Better care, fewer unnecessary treatments and a lower premium. According to health scientists Erik Schut and Wynand van de Ven, this will all be possible if healthcare providers set up their own healthcare insurer. 'Now is the time to get this going. It benefits patients as well as doctors.'
Agreements between healthcare providers and insurers currently form the basis of our healthcare system. They reach agreements on the cost, quality and volume of care. According to the researchers, all this is hardly running smoothly.
Healthcare providers and insurers speak different languages
'You have to be well-informed if you want to make solid agreements on care. The thing is that healthcare providers know much more than the insurers, which is a barrier,' says Erik Schut, a professor of health economics and healthcare policy. 'Healthcare providers look at the interests of the patient and of their own organisation, whereas insurers also look at the costs. These are conflicting interests.'
As are turnover limits. These involve hospitals offering healthcare for free or at reduced rates if the money has already run out in November. In such cases, hospitals want a bigger budget and insurers want to stick to the agreements made previously. Schut: 'This creates friction. Also, insurers have a hard time verifying whether the care provided was actually necessary. This takes us back to the information gap.'
In short, it’s often not smooth sailing between healthcare providers and insurers.
'Why? Patients feel a stronger attachment to, for example, Maasstad Ziekenhuis or Erasmus MC than they do to a healthcare insurer'
Wynand van de Ven
Health scientist - Erasmus School of Health Policy & Management
Hospitals as insurers? Maasstad Verzekering, Erasmus MC Vitaal or Ikazia Polis
These problems can be avoided if healthcare providers were to set up a healthcare insurer of their own. This is called a health maintenance organisation, or HMO. For example, a hospital can set up its own insurer, or an insurer can employ its own healthcare provider. This is already happening in other countries, and it works.
'A hospital that includes primary carers (GPs, physiotherapists and so on) who get together to start an insurer is the best option. Why? Patients feel a stronger attachment to, for example, Maasstad Ziekenhuis or Erasmus MC than they do to a healthcare insurer,' says Wynand van de Ven, emeritus professor of healthcare insurance.
The three main benefits are:
- Better care
- Fewer unnecessary treatments
- A lower premium (not insignificant!)
Better care
Currently, hospitals and other healthcare providers make money when people are sick. For each treatment they get an amount. The more sick people, the more treatments and therefore the more turnover. This flips 180 degrees if you have an HMO, a hospital that is also a healthcare insurer.
The HMO receives all of the premiums, resulting in a big pot of money. It is when people are healthy that the HMO actually makes money. In the absence of a treatment, the money isn’t spent and can stay in the pot. This provides an incentive to make the best possible diagnoses, select the most effective treatments and refer people to the best doctors.
Schut: 'For each patient, you look very carefully right from the start what it is that they need. Is hospital treatment really necessary, or is it enough for them to be treated by their GP? The hospital and all specialists, GPs and physiotherapists are all united in a single organisation, thereby vastly improving the coordination of care. Especially when people have a chronic illness. This is where it currently often goes wrong, as everyone is running their own business. The contact between physiotherapists, GPs and medical specialists is often inadequate. If you have to make do with a single amount, you have a motivation to structure healthcare in the best way possible.'
Electronic patient record
Uniting all healthcare providers in a single organisation also provides an incentive and an opportunity to build an electronic patient record. At the moment, GPs, hospitals and specialists each have their own online patient records, which is highly impractical! This results in doctors lacking a complete picture of their patients.
'A shared electronic patient record for all care received by a patient does not yet exist in the Netherlands. It would be wonderful to have one. The creation of an HMO would give this a boost,' according to Van de Ven.
'If the quality of care goes up and you reduce the number of unnecessary treatments, you save a lot of money. This also means that the rise in healthcare premiums can be limited'
Erik Schut
Health scientist - Erasmus School of Health Policy & Management
Less unnecessary care
According to the researchers, 10 to 20% of all care in the Netherlands is unnecessary. That is a high number! This could include someone who happens to have five physiotherapy sessions left at the end of the year, or someone who takes stomach acid reducers unnecessarily. This costs a lot of money.
Van de Ven: 'An HMO has an incentive to avoid unnecessary care. If the healthcare provider is also your insurer, unnecessary care ends much faster. It is also a motive to prevent complications. Rather than extra income, treatment due to complications means extra costs for the organisation. Many of the current complications in healthcare are avoidable.'
Lower premium
In healthcare, quality and cost go hand in hand. 'If the quality of care goes up and you reduce the number of unnecessary treatments, you save a lot of money. This also means that the rise in healthcare premiums can be limited,' Schut says.
