Page 119 - Effective healthcare cost containment policies Using the Netherlands as a case study - Niek W. Stadhouders

Do managed competition and active purchasing go hand in hand?
In 2012, the government intervened in the hospital market by negotiating an agreement with the representative organisations of hospitals and insurers, reducing real overall hospital growth to 2.5% per year. These agreements did not formally prevent budget reallocations, as within the total hospital budget, purchasers were still supposed to negotiate individual budgets, but the 2.5% limit may have informally functioned as an anchor in individual negotiations. For example, providers may have used the 2.5% mark as a starting bid or minimal offer in the negotiations. This could have lowered market share reallocations, although no trend break after 2012 is found for hospital care. After the reform, insurers were largely compensated for budget overruns (ex-post risk equalisation). Starting from 2012, compensation was gradually abolished, increasing incentives to purchase actively. In combination with the sector agreements, this may have evoked across- the-board cost containment in the short term. Whether increased risk will incentivise insurers to selectively reallocate provider budgets in the long run remains to be seen, but up to 2014 we find little evidence in support.
Purchasers may experience additional barriers in active purchasing. For example, establishing a good relationship with providers may be beneficial for improving outcomes, but may hinder active purchasing (Hughes et al., 2013; Le Grand, 1999; Petsoulas et al., 2014). Evidence from Germany stipulates frictions due to competition in a corporatist health system (Kifmann, 2017). Lastly, in the UK some scholars found that active purchasing is incompatible with the mindset of commissioners (Checkland et al., 2012). A similar explanation could be applicable to the Netherlands: both insurers and LTC- providers may deem themselves unfit to decide for the patient what services from which provider a patient should receive. On the other hand, evidence from the US and the Netherlands suggests that purchasers are to a certain extent able and willing to steer patients (Bes et al., 2017; Mobley, 1998b; Zwanziger et al., 2000). Another explanation could be the credible commitment problem as hypothesised by Boonen and Schut (2010): due to consumers not trusting purchasers to act prudently on their behalf, insurers fear of loss of reputation and customers upon selective contracting of providers (Boonen and Schut, 2010; Mikkers and Ryan, 2014). Possibly, managed competition in the Netherlands might not fully function as envisioned because implementation is imperfect, for example due to a lack of quality transparency (Van de Ven et al., 2013). Lack of valid quality indicators may complicate insurer choice of well-performing providers.
These barriers may question whether active purchasing through budget reallocations is attainable in the hospital sector. However, social care and personal budgets do show high market share volatility. Furthermore, market share reallocations provide a powerful tool to increase efficiency and stimulate quality improvements. While the Dutch
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