The right approach to improving healthcare
Dutch healthcare is of outstanding quality, but relatively expensive. Strict cost control is growing increasingly important. The Netherlands Bureau for Economic Policy Analysis (CPB) is allowing for a rise in healthcare costs from 13% of GDP at present to 31% in 2040. That cannot and will not happen. Even so, the cost of healthcare is threatening to eclipse other public expenditure. One important societal and political question is: at what point does the cost of healthcare become unmanageable? The onerous task facing the sector itself is to achieve the biggest health benefits with the resources available to it.
In 2012, the Strategy& team published its report ‘Kwaliteit als medicijn’ [Quality as remedy], in which we argued that the cost of curative care could be cut by between four to eight billion euros, and not at the expense of quality, but precisely by improving quality. Instead of more efficient delivery of more and more care, our idea was to stop delivering care that has proved to be ineffective, or even harmful. In the years thereafter, we put this formula to work at healthcare institutions and insurers.
Until recently, analysts blamed the escalating cost of healthcare mainly on excessive prices. The solution was to improve efficiency. The number of treatments was a given determined largely by the demand for care. In our report, however, we showed that these assumptions were inaccurate. As it turned out, the ageing population – often blamed for the rising cost of healthcare – is responsible for only a 0.5% increase in care per annum. So what does explain the increase then?
Care providers know how much grey area there is between overtreatment and undertreatment. Should we operate now or wait awhile? When should the patient return for a check-up? How do we weigh the damaging effects of a treatment against its potential benefits? In all these cases, prudent care professionals will make different choices, so it comes as no surprise that care practices tend to differ more than resemble one another.
Meanwhile, on the supply side care providers often urgently need to grow. After all, in the fee-for-service system they are paid per treatment, but receive nothing for not treating a patient. And they need to generate revenues to keep making new investments. Guidelines make demands on numbers, either directly (‘volume criteria’) or indirectly, by setting infrastructure requirements.
Strategy&’s approach is to invite care providers to propose ways of eliminating unnecessary care. We are extremely conscious of the fact that standard rules may be useless when it comes to healthcare. The overriding concern is to deliver quality care to individual patients. Not all standard treatments work for every patient, and as a result, avoiding unnecessary care contributes to quality.
At the same time, reducing unnecessary care makes it possible to reverse rising costs. It frees up time to improve care and lower the cost of care to society. The result is not only better quality care for each individual patient, but also care providers who once again enjoy their work.
It is no easy matter to implement this approach: it takes a change in culture and a transitional period lasting several years. There are many challenges and obstacles along the way that make it difficult to navigate through the complex healthcare landscape. Indeed, most care institutions are unable to go it alone.
Based on our own experience working with care institutions and insurers, we have noticed that seven critical issues arise in every transition process. Our blogs describe how we have tackled these issues in our work with different care institutions. We describe the practical lessons learned and reveal the complexity of the care sector and the organisations in transition.
Quality care initiatives must be implemented to drive the transition to appropriate care and make it tangible. The transition starts, as it were, by thinking big and acting small. Quality initiatives are the basic recipe for this new way of working.
A fixed amount in revenue for at least a few years gives care institutions the assurance that their revenue won’t be jeopardised if production declines. They then have the time and leeway to curtail volume and make the transition possible. A fixed revenue also gives care insurers more certainty about expenditure going forward.
Designing appropriate care inevitably means implementing a long-range transition agenda. We cannot expect the entire organisation, with its many stakeholders – including the board, doctors, support staff, insurers and partners in the care chain – to transform itself from one day to the next. The transition requires governance and a structured programme to guide the overall process, ensure coordination at the right levels, and monitor and manage progress.
At Strategy&, we believe that volume reduction and lower costs should go hand in hand. In the real world, we have noticed that variable costs and the targeted reduction of staffing costs offer the greatest potential. Active steps must therefore be taken to reduce overcapacity. But how does that work in practice?
Strategy& has developed a new perspective on hospital organisations, one aligned with the three main activities of care professionals, i.e. advising, treating and supervising. We have divided these three activities across four care models: Diagnosis & Needs Assessment, where the focus is on advising patients; Intervention Care Centres, where the emphasis is on treatment; Chronic Care, which is largely about supervising patients; and finally Acute Care, which stresses advising and treating patients in an acute setting.
Strategy& has joined forces with health insurers, care institutions, medical specialist firms and specialists to develop new funding models. They encourage behaviour that supports appropriate care and distribute the costs and benefits more fairly between all the relevant parties.