The researchers ultimately expect HMOs to offer lower premiums than do other health insurers. Schut: 'An HMO needs to start up first, but after a few years the premium goes down. All care will be well-organised, the quality will increase and the number of unnecessary treatments will decrease. This better coordination of care means you need fewer employees, which is not unimportant in this day and age. In short, by structuring healthcare differently, its quality can go up and the premium can go down.'
The time is now
Which people does an HMO attract? People who trust your hospital, who are usually people who have been checked into that hospital in the past few years. Chances are these include relatively many chronically ill people.
According to the researchers, this used to be a problem. As an insurer, you used to receive insufficient reimbursement for the higher healthcare costs incurred by the chronically ill. 'This situation changed in the Netherlands on 1 January 2024. In the decades before, chronically ill people were undercompensated. There was an average shortfall of about €150 per insured person. Adjustments were made, and chronically ill people are now no longer undercompensated. This prompted us to call for the creation of an HMO.'
Back to the basics of the health insurance fund
HMOs in Israel, Switzerland and America demonstrate that it can work well. In the Netherlands, we had health insurance funds until 2006. Many of these had been set up by doctors who had clashed with existing health insurance funds. However, the Health Insurance Fund Act (Ziekenfondswet) of 1941 prohibited the merger of healthcare providers and healthcare insurers. This prohibition was only lifted in 2006, when health insurance funds were subsumed into the new health insurance structure.
Van de Ven: 'Why not repeat history? Again, there are conflicts between doctors and insurers over contracts, rates and volume. Erik and I wrote an article on HMOs 38 years ago. Now is the time to start. It’s not such a far-fetched idea.'
Schut concludes: 'It isn’t simple, either, but it can solve many problems in healthcare. It’s better for doctors and it’s better for patients.'
In practice
Frido Kraanen, a healthcare director at Gelre Ziekenhuizen, is affiliated with Drift, a research institute in transition science at our university. While he sees issues with the scientists' idea, he does think the research can spark a discussion. 'We haven’t yet found the perfect formula for the healthcare system. The current health insurance law has been in place for eighteen years. And it’s true: the system has many problems. We need a system analysis, and this study helps with that. To stick with medical terms: the scientists’ diagnosis is good; I’m just not sure about the therapy.'
'Preventive incentive? I wonder'
The researchers' idea is that the HMOs practise more prevention. The less treatment they provide, the more money they get to keep. This allows the premium to remain low and earns money thanks to prevention.
According to Kraanen, prevention can now also be profitable for insurers for the same reason. 'Yet insurers don’t do much in the way of prevention, as you can switch insurers every year. As a result, prevention is not profitable for insurers, which is why it is of little interest to them. If you can sign a ten-year contract with insurers, then yes, it becomes profitable to work on prevention. What’s more: in case of successful prevention, the insurer stands to benefit financially in the current model. In the proposed model, the organisation has the "misfortune" of less income on the care side. This means that on balance there’s less of a financial incentive.'
'The Health Insurance Act can use improving, and we in the sector can put forward our own proposal to that end'
Frido Kraanen
Healthcare manager at Gelre Hospitals & affiliated with research institute Drift
Current system: sometimes unpleasant, but it keeps everyone on their toes
Kraanen is definitely not saying that negotiations between healthcare insurers and healthcare providers are easy. It does keep him on his toes, however. 'The system is a bit cumbersome, but it keeps us healthcare providers on our toes as far as efficiency goes. Sometimes an insurer will say: "This or that hospital charges 20% less; why can’t you?" The negotiations are a bother, they’re rather unpleasant, but they do keep us on our toes.'
'In the researchers’ model, the insurer and the healthcare provider are bundled into a single organisation. As a result, there would be less of an incentive to be thrifty compared to the current situation. I also wonder how it would be organised. Allow at least a decade for a healthcare insurer and a healthcare provider to become a single organisation. And even then, the outcome would still be uncertain.'
Kraanen does see elements in the scientists' plan that can be built on. 'I would love to do a system analysis with different experts from the healthcare sector. This study helps with that. I personally see a lot of potential in something related to this: population funding. In this model, healthcare providers receive a fixed amount per person in a given population, regardless of whether this person needs care. The aim is to encourage prevention and cooperation. By talking about this, we give an impulse to the public debate and to politics. The Health Insurance Act can use improving, and we in the sector can put forward our own proposal to that end.'
- More information
Read the ESB-article (in Dutch) of the health scientists.
More science stories? Check out our online magazine Erasmus Extra.
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