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Hospital Healthcare Europe

European hospital healthcare update: Member State profiles

JM Leemhuis-Stout
1 January, 2008  

JM Leemhuis-Stout
Chairman
NVZ Dutch Hospitals Association

Hospitals in the Netherlands are undergoing a process of transition. A process of leaving a government-regulated system towards a market-driven model. A liberalised system in which patients, through their healthcare insurers, purchase required care from hospitals. This situation involves hospitals negotiating with health insurance companies about the volume and price (DBCs – a Dutch acronym for “diagnosis and care combinations”) of the supplied healthcare services. This puts hospitals in competition with each other.

The government has taken a step back in order to give insurance companies and hospitals more room. From the hospitals’ perspective, this process of transition is moving too slowly. It is admittedly a complex process with a great deal at stake for all parties. But if the transition takes too long, stagnation could produce a situation wherein both systems operate beside one another. This is an undesirable situation for everyone.

Hospitals are not only concerned with systems and finances; they stand for the provision of proper quality care.

There has been much development over recent years regarding liberalisation. For example: efficiency has increased, waiting lists have disappeared, expensive drug costs are being reimbursed, hospital organisation is more transparent, and education is improving. But there are many more steps to be taken. This includes installing a new model in which hospitals will function – a model which speaks of market orientation and competition for a larger part of hospital care.

There are two major issues involved in this subject: open pricing for healthcare products; and the creation of a level playing field for competing hospitals. Five underlying points must be regulated: education costs for medical specialists, building costs for new hospitals, regulation (including reimbursement) for performing specialised medical procedures, emergency care and compensation for providing expensive drugs.

Point A has been regulated. An education fund was established in 2006 that takes care of these costs. We expect that point B will be resolved for the most part this year. Solutions for points C, D and E will require a few years.

The Dutch government has in recent years allowed hospitals and health insurers to negotiate prices for 10% of healthcare products. Initial results are promising. A price explosion did not occur. Hospitals therefore want to move along quickly and gain more room for free enterprise. The stakes are to open the pricing for 70% of all healthcare products to negotiation. These stakes are too high for the politicians. They want to allow hospitals to negotiate 20% of healthcare products. They furthermore wish to thoroughly evaluate the effects and implement a temporary system of standardised competition for the remainder of healthcare. What this system will look like is not clear. Two types of standardised competition are possible. One is where the standards consist of fixed prices; the other offers room for free negotiation beneath an annually set price ceiling.

The effect of this transitory model is that both variations provide little stimulus for insurers to buy real “care”. It is furthermore a bureaucratic system that can be used as a tool to cut expenditure.

Politicians see hospital care essentially as an annual cost item of €10bn, with any increase immediately hitting voters in their wallets. Whenever results are disappointing, politicians intervene and economise through so-called “targeted cutbacks”. Electoral results are affected if this ability to intervene in setting the price and volume is significantly diminished. This is why politicians want guarantees they can continue to influence healthcare pricing. Guarantees, because they will be relinquishing a good deal of power to others: to hospital managers and health insurers. How will they use this power? What are the consequences for the politicians?

In summary: the bottleneck in liberalising healthcare pricing lies in getting politicians to trust the executors of the new system.

Hospitals have been consistently disappointed by the government’s position when it comes to fulfilling agreements. The hospitals’ concern is that a transition model (ie, standardised competition) is being proposed without any concrete guarantees that an effort will be made to reach the ultimate objective – unfettered negotiations concerning volume, price and quality. This, despite the acknowledgement that the system is a temporary one, will make the shift towards an open market more gradual.

The slowness in completing the current change of systems has delivered another complication: a drastic increase in hospitals’ administrative costs. Hospitals currently have three administrative systems running simultaneously. The number of feet parked under the desks are disproportionately higher than the number of hands working the beds.

The involved parties must undertake the interesting yet complicated mission of building a bridge of trust over the chasm of fear.

The second major point is the quality of hospital care. This involves:

  • The quality of professionals – including verifiable agreements concerning supplied medical care and a good performance assessment system for medical specialists.
  • Organisational quality – hospital accreditation and accountability for delivered services.
  • Accountable care – the Dutch National Hospital Association (NVA) wishes to adhere to minimum requirements for client orientation, safety, timeliness, accessibility, effectiveness and efficiency.
  • Mark of approval.

The above points will affect membership requirements for the Dutch Hospital Association.

A year-long programme named “spoorboekje kwaliteit” (quality timetable) has been set up. This is the schedule which members of the NVA will follow to work on the quality of care.

In conclusion: a new Cabinet was formed on 6 March 2007. The new minister is working himself into the job. He has given himself one hundred days. His main occupation in this period will be “listening”. It is not clear yet how he will carry out the government’s coalition agreements. In other words, the Dutch hospital care system awaits a dynamic period.