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					LSE / NHS Confederation Seminar Series
25 May 2010


Siok Swan Tan
institute for Medical Technology Assessment
tan@bmg.eur.nl
                                                             2




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
                                                              3




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
                                                                                4




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
                                                                                     5




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         Private clinics
                                    centers

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


    Mandatory scheme                Mandatory scheme              Non-insured care
                                    (non-acute outpatient care)
                                             6




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
                                                        7




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
                                                              8




Introduction of the DBC casemix system (3)

financing the primary care chain based on quality


       List A DBCs                        List B DBCs
       fixed national DBC prices          negotiable prices
       production volume                  quality
       67%                                33%


                           Share list A   Share list B
             2006          90%            10%
             2008          80%            20%
             2009          67%            33%
             ?             50%            50%
             ?             40%            60%
             ?             30%            70%
                                                             9




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




  * Note conformity independent treatment centers, slide 5
                                                                                               10




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

Health insurers                                    Hospitals
not obliged to contract all hospitals              not obliged to contract all insurers



may employ different prices for different          may employ different prices for different
hospitals                                          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
                                                               11




Evaluation of structural reforms

 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
                                                                                     12




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




Source: van de Ven WPMM, Schut FT (2009). Managed competition in the
Netherlands: still work-in-progress. Health Econ 18:253–255.
                                                                               13




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.




Source: van de Ven WPMM, Schut FT (2009). Managed competition in the
Netherlands: still work-in-progress. Health Econ 18:253–255.
                                                                                   14




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)
                                                                                   15




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
                                                                                                                       16




Introduction of the DBC casemix system (7)

financing the primary care chain based on quality

                               2004            Minimum 2007     Maximum 2007     Mean 2007          % price increase
                             price (€)            price (€)       price (€)       price (€)



   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%




   Source: Nederlandse Zorgautoriteit, 2005
                                                                               17




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
                                                                                              18




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




    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.
                                                               19




Conclusion of structural reforms

 transition from supply-led system to demand-led system ???
                                                               20




Conclusion of structural reforms

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

				
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