Back to the future in Swiss hospital financing

• Abstract
• Characteristics of this policy
• Purpose and process analysis
• Expected outcome
• References

Abstract

The Swiss senate has yielded to pressure from the cantons and abandoned its ?revolutionary? model of hospital financing. In March 2006 the members of the Council of States approved a text of law which is very similar to the government?s 2004 message, but with more onerous financial repercussions for the cantons. At the same time, however, the senators decided to demand a bill from the Federal Council on a unitary financing model for the ambulatory and stationary sectors by the end of 2008.

Neue Entwicklungen

Innovationsgrad	traditionell		innovativ
Kontroversität	unumstritten		kontrovers
Strukturelle Wirkung	marginal		fundamental
Medienpräsenz	sehr gering		sehr hoch
Übertragbarkeit	sehr systemabhängig		systemneutral
current    previous

Purpose and process analysis

Current Process Stages

	Idee	Pilotprojekt	Strategiepapier	Gesetzgebung	Umsetzung	Evaluation	Veränderung/Richtungswechsel
Implemented in this survey?

Initiators of idea/main actors

• Regierung

• Leistungserbringer

• Kostenträger

Stakeholder positions

The revolution has been postponed  

The radical change in the financing of health care services in Switzerland, envisaged by the Committee for Social Security and Health of the Council of States in August 2005 [see reference 1], was shelved for at least some years. We recall that the most controversial point of the senators' proposal concerned the passage to a unitary financing of health care services and the introduction of the single final buyer in the person of the health insurers (monist financing system). The public contribution (today retained for outpatient care in public-interest hospitals, nursing homes, home care) was to br anchored to the ensemble of basic health services and paid directly to the health insurers. Instead of paying a subsidy for services offered by particular institutions (stays in public-interest hospitals, home care and nursing homes) the cantons would have been called on to pay a contribution calculated as a fixed percentage share on all the services covered by basic health insurance.

Thanks to the lobbying by the exponents of the cantonal governments and because of the threat of direct democracy, in September 2005 the senate decided to postpone the formal vote on the draft bill, in order to be able to start formal consultation with the cantons.

The consultation that stretched out between October and December 2005 convinced the committee members of the fact that the time for such a radical change was not ripe and that the threats of a referendum made by the cantons required a more cautious reform approach. For this reason the committee decided to shelve the "revolutionary" proposal and presented a new text of law on 25 January 2006, which is very close to the message drawn up by the Federal Council in September 2004 [see reference 2]. The legislative document was approved, with some changes, by the Council of States on 8 March 2006 [see reference 3] and therefore will soon be put to the vote of the other House (the National Council).

The day before the presentation of the new text of law (24.1.2006) the Committee for Social Security and Health of the Council of States put forward a motion asking the Federal Council to present a new legislative bill to parliament by the end of 2008 on the base of the bill just shelved, which would regulate the introduction of a unitary financing of the hospital and ambulatory sectors in Switzerland [see reference 4].

A little "settling of old scores"

If, on the one hand, the outcome of the consultation process, with some of the senators abandoning the monist financing model, marks an important success for the cantons, on the other it is worthwhile emphasizing how the new draft bill still contains some aspects which are strongly opposed by the cantonal authorities [see reference 5].

In particular, with the new bill the share borne by the cantons will correspond to 60% of the flat-rates per case (AP-DRG), in which investment costs will also be included. On the other hand research and university training activities carried out in hospitals as well as other activities of general interest (e.g. maintaining hospital capacities in rural areas due to regional development policies) will be entirely borne by the State.

In the Federal Council's message of September 2004 (the so-called "dual-fixed" model) the subdivision of the expenses between cantons and health insurers was intended to be equal (fifty-fifty). The cantons that from the beginning were against the Federal Council's project and proposed their own model (status quo ante) managed to have the monist model shelved (at least temporarily) but they saw their share increase from 50% to at least 60%.

