Cost effects of outsourcing health services: a register data based analysis
Keywords:
total outsourcing, health services, costs, efficiencyAbstract
Outsourcing of health services has increased in municipalities over the past few years, but there is little research on the cost effects of such reforms. The aim of this study was to find out whether the standard and net operating costs of the health services in fully outsourced municipalities differ from the costs of municipalities which produce health services in-house. Total outsourcing refers to a situation where the municipality uses a private service provider to deliver healthcare services and often also some segments of the social services.
The research is based on the registry data collected in the STN IMPRO research project of the Academy of Finland. The data contains information on the use of health services by municipalities, supplemented with the data from the Sotkanet database of the Institute of Health and Welfare on the net operating costs. Using the difference-in-differences with multiple time periods analysis, we compared the standard and net operating costs of the health services of the municipalities performing total outsourcing in 2016–2018 (n= 14) with the corresponding costs of the control municipalities (n=218).
The outsourcing had no effect on the standard costs in primary care (59,0 €/inhabitant, p=0,296), but the net operating costs of primary care decreased (-154,9 €/inhabitant p=0,001) compared to the control group. The standard costs of specialized care decreased (-96,4 € /inhabitant, p=0,027), but the net operating costs did not change (38,7 € /inhabitant, p=0,373). In the overall health services statistically significant effect was observed neither in standard costs (37,4 € /inhabitant, p= 0,621) nor in net operating costs (-116,1 € /inhabitant, p=0,108).
The total use of specialized medical care, i.e., the standard costs, in the outsourcing municipalities decreased, but this was not reflected in the net costs of specialized medical care. On the other hand, the net operating costs of primary healthcare decreased even though the use of primary care services did not change. Elucidating the factors behind the deviations in the amount of service use and the corresponding net costs observed in our study requires further research.
