Building Competence. Crossing Borders.

Costs, Prices and Quantities of the Swiss Health Care System2004 to 2010

Prof. Dr. Reto Schleiniger

Fachstelle für Wirtschaftspolitik, ZHAW

Luzern, September 13. 2013

2

Disposition

• Study objectives

• Methodology to derive price and quantity indices

• Results cross section analysis

Panel data analysis to explain quantity indices

• Results longitudinal analysis

• Conclusions

3

Study Objektives

Break down health care costs into prices and quantities to answer the questions:

• Cross section analysis:

• Are regional cost differences due to different quantities or varying prices?

• What are the factors causing regional quantity differences?

• Longitudinal analysis:

• Is the cost increase over time caused by rising prices or increasing quantities?

• Is there a substitution of out-patient hospital services for in-patient hospital services

or out-patient services by physicians?

4

Price and quantity indices: Methodology

� Determining costs of each service as product of prices and quantities

• Ambulatory services

- Quantity: Tax point of Swiss medical tariff scheme (Taxpunkt)

- Price: Tax point value of Swiss medical tariff scheme (Taxpunktwert)

• In-patient hospital services

- Quantity: Hospital day per hospital category

- Price: Cost per hospital day and category

• Pharmaceuticals and laboratory services

- No regional price differences; price changes only over time

� Calculating Paasche quantity and Laspeyres price indices

• With (gross) and without (net) public subsidies to hospitals

→ Interpretation cross section indices: Relative to Swiss mean

→ Interpretation longitudinal indices: Relative to base year

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Results cross section I: All mandatory services, mean 2004 to2010

• GE: Very large quantities, high prices

• BS: Very large quantities

• NE, BE: Very high prices

• VD: Large quantities, high prices

• TI: Large quantities

• ZH: Close to mean (net calculation)

• Central Switzerland:

Very small quantities, low prices

• Quantities vary stronger than prices

• Positive correlation of prices and

quantities

AG

BE

BL

BS

FR

GE

GL

GR

JU

LUOWNW

NE

SGAIARSH

SOSZ

TG

TI

UR

VD

VS

ZG ZH

AG

BE

BL

BS

FRGE

GL

GR

JU

LUOWNW

NE

SGAIAR SHSO

SZ

TG

TIUR

VD

VS

ZG

ZH

0.90

0.95

1.00

1.05

1.10

1.15

0.80 0.90 1.00 1.10 1.20 1.30

net gross

Isocosts 0.80 Isocosts 0.90

Isocosts 1.00 Isocosts 1.10

Isocosts 1.20

Price

Quantity per capita

6

Results cross section II: Variation Paasche quantity index, 2004 to 2010

0.80

0.85

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

PMI 2004 PMI 2005 PMI 2006 PMI 2007 PMI 2008 PMI 2009 PMI 2010

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Regression results I: All services 2006 to 2010

• Coefficients not directly

interpretable

• Strongest influence from:

• Specialists

• Gender

• Age

Regressor Coefficient

Share of women 2.895***

Age >75 0.186**

Population density 0.007**

Unemployment rate 0.056**

Specialist practitioners (density) 0.170***

Corr. R2 0.703

Significance level: 99%: ‘***’; 95% ‘**’; 90%: ‘*’

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Regression results II: Pharmaceuticals 2004 to 2010

• Strongest influence from:

Density of self-dispensing

physicians

Significance level: 99%: ‘***’; 95% ‘**’; 90%: ‘*’

Regressor Coefficient

Density of GP 0.151***

Density of specialists 0.183***

Density of self-dispensing

physisians

0.049***

Density of pharmacies 0.083*

Dummy latin language 0.150**

cor. R2 0.503

9

Results longitudinal section I: All services (gross), Switzerland

Comp. increase consumer price index 2004 to 2010: 5.7 per cent

→ Considering general Inflation, the cost increase is solely due to larger quantities

(relative price of all health care services is unaltered)

Price- and quantity changes 2004/2005 to 2010

Prices Quantity per capita Population Cost

2004 - 2010 1.0558 1.2180 1.0544 1.3560

2005 - 2010 1.0610 1.1030 1.0500 1.2277

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Results longitudinal section II: Index development over time

0.8000

0.9000

1.0000

1.1000

1.2000

1.3000

1.4000

2004 2005 2006 2007 2008 2009 2010

LPI PMI per capita WI per capita CPI

Large quantity increase 2004 to 2005, followed by small increase 2005 to 2006

Probably due to introduction of TARMED in 2004 and delayed booking of

services from year 2004 in year 2005

→ Upward bias from 2004 to 2005 and downward bias from 2005 to 2006

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Results longitudinal section III: Specific services (gross), Switzerland

Prices Quantities/capita Costs/capita

Out-patient practitioners0.9824

(0.9994)

1.5448

(1.0850)

1.5176

(1.0844)

Out-patient hospitals0.9747

(0.9854)

2.1578

(1.7105)

2.1031

(1.6855)

In-patient hospitals1.2476

(1.2231)

0.9875

(0.9776)

1.2320

(1.1956)

Pharmaceuticals0.8300

(0.8374)

1.3311

(1.2802)

1.1049

(1.0720)

• Out-patient services: Large increase of quantities (hospitals!)

• In-patient hospitals: Price increase (quantities almost constant)

• Pharmaceuticals: Price reduction and quantity increase

Price- and quantity changes 2004 to 2010

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Evidence on substitution of out-patient for in-patient hospital sevices

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5

Qu

an

tity

ind

ex

ou

t-p

ati

en

t h

osp

ita

lse

rvic

es

Quantity index in-patient hospital services

No negative correlation between in-patiant and out-patient hospital services

→ No evidence for substitution of out-patient for in-patient hospital services

13

Evidence on substitution of out-patient hospital for out-patient physician services

No negative correlation between out-patient services by physicians and out-patient

hospital services

→ No evidence for substitution of out-patient hospital services for out-patient

services by physicians

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4

PM

I out-

patient

hospital serv

ices

PMI out-patient services by physicians

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Conclusions

• Regional cost differences are mainly due to quantity differences

• The density of specialist practitioners yields the strongest influence on quantities

• All supply variables have a significant effect on the quantity of pharmaceuticals

• The cost increase over time across all services is caused by larger quantities

• The quantity of out-patient hospital services grows very strongly

• The increase of out-patient services seems to bee a independent phenomenon and

is not accompanied by a decrease of in-patient services or out-patient services by

physicians