The other innovations of the draft bill approved by the Council of States

The new draft bill also abandons the concept of "dual-fixed" financing (see new article 49a). The obligation to cover at least 60 percent of the flat-rate will, in fact, apply only to the cantons where the level of health insurance premiums is higher than the average national level. In the cantons with premiums lower than the average the part covered by the State can go down to the minimum legal threshold of 45 percent. For the first five years from the introduction of the new law the cantons will be able to modify their own share by two percent points maximum per year. On the other hand the cantons who at the time of the new law coming into force do not satisfy the legal requisites will have to adapt their own financing share upward by at least one percent point per year. The decision to make the public financing share variable (motivated by the heterogeneous situation of the 26 cantons and by the desire to make the new model as neutral as possible from a financing point of view) will end up substantially making the mobility of patients between one canton and another more difficult. In fact, it must be recalled that at present (and this will also be the case in future) for a hospital stay outside the canton of residence a patient must obtain authorization from the canton of residence, which is called on to sustain the part of the costs due to the State (today in public-interest hospitals outside the canton only, but tomorrow even in private clinics). Among the nine cantons where the premium is above the national average level we find all the five university cantons (where most  patient inflow from other cantons is observed).

In other words, in the future, admission to a university hospital of a patient residing in a canton with a premium which is lower than the average will mean a cost equal to 60 percent of the AP-DRG, whereas in hospitals within the canton the share borne by the State would amount to 45 percent only. Many hope that the present cantonal hospital planning system will be substituted by a planning concept at the level of five macro-regions [see reference 6], with the intent of breaking the "cantonal monopolies" and encouraging hospital mergers in order to reach optimal size (notoriously Switzerland suffers from a problem of inefficiency of scale, due to the high number of hospitals which do not reach optimal dimensions [see reference 7]). In fact the new law includes the precept for the cantons to enforce better coordination with each other concerning their hospital planning.  However, in spite of this prescription, with the new financing rule (with variable co-payment between 45 and 60 per cent) the cantonal idea of territory could be reinforced and this would probably lead to a restricted patient mobility.

The bill approved by the Council of States contains two other major differences compared to the Federal Council's message of September 2004.

1. At present (and this is also true for the law proposed by the Federal Council) the exclusion of a hospital from hospital planning means it will be impossible for that institute to function and be reimbursed by the compulsory health insurance. The law approved by the members of the Council of States offers a makeshift solution to the excluded structures. If they so wish, the sickness funds will be able to stipulate a contract with institutes or single departments of institutes excluded from the hospital list (these are structures to which the cantons will decide not to offer a service contract), and thus reimburse their services. But there are clear law restraints. The financing modalities explained above (60 percent to be borne by the canton, 40 percent by the health insurers when the canton's premiums are higher than the national average, with a subdivision of 45 percent-55 percent for the flat-rate per case in other cantons) will be applied to inpatient services delivered. For services offered in structures excluded from the hospital list the flat-rate per case will obviously be met only by the health insurers. Moreover, the rate paid cannot exceed the amount met by the same insurers in the case of hospitals included on the hospital lists (see article 49a,4). In other words, the amount paid to these off-the-list hospitals by the health insurers for the treatment of a particular AP-DRG will not be able to exceed 55 percent of the price paid to hospitals which are co-financed by the cantons (respectively 40 percent, where the canton pays 60 percent of the flat-rate). Thus it is a rule which should make the exclusion of an institute from the hospital list less dramatic (respectively easier for the canton to insert only structures necessary to cover the population's needs on the list), but this is only true in theory. In fact, the difference in the amount reimbursed between hospitals on the list and those off the list (defined by the law itself) seems to be so great as to make the financial survival of off-the-list hospitals almost impossible. These structures could carry out a selection of cases (focalizing on the easier and more lucrative ones), could adopt possible reductions in quality and work with greater efficiency in the private sector (the complementary private insurances could be interested in offering their customers a larger choice set of providers, by signing specific contracts with private clinics). However, it seems impossible for them to manage to save 45 to 60 percent of the production costs compared to other hospital structures.
2. The new law intends to increase the cantons' autonomy regarding the drawing up of hospital planning. In fact, the hospitals excluded from the list will be able to appeal against the exclusion only in case of clear violation of federal law.

