Page 148 - Effective healthcare cost containment policies Using the Netherlands as a case study - Niek W. Stadhouders

Chapter 7
indication of the importance of funding schemes might be the fact that after a DRG-based payment system had been introduced in Italy, NFP hospitals converged to the same levels of technical efficiency as public hospitals (Barbetta et al., 2007). In Germany, Herr (2011) also found no statistically significant differences in technical efficiency between FP and public hospitals after a DRG-based payment system had been introduced in 2004 (Herr et al., 2011). Earlier, Herr (2008) showed that private hospitals were on average less cost and technical efficient, maybe because of the fact that in that timeframe there existed an incentive to increase LOS to raise revenues (Herr, 2008). Nonetheless, FP hospitals were found to be more profit efficient than public hospitals, meaning that hospitals have certain output prices and input prices, and FP hospitals choose the best combination of both input and output factors (Herr et al., 2011). However, another study discovered that under the DRG payment system efficiency gains among FP privatized hospitals were significantly lower compared to before the DRG payment system (Tiemann and Schreyögg, 2012). The Austrian DRG system only covers up to 50% of hospital costs and additional funds come from states and operational deficit coverage, determined ex post by the local authorities. Such funds disproportionally accrue to public providers placing the private sector at bay, but possibly also increasing their incentives to operate more cost conscious (Czypionka et al., 2014).
A subset of studies does use other outcomes to assess the efficiency of hospital providers. Multiple studies analyse the relationship between ownership and LOS (Table 7.4). A short case-mixed LOS is seen as an indicator of superior efficiency. French private hospitals have longer LOS for knee procedures, but shorter LOS for hip procedures (Maravic and Landais, 2006). For most diagnostic groups, there exists no difference in LOS between UK public hospitals and private ISTCs, although for some treatments, particularly hip and knee procedures, a longer LOS was found for NHS hospitals (Street et al., 2010). Another study using the same dataset as the former study supports the latter findings, whereby LOS in ISTCs is shorter than in public hospitals for hip replacements (Siciliani et al., 2013). Evidence from Italy reports shorter LOS in private hospitals for aortic valve substitution (Fattore et al., 2014). However, LOS was found to be longer in Italian private psychiatric hospitals (Gigantesco et al., 2009). The authors explain this by private psychiatric hospitals being funded on a per diem basis, creating incentives to increase LOS. Indeed, in Greece, LOS was also higher in private mental health clinics (Kondilis et al., 2011). This alludes to the assumption that FP providers seem to apply more revenue maximizing strategies. Overall, per diem funding structures – as in mental health - seem to increase LOS among private
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Other efficiency outcomes