Towards an economic model of the Dutch health care sector

Health Economics

Volumn 6, Issue 4, 1997, Pages 351-363

  Folmer, Kees ^a   Stevens, Johnny ^b   Van Tulder, Frank ^b   Westerhout, Ed ^a  

^a CPB NETHERLANDS BUREAU FOR ECONOMIC POLICY ANALYSIS   (Netherlands)

^b Social and Cultural Planning Office   (Netherlands)

Author keywords

Health care costs; Simulation model

Indexed keywords

CONFERENCE PAPER; GENERAL PRACTITIONER; HEALTH CARE; HEALTH CARE DELIVERY; HEALTH CARE NEED; HEALTH ECONOMICS; MANAGER; MEDICAL SPECIALIST; MODEL; NETHERLANDS; PATIENT; PRIORITY JOURNAL;

COMPUTER SIMULATION; FAMILY PRACTICE; FINANCIAL MANAGEMENT, HOSPITAL; HEALTH BEHAVIOR; HEALTH CARE COSTS; HEALTH CARE SECTOR; HOSPITAL CHARGES; HOSPITAL COSTS; HUMANS; INSURANCE, HEALTH; MODELS, ECONOMIC; NETHERLANDS; PHYSICIAN'S PRACTICE PATTERNS; REFERRAL AND CONSULTATION; SPECIALTIES, MEDICAL;

EID: 0030869335     PISSN: 10579230     EISSN: None     Source Type: Journal    
DOI: 10.1002/(SICI)1099-1050(199707)6:4<351::AID-HEC274>3.0.CO;2-5     Document Type: Conference Paper

References (22)

1. Oxley, H. and MacFarlan, M. Health care reform: controlling spending and increasing efficiency. OECD Economic Studies 1995; 7-55.
2. Weisbrod, B. A. The health care quadrilemma: an essay on technological change, insurance, quality of care and cost containment. Journal of Economic Literature 1991; 29: 523-552.
3. Schut, F. T. Health care reform in The Netherlands: balancing corporatism, etatism and market mechanisms. Journal of Health Politics, Policy and Law 1995; 20: 615-652.
4. Pauly, M. V. A re-examination of the meaning and importance of supplier-induced demand, Journal of Health Economics 1994; 13: 369-372.
5. Rutten, F. F. H. The use of health care facilities in The Netherlands - an econometric analysis. PhD Thesis. Erasmus University, Rotterdam, 1978.
6. Our assumption that suppliers decide on the provision of medical services is based upon the notion that the patient has no information at all on the appropriate amount of care. Rochaix (Rochaix, L. Information asymmetry and search in the market for physicians' services. Journal of Health Economics 1989; 8: 53-84) demonstrates that if a small number of patients is informed, this may strengthen the agency role of physicians.
7. Arrow, K. J. Uncertainty and the welfare economics of medical care, American Economic Review 1963; 53: 941-973.
8. We neglect the fact that privately insured also face higher effective prices than the publicly insured because the privately insured first have to pay and obtain reimbursement later whereas the health care received by the publicly insured is paid directly for by insurance companies.
9. An alternative route to tackle this problem is to introduce a time price (see Becker, G. S. A theory of the allocation of time. Economic Journal 1965; 75: 493-517). Medical consumption takes time which could alternatively be used to earn more income. We think this solution is not fully satisfactory as many consumers of health services are of old age and do not belong to the work force. Moreover, payments to Dutch employees in general continue in case of sickness and medical consumption.
10. s.
11. Feldstein, M. S. Econometric studies of health economics. In: Intriligator, M. D. and Kendrick, D. A. (eds) Frontiers of Quantitative Economics, pp. 377-442. North-Holland, Amsterdam, 1974.
12. McGuire and Pauly (McGuire, Th. G. and Pauly, M. V. Physician response to fee changes with multiple payers. Journal of Health Economics 1991; 10: 385-410) introduce a demand-inducement variable to deal with the case where physicians collect different fees for different types of patients. Our approach is more general than theirs in that it captures both the cases of over-supply and under-supply of medical services, whereas their model only deals with the former case.
13. Ethics is specified as a dichotomous variable because of analytical simplicity. Though reality may be continuous, our approach may equally well capture the impact of ethical norms upon aggregate physician labour supply, which is the focus of our model. Contrary to our paper, Woodward and Warren-Boulton (Woodward, R. S. and Warren-Boulton, F. Considering the effects of financial incentives and professional ethics on 'appropriate' medical care. Journal of Health Economics 1984; 3: 223-237) specify ethics as a continuous variable. Their approach does not readily lend itself for an empirical application however.
14. Van Vliet, R.C.J.A. and van de Yen, W.P.M.M. Analyzing differences in medical care by general practitioners between publicly and privately insured (in Dutch: Analyse van verschillen in huisartsenhulp tussen ziekenfonds- en particulier verzekerden). Economisch Statistische Berichten 1983; 68: 456-461.
15. It would be interesting to know to what extent the result that there are two types of physicians is supported empirically by cross-section data. We are unaware of studies that aim directly to assess this kind of supply effect, however.
16. This argument may be enervated by noting that patients might be able instead to observe the delivery of physicians' services. However, in reality physicians may differ not only in their ethical costs, but also in other factors and these other factors may also be unobservable. If this were to be accounted for in the model, for example by allowing for unobservable variation in the demand for health care across physicians, patients would be unable to infer a physicians' ethical cost from its delivery of services and a result similar to that in the paper would be achieved.
17. Newhouse, J. P. Toward a theory of nonprofit institutions: an economic model of a hospital. American Economic Review 1970; 60: 64-73.
18. Pauly, M.V., Nonprofit firms in medical markets. American Economic Review 1987; 77: 257-263.
19. Hodgkin, D. and McGuire, Th. G. Payment levels and hospital response to prospective payment. Journal of Health Economics 1994; 13: 1-29.
20. 19 in which hospital management decides on hospital output and the model of Pauly and Redisch (Pauly, M. V. and Redisch, M. The not-for-profit hospital as a physicians' cooperative. American Economic Review 1973; 63: 87-99) in which specialists decide on hospital output.
21. Harris, J. E. The internal organization of hospitals: some economic implications. Bell Journal of Economics 1977; 8: 467-482
22. In The Netherlands, the variable prospective component relates hospital revenues also to agreements on the number of patient days and the number of first outpatient consultations. As these extensions do not affect the results of the model in an important way, we omit them here.