The positions of the various stakeholders Still not satisfied the cantons came down in favor of a further downsizing of the bill. The main request made by the cantons in a letter to the members of the Committee for Social Security and Health of the National Council is that it should limit itself to legislating the introduction of the flat-rate per case and to gathering the data necessary to carry out benchmarking. In their opinion the financing of public and private hospitals should continue to comply with the present practice (at least 50 percent of the flat-rate for public hospitals, no public financing for private clinics). If the Committee of the National Council does not accept this downsizing and should decide to discuss the text of law approved by the senators in any case, then the cantons request at least some alterations to the present text. In particular the cantons hope the National Council will decide to: (1) concede maximum autonomy to the cantons concerning the definition of the hospital lists and the checking of the investments made by the private institutes (whose cost will be included in the flat-rate per case); (2) limit the services financed separately by the State to university training and research; (3) leave the cantons the freedom to cover a variable part of the flat-rate per case between 45 and 55 percent (eliminating the automatism which binds the financing share to the level of premiums above or below the national average).

But the association of Swiss hospitals [see reference 8], which both public and private hospitals belong to, disapproves the idea that a unitary financing model of inpatient and outpatient hospital services be given up by the Council of States and is afraid that the cantons' autonomy in defining the hospital lists may lead to a management of the hospital sector inspired more by political than by economic considerations. But it must be emphasized that the association includes two entities with diverging interests: public hospitals and private clinics.  The first  time a stand was taken (in March 2006) more attention was given to the interests of the private clinics, in a second stand (May 2006) the association assumes a more moderate position, limiting itself to asking the legislator to dispense with the differentiation between hospitals on the list and clinics with contracts only with the health insurers.

Finally Santésuisse declares it agrees with the general lines of the bill [see references 9, 10 and 11] but proposes abandoning the differentiation of the public share of financing between cantons with premiums above and those with premiums below the national average. For the health insurers the financing share to be borne by the cantons should be fixed everywhere at the level of 60 percent.

Actors and positions

Regierung
Federal Council	sehr unterstützend		stark dagegen
cantonal health ministries as well as cantonal governments in general	sehr unterstützend		stark dagegen
Leistungserbringer
Swiss hospital association	sehr unterstützend		stark dagegen
Kostenträger
Health insurers (santésuisse)	sehr unterstützend		stark dagegen
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Influences in policy making and legislation

The Committee for Social Security and Health of the National Council is drawing up the text of law to put to the vote of the plenum. Given the amendments proposed by some of the committee members (some in favor of the cantons, others in favor of Santésuisse or the hospitals) a somewhat heated debate can be expected even at committee level.

Legislative outcome

Hold

Actors and influence

Regierung
Federal Council	sehr groß		kein
cantonal health ministries as well as cantonal governments in general	sehr groß		kein
Leistungserbringer
Swiss hospital association	sehr groß		kein
Kostenträger
Health insurers (santésuisse)	sehr groß		kein
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Positions and Influences at a glance

Expected outcome

It is probable that the National Council will decide to amend the text of law of the Council of States, annulling the constraint which binds the minimum share of financing to be borne by the cantons (60 percent versus 45 percent) to the level of the premiums of the compulsory health insurance (above or below the national average). On the other hand it seems improbable that parliament will accept the cantons' request to limit the law to the introduction of the AP-DRG, without modifying the present disparities of treatment between public and private structures. Finally there is a slight chance that the committee will go back and consider the senators' revolutionary proposal (some hearings with experts of the sector are planned) and decide to bring  the unitary financing project of all the health services (inpatient and outpatient) immediately into play (i.e. without waiting for 2008).

