Global budget (GB) arrangements have become a popular method worldwide to control the rise in healthcare expenditures. By guaranteeing hospital funding, payers hope to eliminate the drive for increased production, and incentivize providers to deliver more efficient care and lower utilization. We evaluated the introduction of GB contracts by certain large insurers in Dutch hospital care in 2012 and compared health care utilization to those insurers who continued with more traditional production-based contracts, i.e., cost ceiling (CC) contracts. We used the share of GB hospital funding per postal code region to study the effect of contract types. Our findings show that having higher share of GB financing was associated with lower growth in treatment intensity, but it was also associated with higher growth in the probability of having at least one hospital visit. While the former finding is in line with our expectation, the latter is not and suggests that hospital visits may take longer to respond to contract incentives. Our study covers the years of 2010-2013 (2 years before and 2 years following the introduction of the new contracts). Therefore, our results capture only short-term effects.
Abrupt jumps in reimbursement tariffs have been shown to lead to unintended effects in physicians’ behavior. A sudden change in tariffs at a pre-defined point in the treatment can incentivize health care providers to prolong treatment to reach the higher tariff, and then to discharge patients once the higher tariff is reached. The Dutch reimbursement schedule in hospital rehabilitation care follows a two-threshold stepwise-function based on treatment duration. We investigated the prevalence of strategic discharges around the first threshold and assessed whether their share varies by provider type. Our findings suggest moderate response to incentives by traditional care providers (general and academic hospitals, rehabilitation centers and multicategorical providers), and strong response by profit-oriented independent treatment centers. When examining the variation in response based on the financial position of the organization, we found a higher probability of manipulation among providers in financial distress. Our findings provide multiple insights and possible indicators to identify provider types that may be more prone to strategic behavior.
SUMMARY It is often argued that health care providers (e.g. hospitals, physicians, etc.) are imperfect agents of the patient: over-supplying (or in certain situations under-supplying) health care services when facing a financial advantage to do so.[1] Hence, changing the incentives in provider payment contracts may lead to more appropriate provision of health care. This belief was the motivation for the design of several innovative reimbursement arrangements, such as Medicare’s Hospital Readmission Reduction Program or Maryland’s All-Payer program, created under Affordable Care Act (ACA), and the creation of Accountable Care Organizations.[2] However, the results of these initiatives have been mixed, leading experts to conclude that reaching optimal contract design is more tedious than originally believed.[3] Therefore, it is important to understand what drives providers and under what conditions they respond to financial incentives. Although health care providers’ response to financial stimulus has been empirically shown in an abundance of cases [1, 4], its magnitude is far from uniform and, in certain cases, researchers found no measurable response at all ([5-8]). There is a shortage of comprehensive analyses on exactly what drives providers’ behavior, which hampers the realization of optimal payment designs. In the present dissertation, I attempt to illustrate how providers respond to incentives in various environments and provide recommendations on the optimal payment design in order to obtain high quality and affordable care. My research utilizes examples of policy-reforms and payment design discontinuities in Dutch health care as ‘natural experiments’ that allow me to quantify responses to sudden shifts in the incentive structure. My work focuses primarily on medical specialist care (secondary care) and utilizes claim-level administrative data from Dutch health insurers for the years 2006 to 2018. Overall, my results show that providers with guaranteed budgets, that were independent of production volumes, achieved higher productivity growths and lower growths in treatment intensity, than those with volume-driven arrangements, demonstrating that providers were able to improve efficiency when incentivized to do so using guaranteed budgets (in Chapters 2-3). However, when going deeper and evaluating health care organizations’ response to financial incentives using discontinuities in reimbursement schedules (in Chapters 4-5) I found that the response was not uniform among all providers: small, profit-oriented organizations, especially those in financial distress, were more likely to maximize revenues by strategically discharging patients when a higher tariff was reached. In addition, I demonstrate that the same organization (i.e. rehabilitation centers) showed no response to the discontinuity in an outpatient setting, while strong response is observed in an inpatient setting. A possible interpretation could be the higher potential financial gains from utilizing strategic discharge behavior. Overall, these findings imply that moving away from volume-based production arrangement towards guaranteed payments (e.g. global budgets) could present the right incentives for containing costs and improving efficiency. Global budget mechanisms, however, are not new. These arrangements have been frequently used since the first wave of health care reforms after World War II. [9]. Lessons learnt from these, as well as more recent experiments, such as Maryland’s All-Payer program and pilot programs such as Bernhoven Hospital in the Netherlands, must be considered when designing hospital contracts. Most importantly, the mechanism should appropriately reward gains in market share in order to continue to encourage competition between providers and to circumvent the build-up of waiting lists, while quality and continuity of care must be guaranteed, and policy-makers should ensure that the mechanism is in line with other reimbursement arrangements (e.g. DRG- systems, risk-adjustment mechanisms).
Deregulation and the related rise in competition are generally believed to spur productivity growth. This relationship is one of the main arguments used for the liberalization of healthcare industry. But the exceptional nature of healthcare markets, the presence of asymmetric information and physician-induced demand casts doubt on whether this also holds for the provision of care. Using the healthcare reform of 2006 in the Netherlands, we evaluated how productivity changed when the market was opened to competition. Our results indicate that improvements in productivity were smaller after products were transferred to the liberalized-segment (by 9.5 and 6.6% in 2008 and 2009), suggesting a negative relationship between competition and productivity in healthcare. Our paper also shows that higher levels of productivity gains were reached using hospital budget financing compared to open competition. Competition in healthcare provision has several advantages, such as moderating the growth in product prices and improving patient-choice, but it is more susceptible to physician-induced demand. Meanwhile, budget financing has the advantage of boosting productivity, but the resulting economic gains are generally assumed by the provider. Therefore, we conclude that competition could be socially optimal if volumes and treatment activity could be effectively controlled, and likewise that budgets could be optimal if hospital savings earned through productivity gains could be passed on to society.
Background Unwarranted practice variation refers to regional differences in treatments that are not driven by patients’ medical needs or preferences. Although it is the subject of numerous studies, most research focuses on variation at the end stage of treatment, i.e. the stage of the treating specialist, disregarding variation stemming from other sources (e.g. patient preferences, general practitioner referral patterns). In the present paper, we introduce a method that allows us to measure regional treatment variation with that at different stages of the patient journey leading up to treatment. Methods A series of logit regressions estimating the probability of (1) initial visit with the physician and (2) treatment correcting for patient needs and patient preferences. Calculating the coefficient of variation (CVU) at each stage of the patient journey. Results Our findings show large regional variations in the probability of receiving an initial visit, The CVU, or the measure of dispersion, in the regional probability of an initial visit with a specialist was significantly larger (0.87–0.96) than at the point of treatment both conditional (0.14–0.25) and unconditional on an initial visit (0.65–0.74), suggesting that practice variation was present before the patient reached the specialist. Conclusions Our finding demonstrate that specialists’ decisions meaningfully diminish the amount of regional variation, but the variation does not entirely disappear at any stage, even after controlling for patient needs and patient preferences. Hence, a significant share of the treatment variation remains ‘unexplained’. Our findings also suggest that at least of the variation stems from the regional variation in providing referrals in Dutch primary care. JEL classification I11; I13; I18
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.