

complex and chronic DBCs less sensitive to market competition

hospitals negotiate on the total budget rather than on individual DBCs

17

Introduction of the DBC casemix system (9)

financing the primary care chain based on quality

Limitations for health insurers that restrain them from competing on quality:

• Patients assume that quality is equal among all hospitals

• Hospitals have contracts with several insurers, which limits the effect of a

single insurer’s effort to motivate hospitals

• If an insurer achieves recognition for providing high-quality care, it is likely to

enrol a disproportionate share of patients with chronic medical problems

18

Source: Custers T, Arah OA, Klazinga NS (2007). Is there a business case for quality in the Netherlands? A critical analysis of the recent reforms of the health care system. Health Policy 82:226–239.

Conclusion of structural reforms

19

transition from supply-led system to demand-led system ???

Conclusion of structural reforms

20

transition from supply-led system to demand-led system ???