Cost-Containment Policies in Hospital Expenditure in the European Union

As hospital inpatient care accounts for 30% of total health expenditure, and as health expenditure will continue rising, due to ageing populations and costly technological innovations, it is necessary to examine how to address the twin objectives of containing costs and ensuring high access and quality of services. Bed capacity has been reduced in all EU countries in the past decade, but cross-country variation in bed capacity and inpatient hospitalisations is considerable. Apart from being a cost factor, this impacts negatively on quality of care, as countries with more hospitalisations per capita tend to have also higher shares of preventable hospitalisations. This suggests that the reorganisation and rationalisation of hospital care particularly in countries with a high bed density is an important factor towards cost containment and possibly increasing quality of care. There are well tested options for cost containment at least in the short-term. Among these, the application of hard global budgets in combination with activity-based payments seems useful. Reducing operational costs has also been widely applied and proven to contribute to cost control in the short term. The impact of the many tools aiming at improving hospital performance via structural changes of the hospital and health care sector is more difficult to gauge. It depends among others on the role of the policy reform within the specific health system, whether it was applied at the same time with other health policy reforms and the time needed to see its effects. This applies to virtually all tools reviewed in this paper. The EU can play a supportive and active role in helping to identify the right tools for hospital reform by using its tools of economic governance, policy advice, evidence building and exchange of best practices and providing funding for investments in the sector.