Page 190 - Effective healthcare cost containment policies Using the Netherlands as a case study - Niek W. Stadhouders
P. 190

Chapter 8
 Appendix 8.2: A multi-equilibrium model to assess cost containment policy effects
The model consists of two stages. In the first stage, the model describes the health system by four equilibriums:
1. provider market equilibrium 2. provider budget equilibrium 3. bargaining equilibrium
4. patient market equilibrium
These four equilibriums predict response options of healthcare agents. First, the equilibriums are described in detail. Next, the most likely response option is modelled. Third, the model is demonstrated by analyzing relevant cost containment options. Last, recommendations are given.
The first equilibrium is the most straightforward: total health spending is by definition equal to the sum of the budgets of all providers. Mathematically, total healthcare spending (T) is defined as the sum of individual budget (b) of each provider (s), ranging from 0 to S.
This equilibrium has one major consequence: reductions in the total budget (cost containment) must cause a reduction in a selection of provider budgets or a reduction in the number of providers (or both). For the moment, I focus on total public spending, which is the primary concern for policy makers. Additional potential extensions of the model include disaggregation to public spending and private spending:
This would add a third possibility: reductions in the public budget (public cost containment) must lead to (a combination of) either: (1) a reduction in (some) provider budgets; (2) a reduction in the number of providers; (3) an increase in private spending. The third option has been widely hypothesized (Dobson et al., 2006). Policy makers should keep in mind that a successful reduction in the public budget might have spillovers on the private market. For brevity, I will focus on the public budget without loss of generalization.
The provider market equilibrium
Next, we zoom in on the provider budget accounting identity. By assumption, the provider budget can be decomposed into patient numbers, treatment intensity (i.e. the number of
182
The provider budget equilibrium






















































































   188   189   190   191   192