Strategic cost-shifting in long-term care. Evidence from the Netherlands

With the reform in 2015 of the system of long-term care (LTC) in the Netherlands, responsibilities for the provision of social support and assistance were delegated from the central government to the municipalities. Unintentionally, the way municipalities are financed created incentives to shift cost from the local level back to central level. In this paper we examine whether municipalities respond to the prevailing financial incentives by shifting costs to the public LTC insurance scheme. Using data on almost all Dutch municipalities over the period 2015–2019, we estimate that municipalities with a solvency rate below 20% have a 2.5% higher admission rate to the public LTC scheme. Furthermore, we show that the tightening municipal budgets for social care since 2017 were accompanied with about 14% higher admission rates in 2018 and 2019 compared to 2015. The results point to strategic cost shifting by municipalities that can be counteracted by changing the financial incentives for municipalities and by reducing the existing overlap between the local and central care domains

Managed Competition Reform in the Netherlandsand its Lessons for Canada

This article provides an economic and legal perspective on the managed competition reforms within the Netherlands. After an examination of the rationale and the main features of the reforms, a number of problems and dilemmas that were encountered during the implementation process will be highlighted. The authors conclude that although the logic of the managed competition model is appealing, its implementation is quite complicated and requires a strong government with a continued commitment to set and enforce the rules of competition. If these preconditions are not met, the prospects of a successful introduction of managed competition are bleak. Despite its different health care system, Canada may benefit from the Dutch reform experience, especially if the trend towards decentralization of health planning and funding continues. In particular, the need for an adequate definition of entitlement to health care will become more pronounced

Changing roles of health insurers in France, Germany, and the Netherlands:any lessons to learn from Bismarckian systems?

Bismarckian health systems are mainly governed by social health insurers, but their role, status, and power vary across countries and over time. We compare the role of health insurers in three distinct social health insurance systems in improving health systems' efficiency. In France, insurers work together as a single payer within a highly regulated context. Although this gives insurers substantial bargaining power, collective negotiations with providers are highly political and do not provide appropriate incentives for efficiency. Both Germany and the Netherlands have introduced competition among insurers to foster efficiency. However, the rationale of insurer competition in Germany is unclear because contracts are mostly concluded at a collective level and individual insurers have little power to influence health system efficiency. In the Netherlands, insurer competition is substantially more effective, but primarily focused on price and cost containment. In all three countries, the role of insurers has been transforming slowly to respond to common challenges of assuring care quality and continuity for an ageing population. To assure sustainability, they need to ensure that care providers cooperate with the same quality and efficiency objectives, but their capacity to do so has been limited by insufficient support to enforce public information on provider quality.</p

The impact of geographic market definition on the stringency of hospital merger control in Germany and the Netherlands

In markets where hospitals are expected to compete, preventive merger control aims to prohibit anticompetitive mergers. In the hospital industry, however, the standard method for defining the relevant market (SSNIP) is difficult to apply and alternative approaches have proven inaccurate. Experiences from the United States show that courts, by identifying overly broad geographic markets, have underestimated the anticompetitive effects of hospital mergers. We examine how geographic hospital markets are defined in Germany and the Netherlands where market-oriented reforms have created room for hospital competition. For each country, we discuss a landmark case where definition of the geographic market played a decisive role. Our findings indicate that defining geographic hospital markets in both countries is less complicated than in the United States, where antitrust analysis must take managed care organisations into account. We also find that different methods result in much more stringent hospital merger control in Germany than in the Netherlands. Given the uncertainties in defining hospital markets, the German competition authority seems to be inclined to avoid the risk of being too permissive; the opposite holds for the Dutch competition authority. We argue that for society the costs of being too permissive with regard to hospital mergers may be larger than the costs of being too stringent

Financial risk allocation and provider incentives in hospital–insurer contracts in The Netherlands

In healthcare systems with a purchaser–provider split, contracts are an important tool to define the conditions for the provision of healthcare services. Financial risk allocation can be used in contracts as a mechanism to influence provider behavior and stimulate providers to provide efficient and high-quality care. In this paper, we provide new insights into financial risk allocation between insurers and hospitals in a changing contracting environment. We used unique nationwide data from 901 hospital–insurer contracts in The Netherlands over the years 2013, 2016, and 2018. Based on descriptive and regression analyses, we find that hospitals were exposed to more financial risk over time, although this increase was somewhat counteracted by an increasing use of risk-mitigating measures between 2016 and 2018. It is likely that this trend was heavily influenced by national cost control agreements. In addition, alternative payment models to incentivize value-based health care were rarely used and thus seemingly of lower priority, despite national policies being explicitly directed at this goal. Finally, our analysis shows that hospital and insurer market power were both negatively associated with financial risk for hospitals. This effect becomes stronger if both hospital and insurer have strong market power, which in this case may indicate a greater need to reduce (financial) uncertainties and to create more cooperative relationships.</p

The long and winding road towards payment for healthcare innovation with high societal value but limited commercial value:A comparative case study of devices and health information technologies

Innovation is widely recognized as an important means of tackling challenges that face healthcare systems. But innovation can only succeed in this role if financial conditions allow innovations with high societal value to be developed and implemented. This study is an in-depth examination of the role of payment mechanisms throughout the innovation process, from the perspective of innovators. We conducted a comparative case study of four innovation projects, two involving medical devices and two involving health information technologies, all of which originated from academic settings. Although financial factors were found to have impeded the progress of innovative products at every step in the innovation process, this effect appears to have been strongest during the implementation phase. The perceived commercial value of an innovative product was a key factor in obtaining sufficient payment. Innovative products with potentially significant societal value but limited commercial value are unlikely to become structurally embedded in practice, or to be scaled up beyond the local level. The study reveals four additional factors that affect progress through the healthcare innovation process: compatibility of the innovation with existing practice, and commitment, competences, and social capital of the innovator. We identify a number of lessons for policy and practice that we believe would increase the likelihood of innovations with potentially significant societal value to achieve widespread implementation. These lessons reflect three key issues identified in our research: 1) shift the focus from commercial value towards societal value; 2) support dissemination of innovations beyond the local level; 3) help innovators to convey their valuable ideas.<br/

Spillover effects of supplementary on basic health insurance: evidence from the Netherlands

Like many other countries, the Netherlands has a health insurance system that combines mandatory basic insurance with voluntary supplementary insurance. Both types of insurance are founded on different principles. Since basic and supplementary insurance are sold by the same health insurers, both markets may interact. This paper examines to what extent basic and supplementary insurance are linked to each other and whether these links generate spillover effects of supplementary on basic insurance. Our analysis is based on an investigation into supplementary health insurance contracts, underwriting procedures and annual surveys among 1,700–2,100 respondents over the period 2006–2009. We find that health insurers increasingly use a variety of strategies to enforce a joint purchase of basic and supplementary health insurance. Despite incentives for health insurers to use supplementary insurance as a tool for risk selection in basic insurance, we find limited evidence of supplementary insurance being used this way. Only a minority of health insurers uses health questionnaires when people apply for supplementary coverage. Nevertheless, we find that an increasing proportion of high-risk individuals believe that insurers would not be willing to offer them another supplementary insurance contract. We discuss several strategies to prevent or to counteract the observed negative spillover effects of supplementary insurance