Transparency of hospital expenditure

Report | 28-10-2013

Conclusions

Funding of hospital care extremely complex

The funding of hospital care has been very complex for many years. The problem was aggravated in 2012 by a series of system changes and measures taken during the year by the Minister of Health, Welfare and Sport (VWS). The complicated funding structure makes it difficult to check whether hospital care is delivered appropriately and declared and accounted for correctly. The complexity of the system has also led to uncertainty about the development of care expenditure. Hospitals, healthcare insurers, auditors and supervisors do not have a good insight into the costs. The situation is a matter of concern. Care expenditure must be properly managed and the care premiums paid by the public must be spent regularly and efficiently. The public interest is compromised if the complexity of funding hospital care is not reduced. The Minister of VWS must address this problem.

Better information on healthcare costs needed

Cost overruns have been a virtually constant feature of the healthcare sector in recent years. Accountability to parliament for care expenditure would be improved if more accurate information were available. Improvements have been made and announced but there was still little insight in mid-2013 into the expenditure incurred in 2012. It is not possible to check hospital expenditure against the available budget during the year. If it were, potential overruns could be identified and addressed on a timely basis.

Better management of healthcare costs needed

Apart from better information on healthcare costs, effective cost management is needed. Unfortunately, there are few incentives for hospitals and healthcare insurers to check declarations. Hospitals have a virtual monopoly of the information and are subject to little external pressure to check the level of declarations. Healthcare insurers do not pay sufficient attention to checking the regularity of the declarations. They are technically difficult to check. It must be determined not only whether the care declared was actually provided but also whether it was appropriate, i.e. consistent with the latest medical knowledge and practices and appropriate to the state of the patient's health.

Recommendations

Our main recommendations to the Minister of VWS were: 

• ensure that the contracting, funding, invoicing and accounting process is auditable and transparent;
• address the complex care funding system as part of the Information Management in Order Programme (PrIO); 
• have the parties involved in the healthcare sector develop new standards and guidelines or simplify existing standards and guidelines;
• continue to hold healthcare insurers responsible for formal and material checks of declarations; 
• ensure that the Dutch Healthcare Authority (NZa) has sufficient capacity to supervise activities.

Response

The Minister of VWS wrote in her response that she agreed with our conclusions and recommendations. She recognised the importance of reducing complexity and enhancing transparency in the healthcare sector. She referred to the system changes and measures already taken and the plans that were about to be carried out. She expected a great deal from the agreement concluded in the summer of 2013 regarding specialist medical care. It had been agreed to draw up a quality and efficiency agenda, to increase insight into declarations and to speed up the contracting and declaration process. The minister also referred to the additional funds (€5 million in 2014 and €10 million in 2015) that had been budgeted to strengthen the detection function and supervision of the healthcare sector. The minister also referred to the action plan to improve sector-wide responsibility for the declaration process and the measures proposed by the steering group established to improve the provision of information.

Like the minister, we cherish the hope that the plans will deliver in practice what they promise on paper.