Two considerations are suggested by the analysis of what has been happening in the last two years in relation to the hospital financing reform:

1. Unfortunately after two years it must be noted that the unbundling strategy has not met with the success hoped for [see survey round #3]. Only two of the seven legislative packages formulated by the Federal Council have been approved to date (the urgent measures, among which the extension of the moratorium for the opening of new doctors' practices, and the package dedicated to the reduction of premiums, very much downsized in the course of the parliamentary debates). Also reforms which were initially considered "only slightly problematic", like hospital financing, are still a long way away from "giving birth" to a text of law really open to compromise. Therefore, a solution in the short term can hardly be expected (the new law will not be able to come into force by 2007, as was hoped at the beginning).
2. If the text of law approved by the Council of States last March is ratified (with some amendment probable), some cantons will be called on to increase their financial commitment significantly, but in exchange they will obtain much more planning autonomy. Since the new system provides for public and private structures to be put on an equal footing substantially (with the intent of increasing competition and benchmarking), it will be important for the cantons to accept the institution of a regulating body (a really independent and super-partes authority) able to define the rules of the game, which are really the same for all, and have them applied. In fact, two risks must be avoided: (a) for-profit private institutes might take advantage of public subsidies in order to increase the rate of return on equity, thus obtaining extra profits; (b) institutes which in the past benefited from state subsidies might be favored by institutional procedure and ties consolidated over time with civil servants who know their interlocutors well and thus might not assume neutral positions guaranteeing the rules of the game.

Impact of this policy

Qualität	kaum Einfluss		starker Einfluss
Gerechtigkeit	System weniger gerecht		System gerechter
Kosteneffizienz	sehr gering		sehr hoch
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References

Sources of Information

1. Krankenversicherungsgesetz. Teilrevision (Spitalfinanzierung). Proposals by the Committee for Social Security and Health of the Council of States, 30.08.2005.
2. The Federal Council, Botschaft betreffend die Änderung des Bundesgesetzes über die Krankenversicherung (Spitalfinanzierung) vom 15. September 2004, www.admin.ch/ch/d/ff/2004/5551.pdf
3. Bundesgesetz über die Krankenversicherung. Teilrevision. Spitalfinanzierung. Beschluss des Ständerates vom 8. März 2006.
4. Motion 06.3009. Einheitliche Finanzierung von Spital- und ambulanten Leistungen, eingereicht von der Kommission für soziale Sicherheit und Gesundheit www.parlament.ch/afs/data/d/gesch/2006/d_gesch_20063009.htm
5. Council of the Swiss cantonal health ministries, KVG-Teilrevision Spitalfinanzierung. Hochgradig korrekturbedürftig. Medienmitteilung vom 08.03.2006. www.gdk-cds.ch/fileadmin/pdf/Aktualitaeten/Medienmitteilungen/Medienmitteilung_SR_200603.pdf
6. H+ Die Spitäler der Schweiz, H+ fordert eine nationale Gesundheitspolitik. Medienmitteilung vom 3.11.2005 http://files.hplus.ch/pages/HPlusDocument6240.pdf
7. Farsi, M. and M. Filippini (2006), An Analysis of Efficiency and Productivity in Swiss Hospitals, Zeitschrift für Volkswirtschaft und Statistik, 142(1): 1-37. http://doc.rero.ch/lm.php?url=1000,42,6,20051019172702-DS/1_wp0501.pdf
8. H+ Die Spitäler der Schweiz, Spitalfinanzierung: ein kleiner Schritt des Ständerates. Medienmitteilung vom 8.3.2006 http://files.hplus.ch/pages/HPlusDocument6661.pdf
9. Santésuisse, Positionspapier zur Spitalfinanzierung (12.10.2005) www.santesuisse.ch/datasheets/files/200511031118330.pdf
10. Santésuisse, Reform der Spitalfinanzierung. Anträge santésuisse auf der Basis der Beschlüsse des Ständerates vom 8. März 2006. www.santesuisse.ch/datasheets/files/200605050844401.pdf
11. Santésuisse, Hearing zum Thema Spitalfinanzierung, SGK des Nationalrats, 4. Mai 2006. www.santesuisse.ch/datasheets/files/200605050844400.pdf

Reform formerly reported in

Revolution of hospital financing reform plan Process Stages: Gesetzgebung

Hospital financing reform (?dual-fixed?) Process Stages: Gesetzgebung

Author/s and/or contributors to this survey

Luca Crivelli

Empfohlene Zitierweise für diesen Online-Artikel:

Luca Crivelli. "Back to the future in Swiss hospital financing". Health Policy Monitor, May 2006. Available at http://www.hpm.org/survey/ch/a7/1