Page 20 - Effective healthcare cost containment policies Using the Netherlands as a case study - Niek W. Stadhouders

Chapter 1
One option to contain costs is to reduce the total hospital budget. However, this policy option does not address any inefficiencies, risking displacement of valuable care. It has been proposed that hospital budget reductions have negative effects on health outcomes, but not much empirical evidence is available. Some evidence suggests that quality declined as a consequence of cost reductions in hospital care, suggesting a trade-off between spending and quality at the macro level (Wray, 2013). Another strand of literature estimates marginal benefits of spending, defined as the value gained upon a marginal increase in the health budget. This could also be interpreted as the amount of health lost when the budget is reduced (Claxton et al., 2015a). Conveniently, these estimates can also be used in assessment of new technologies, in order to prevent new cost-ineffective technologies from entering the benefit package (Claxton et al., 2015a). In order to set effective spending limits and properly assess new technologies, governments require information on the relation between reductions in spending and health outcomes at the macro level (Helderman and Jeurissen, 2010). This leads to the following research question:
1.6.2. The relation between cost containment and health outcomes
- What is the marginal value lost due to reductions in hospital spending in the Netherlands? (Chapter 4)
For this purpose a methodology tailored to the Netherlands is constructed. This includes novel methods to construct health gains, to model the production of health gains and to correct for reverse causality. Application to the Dutch hospital sector provides estimates on the value lost when hospital funds is reduced. This information can be used to guide cost containment, specifically prioritization, new technology assessment, and setting global budgets. The Netherlands informally uses reference values in approving new technologies of between €20.000 and €80.000. Estimation of the marginal value of hospital spending allows comparison to assess if this range is appropriate. For some countries, e.g. England, the US, Canada, Spain, Australia, it is estimated that one QALY is lost for each €18.000 to €200.000 of budget reduction (Claxton et al., 2015b; Thokala et al., 2018; Vallejo-Torres et al., 2016; Vallejo‐Torres et al., 2017). Addition of the Netherlands to this list allows comparison of methodologies and outcomes.
Active purchasing allows purchasers to simultaneously contain costs and stimulate quality improvements. Many systems have upgraded the role of purchasers over time. With the Health Insurance Act reform in 2006, the Netherlands became a forerunner in using managed competition principles to improve purchasing (Enthoven and van de Ven, 2007).
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1.6.3. The role of purchasers in improving quality and containing costs