May 2015 - Economic trade-offs in healthcare
The Healthwise Expertise Centre of the University of Groningen and the UMCG organised their first joint spring symposium about ‘Economic considerations in care’ on Friday 29 May 2015. Managers, professionals and researchers from healthcare, academia and administration were cordially invited to this meeting. Our spring symposium offered a varied programme of lectures and workshops by academics and professionals from practice.
Rising costs have increased the need for economic decisions. In the UK, for instance, the solution has been to create a framework for policy decision-making in healthcare about, for example, the contents of the standard package. But how are we going to do this in the Netherlands? How can we turn citizens into the human capital of care and thus build a fully voluntary economy? The first best practices have been coming in as existing formal care institutions, especially in shrinkage areas, are trying to prove their economic impact. During the spring symposium, two examples from the Northern Netherlands will show you how to map such things.
Finally, we will discuss formulating a business case for care innovations, such as a new screening tool or a new care package.
This mix of economic and business know-how, together with examples from practice, guarantee an instructive afternoon.
Looking back (keynotes)
Keynote Lecture by Simon Walker, University of York
Simon Walker, Research Fellow at the Centre for Health Economics of the University of York, set a nice framework with his keynote lecture. Care needs are endless whereas resources are scarce; introducing a new treatment here means the loss of a treatment elsewhere. For this reason, the health gains of one treatment should always be weighed against the health loss incurred as another treatment becomes unavailable elsewhere. The same applies to education. School meals, for example, may lead to better health and higher productivity in the future, but these benefits don’t serve education itself. Rather, they raid the very resources that could have been deployed in education.
Value in care is defined as health, individual wellbeing and social wellbeing in a broad sense, including, for example, social justice and equality. This makes assigning value to healthcare a complex matter. While new interventions need to be judged according to their impact on health and broader social benefits, such as participation in the work process, on the one hand, they should also be judged in terms of their effect on the costs of care on the other hand. Alongside their effect on mortality, their effect on morbidity should also be weighed since much of healthcare is indeed aimed at impacting on morbidity. Sound economic decisions in healthcare require a multi-sectoral perspective, as the sector that sows is not necessarily the sector that reaps.
The civil society: past, present and future
This workshop, led by Erik Buskens, Professor of Medical Technology at the UMCG, and Karin Kalverboer, Director of the Healthcare Innovation Forum (ZIF), discussed civil society and compared the challenges of the future with those of the past. After a short introduction of the participants, Joke Bakker was the first to tell a story about a civil initiative in Emmerhout, an example of what citizens themselves can do in their immediate surroundings. Jan Bos, an alderman of Emmen, echoed the story and provided insight into the 3 systems that have a common interest in society: the political, the economic and the social system. He stressed that the drive of any civil initiative should primarily manifest itself in the social system, although it may expand into the other two systems as it grows. In addition, he provided insight into the changing nature of civil initiatives as citizens are becoming increasingly empowered and autonomous.
Marjolein van Offenbeek, Associate Professor at the Faculty of Economics and Business and final speaker, underpinned the importance of reciprocity in a civil society, in which facilitation on the one hand and stimulus on the other hand are important factors. A broad discussion ensued between participants and speakers, after which the session was concluded with a word of thanks.
Presentation by Joke Bakker
(only available in Dutch)
Presentation by Jan Bos (only available in Dutch)
Presentation by Marjolein van Offenbeek (only available in Dutch)
Societal cost-effectiveness analysis: two examples of calculating economic impact
In his workshop about societal cost-effectiveness analysis (MKBA), Paul Elhorst, Professor of Regional Economy at the Faculty of Economics and Business of the UG, first addressed the way that such analyses are performed, using the case of Groningen Airport Eelde (GAE) as an example. A balanced image of the costs and revenues of such an amenity can be obtained by not only looking at the business losses, as guaranteed by the shareholders, but also at the costs of vicinity nuisance and the revenues from direct and indirect employment as well as travel time saved. For several scenarios, including expansion, competition and business as usual, Elhorst demonstrated that GAE would make a positive net societal contribution. He advocates the use of societal cost-effectiveness analysis in order to obtain a more balanced image of the societal contribution of healthcare services as well.
