As predicted by theory: choice and competition in a publicly funded and regulated regional health system yield improved access and cost control

Abstract

Background New Public Management (NPM) has been widely used to introduce competition into public healthcare. Results have been mixed, and there has been much controversy about the appropriateness of a private sector-mimicking governance model in a public service. One voice in the debate suggested that rather than discussing whether competition is “good” or “bad” the emphasis should be on exploring the conditions for a successful implementation. Methods We report a longitudinal case study of the introduction of patient choice and allowing private providers to enter a publicly funded market. Patients in need of hip or knee replacement surgery are allowed to choose provider, and those are paid a fixed reimbursement for the full care episode (bundled payment). Providers are financially accountable for complications. Data on number of patients, waiting lists and times, costs to the public purchaser, and complications were collected from public registries. Providers were interviewed at three points in time during a nine-year follow-up period. Time-series of the quantitative data were exhibited and the views of actors involved were explored in a thematic analysis of the interviews. Results The policy goals of improving access to care and care quality while controlling total costs were achieved in a sustained way. Six themes were identified among actors interviewed and those were consistent over time. The design of the patient choice model was accepted, although all providers were discontent with the level of reimbursement. Providers felt that quality, timeliness of service and staff satisfaction had improved. Public and private providers differed in terms of patient-mix and developed different strategies to adjust to the reimbursement system. Private providers were more active in marketing and improving operation room efficiency. All providers intensified cooperation with referring physicians. Close attention was paid to following the rules set by the purchaser. Discussion and conclusions The sustained cost control was an effect of bundled payment. What this study shows is that both public and private providers adhere long-term to regulations by a public purchaser that also controls entrance to the market. The compensation was fixed and led to competition on quality, as predicted by theory.

Promises and pitfalls of value-based reimbursement in healthcare : A mixed method health economic approach

“…Due to the responsibility, healthcare providers became more prone to strive for optimal healthcare consumption also outside of their own clinic. Similar findings have been reported in other studies, where bundled payment reduced healthcare use and costs (Agarwal et al, 2020;Wohlin et al, 2021). With STHLM-VBRP, Region Stockholm moves towards integrated care with patient-centeredness and a greater responsibility to healthcare providers, in line with value-based healthcare (VBHC), according to Porter (Porter, 2008).…”

“…Further, it is difficult to distinguish the effect of LOV from other contemporary changes (Janlöv et al, 2013;Wohlin et al, 2012). Approximately 60 per cent of the publicly financed primary care services are provided by private enterprises today (Wohlin et al, 2021).…”

“…There are many empirical studies from different healthcare setting that have investigated the effects of free establishment and free choice, however, the effects are mixed (Goddard, 2015). In Region Stockholm, free establishment and free choice in specialist care have shown both positive and unchanged effects on quality (Goude et al, 2021;Wohlin et al, 2021). However, there are also indications of shifts in case-mix that raise concerns whether private healthcare providers are "gaming the system" (Wohlin et al, 2021) but also threaten the equity in healthcare (Hanning et al, 2012).…”

“…In Region Stockholm, free establishment and free choice in specialist care have shown both positive and unchanged effects on quality (Goude et al, 2021;Wohlin et al, 2021). However, there are also indications of shifts in case-mix that raise concerns whether private healthcare providers are "gaming the system" (Wohlin et al, 2021) but also threaten the equity in healthcare (Hanning et al, 2012). Thus, the effects of competition and free choice in a publicly funded healthcare system is still unclear.…”

“…Several studies on elective hip replacement surgery with bundled payment and LOV show mixed results. Wohlin et al (2021) found 1) increased quality based on patient administrative data and quality registries, 2) reduced waiting times and improved access to care and 3) improved staff satisfaction. Goude et al (Goude et al, 2021) found no effect on quality based on PROM, but did only include hip replacement in their analysis.…”