Page 177 - Effective healthcare cost containment policies Using the Netherlands as a case study - Niek W. Stadhouders

treatment intensity of patients. Furthermore, to avoid a spending deficit, any decline in revenue must be compensated by a reduction in labour costs, capital expenses, inputs or profits. Policies to reduce hospital expenses, such as wages or capital costs, may not reduce the total costs if the income side (the hospital budget) remains unchanged. The bargaining equilibrium predicts that the height of the provider budget is the result of the relative bargaining position of both the purchaser and the hospital. If the fallback option of no agreement is unattractive for the provider, the budget negotiated will be lower, whereas it will be higher if the fallback option of no contract is unattractive for the payer. Purchasers need to take into account effects of other cost containment policies in budget negotiations in order to reduce the total costs. Furthermore, in case of multiple payers, any reduction in the budget negotiated by one payer may induce attempts of the provider to negotiate a higher budget in negotiations with other payers. Lastly, the patient market equilibrium describes the interaction between supply and demand. In equilibrium, supply (as determined by the other equilibriums) equals demand (as determined by the needs and price paid by patients). Policies that reduce supply may invoke reduced access and waiting lists. Policies that reduce demand may result in excess supply and increased treatment intensity.
Chapter 4 includes an extensive discussion on the strengths and limitations of the methodology and policy implications of the marginal value of hospital spending in the Netherlands. In this section we discussed the applicability of supply-side thresholds in new technology assessment, reflecting upon mechanisms to improve efficiency and reduce risk of displacement.
8.4 The marginal value of spending
The use of a threshold based on supply-side estimates of opportunity costs assumes that these opportunity costs are fixed. However, opportunity costs in the hospital sector may vary with the stringency of the budget, defined as the relation between the height of the
General Discussion
The four models indicate that policies targeting a single equilibrium are likely to be associated with counterbalancing effects in other equilibriums. The model outcomes are consistent with the results from chapters 2 and 3, as the model simultaneously incorporates the possible targets for cost containment and demonstrates that single policies are likely to be ineffective. Appendix 7.1 provides examples of applications of the model on cost containment policies relevant for the Netherlands: budgeting, cost sharing, managed care and benefit package restrictions. A combination of policies targeting multiple equilibriums could increase the likelihood of policies being effective in containing costs. Policy makers could use the model to predict policy responses and monitor their effectiveness. Table 46 in appendix 7.1 also provides suggestions for further model development.
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