Subsequently, Norbert Hoefsmit, ad interim Chairman of the Board of Management of Nij Smellinghe, addressed the developments that confronted the Pasana Care Group, to which hospital De Sionsberg belonged, in 2014. He gave a historical account that described the increasing pressure on the hospital, and he outlined what happened when it became clear that the number of treatments had dropped below a minimum and that the hospital was suffering structural losses, which could no longer be covered by the rest of the care group. And what can you do when you discover that many patients are already avoiding the hospital, looking for care elsewhere in Fryslân? Of course, several care chains were successful, including, for example, the ones in which De Sionsberg supplied after-care. In all, Hoefsmit offered a careful reconstruction of what can happen to small hospitals like De Sionsberg.
Presentation by Paul Elhorst
(only available in Dutch)
Presentation by Norbert Hoefsmit (only available in Dutch)
Business case for a care innovation
Professor Hans Wortmann of the Faculty of Economics and Business started his workshop ‘Business case for a care innovation’ with an introduction to the underlying theory. The care sector is full of innovations, only a small percentage of which become successful. The pattern that Wortmann recognises in healthcare is the inability to conclude the business case. Another issue is that the innovation tends to fade once the money has run out or the subsidy has come to an end. This observation met with great approval and recognition from the room.
The innovation process consists of these consecutive steps: research, opportunity identification, concept development, concept testing, product development, product launch and realisation. This can be viewed as a downward curve that may start with dozens of initial ideas and ends with only 1 successful product, due to technological constraints, adoption issues and financial barriers. Therefore, it is important to manage people's expectations of this process, especially since most innovations in healthcare are multi-stakeholder innovations where partnership often means collectively investing first and earning later for all parties involved. It is often the investment in the initial project that causes the hassle. In any business case, the revenues should exceed the expenses, but Wortmann seldom encounters that basic logic in the healthcare sector.
He referred to research indicating that people in the care sector often don’t know what innovation phase they are in, don't produce a business case before the development phase, when the costs start to skyrocket, and that the costs usually end up elsewhere than the profits, which people then forget to manage and really cash in on. Based on this and on his own experiences, Wortmann gave his audience a few tips: only invest when the business case is solid; and use your subsidies for research, not development.
After this introduction, Cid Berger, Director of iLentis, discussed business cases for innovation at Lentis. Innovations pass through the following stages: pilot, testing ground, proof of concept, serious scale-up. Also, innovations should be able to take off without subsidies, meaning that, unless other stakeholders agree to structural funding, the innovation will be phased out. In addition, iLentis has its own innovation fund and makes optimal use of other people's knowledge and experience to save money. The Lentis network includes many technology partners, for instance.
In his presentation, Berger highlighted several innovation projects, including eTriage, Video Calls/Telecare and Domotics, stressing that innovation projects may very well originate in the will to solve a certain problem, rather than a mere profit motive. While it is desirable to be able to validate an innovation scientifically before scaling up, many technological innovations move much too fast to do so. Moreover, some of them are customised, which complicates comparative research among patients and calls for other forms of research. Some innovations even lead to a decrease in income for Lentis, necessitating discussions with health insurance companies and the Ministry of Health, Welfare and Sport (VWS) about the care provider's remuneration scheme. So, yet again, the revenues of innovation may end up elsewhere than the costs.
Presentation by Hans Wortmann
(only available in Dutch)
Presentation by Cid Berger (only available in Dutch)
Debate: ‘The changing care market’
A debate about ‘The changing care market’ concluded the symposium. Its participants were Edwin Klok, Director of Zorgbelang Groningen, Paul Offringa, Care & Health Manager ,Medical Specialist Care at health insurance company De Friesland and Ton Schroor, alderman of Groningen.
Theses (only available in Dutch)
|Last modified:||09 April 2020 4.15 p.m.|