Talks of the Swiss Health Economics Workshop 2013

1. Building Competence. Crossing Borders.
Costs, Prices and Quantities of the Swiss Health Care System
2004 to 2010
Prof. Dr. Reto Schleiniger
Fachstelle für Wirtschaftspolitik, ZHAW
Luzern, September 13. 2013

2. 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. 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. 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

5. 5
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
SGAIAR
SH
SOSZ
TG
TI
UR
VD
VS
ZG ZH
AG
BE
BL
BS
FR
GE
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. 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

7. 7
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%: ‘*’

8. 8
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. 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

10. 10
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

11. 11
Results longitudinal section III: Specific services (gross), Switzerland
Prices Quantities/capita Costs/capita
Out-patient practitioners
0.9824
(0.9994)
1.5448
(1.0850)
1.5176
(1.0844)
Out-patient hospitals
0.9747
(0.9854)
2.1578
(1.7105)
2.1031
(1.6855)
In-patient hospitals
1.2476
(1.2231)
0.9875
(0.9776)
1.2320
(1.1956)
Pharmaceuticals
0.8300
(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

12. 12
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
Quantityindex
out-patienthospitalservices
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. 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
PMIout-patienthospitalservices
PMI out-patient services by physicians

14. 14
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