Doctors, pharmaceutical companies and health insurers promote new financing: the poisoned panacea for high healthcare costs

Panacea ‘unified financing’?

A broad alliance of doctors, the pharmaceutical industry, major health insurers and the economics association Economiesuisse are now calling for new financing of healthcare costs.

Article from the “Observator”

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This article was first published in the paid offer of beobachter.ch. Blick+ users have exclusive access as part of their subscription. You can find more exciting articles at www.beobachter.ch.

Her name is Ephaz. A cumbersome term that almost no one can remember. Typical for healthcare. But the ‘unified financing of outpatient and inpatient services’, which Efas stands for, should be ‘the most important reform for cost control’, advertises, for example, the medical association FMH.

To assess whether this is true, we follow the path of the fictional patient Anna Muster. Muster feels pain in his chest when climbing stairs. Her GP Heilgut sends her to the renowned Wohlgesund hospital. The doctors there conduct an examination. Anna Muster stays for two days, which costs 10,000 francs. Who pays?

The hospital distributes the total amount. It sends an invoice for 5,500 francs to the canton where Muster lives, and Muster’s health insurer must pay 4,500 francs. This division has been in effect since 2012, when the Hospital Financing Act came into effect. It stipulates that the cantons will account for 55 percent of the total costs in the intramural area and the health insurers for 45 percent. Be that as it may, it is ultimately the citizens who pay: the health insurance share in their premiums, and the cantons’ share in their taxes.

The analysis

Exploding premiums

How doctors and pharmaceutical companies torpedo the cost brakes

Now Ephas comes into play. The core objective of the proposal is simple: the cantons must now also cover 55 percent of the total costs for outpatient treatment. To understand this, let’s look again at the patient Anna Muster.

‘Outpatient before inpatient’: a good thing?

Instead of going to the hospital, Heilgut’s GP sends Anna Muster to a doctor with his own practice. He performs the heart examination on an outpatient basis. Muster comes to the practice in the morning and goes home in the evening. The note is much cheaper at 2,000 francs. The high costs in the hospital, which arise from the 24-hour operation and the hotel industry, disappear.

To benefit from these cost benefits, the federal government wants more and more treatments to be performed on an outpatient basis. These include knee endoscopy and certain varicose vein and groin surgeries. The principle is called ‘outpatient before inpatient’ and was regulated in the Nursing Services Regulation in 2019. What was supposed to save money is now driving up premiums, according to FMH. Under the current financing model, Anna Muster’s health insurance must pay for 100 percent of outpatient treatment. The canton does not contribute to the costs.

“If we treat more and more outpatients, the premium payer will have to finance more and more treatments alone. Depending on the treatment, this can even be more expensive for the premium payer,” says FMH chairman Yvonne Gilli, who illustrates this with her own calculation example. A pacemaker operation costs 23,770 francs if it is performed in an inpatient setting, of which 10,700 francs is paid from premiums. An outpatient procedure is more than 3,000 francs cheaper: 20,460 francs. But because it is fully paid for by health insurance, it costs premium payers almost 10,000 francs more. “Only the canton saves this way,” says Gilli. This problem could be solved by Efas. Is she right?

Is Ephas a smoky candle?

‘No’ would probably be the right answer. The ‘disadvantage’ of inconsistent financing could be remedied by Efas – but is it actually a complaint? Or is the FMH just putting up a smokescreen to distract from the real problems? The fact is that Efas would only change the financing method. Instead of financing outpatient care exclusively from the premium pot, you would simply get a little more from the tax pot. Efas has no delaying effect on the real problem of rising total costs.

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Critics even fear the opposite effect. The annual announcement of the premium amount ensures that the cost problem in healthcare receives a lot of attention through broad reporting. With greater tax financing this would hardly be the case to this extent. However, Efas would provide more social financing because, unlike premiums, taxes are levied based on income.

A randomly chosen example

Research by management consultancy PWC, health insurer Curafutura and the Swiss Health Observatory (Obsan) even shows that the FMH calculation example was chosen very randomly. When it comes to inserting a pacemaker, the cost difference between inpatient and outpatient treatment is relatively small. With many other procedures – such as tonsil surgery – the difference is so great that health insurers do better if they are performed on an outpatient basis. Even though health insurers must reimburse the full costs in this case.

The studies mentioned come to the conclusion that ‘outpatient before inpatient’ does not lead to higher costs for health insurers and therefore not to higher premiums. The current Obsan report states that the total costs for the procedures affected by the shift from “inpatient” to “outpatient” have fallen by R59 million since 2019. The cantons would have benefited from the savings with 48 million francs and the health insurers with 11 million francs. Conclusion: Everyone benefits from the principle ‘outpatient, before inpatient’.

Half as expensive in Germany

The real fundamental problem with the Swiss healthcare system is that it produces very expensive products. Health economist Oliver Peters knows this. He was deputy director of the Federal Office of Public Health and director of the University Hospital of Lausanne. And he likes plain language: “The conditions here in Switzerland are scandalous. Compared to neighboring countries, there are price increases of up to 200 percent that cannot be rationally explained.

A current report from the consultancy International Federation of Health Plans supports Peters’ statement: the insertion of an artificial hip joint costs 7,000 francs in Germany and 15,000 francs in Switzerland. Or a stent operation to widen the blood vessels of the heart: 3,500 francs in Germany, 8,700 francs in Switzerland.

“The earning potential is too great in Switzerland”

This suggests that the focus should not be on financing – as the FMH would like to do – but rather on costs. Health expert Peters puts it bluntly: “Compared to other countries, the earning potential in Switzerland is too great.” Providers of lucrative procedures, such as hip replacements, would not be monitored. That is why there is hardly any competition in general internal medicine, but there is a lot of competition in, for example, radiology, radiation therapy, orthopedics, cardiology and urology. “Without state control over supply or restrictions on billed services, clinics and practicing physicians will continue to expand their range of profitable services.”

This does not concern employed hospital doctors, but specialists with their own practice who provide outpatient treatment. This is where another billing system comes into play: Tarmed. Doctors do not receive a lump sum for a specific procedure, as is the case in hospitals, but are reimbursed for each individual service they invoice. There is currently no upper limit on costs. A reform that also provides for fixed rates in the outpatient sector is under consideration by parliament.