Global budget versus cost ceiling: a natural experiment in hospital payment reform in the Netherlands

Abstract

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.

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

“…In case of a global budget contract, the hospital receives a guaranteed, prospectively set budget to provide all necessary care to a predetermined population of patients for a fixed period of time [ 25 , 32 ]. The budget can be based on historical figures, such as healthcare expenditures in the preceding year(s), or on a projection of expected costs based on the expected number of patients, including case-mix adjustments.…”

“…Studies that did look at actual contracts have typically not studied risk allocation explicitly (e.g., [ 9 , 27 ]. The few studies that did empirically investigate risk allocation in contracts either analyzed the contracts of a single purchaser and/or provider [ 25 , 53 ], or analyzed all hospital contracts in a country but only for a single year [ 47 ]. To our knowledge, no prior studies empirically investigated the determinants of financial risk allocation in hospital–insurer contracts.…”

The Dollar or Disease Burden: Caps on Healthcare Spending May Save Money, but at What “Cost” to Patients?

“…Real-world evidence of the effects of budget caps suggests that health providers change their behavior to stay within the confines of the budget, with consequences that may include reduction of patient-centeredness, optimal care (eg, early hospital discharge leading to later readmission), an increased financial burden on the patient, [29][30][31] and, ultimately, diminishing health. Yet other sources suggest that establishments may reorganize how patients are cared for (eg, the use of advanced practice providers vs doctors), and healthcare providers may focus more on the management of preventable complications and switch to generic medications to reduce cost but maintain standard of care.…”

The impact of DRG-based management of healthcare facilities on amenable mortality in the European Union

“…The hospital financing system is considered an essential part of their management (Gaspar et al, 2020). Among other shortcomings, some countries in the EU do not apply a comprehensive approach to their financial management.…”