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The Netherlands

 

The Netherlans case studies - Orbis and Groningen Hospitals

 

 

Introduction

 

  • Healthcare is organised on the so called Bismark (insurance fund model). Insurance funds are the commissioning agents for healthcare delivery
  • Hospitals are almost universally owned by charities and function on the basis of not-for-profit trusts
  • Capital financing has until 2009 been in effect underwritten by the state – hospitals take out commercial loans with repayment made from income earned by the hospital. Banks loan funds at preferential rates knowing that the State will guarantee debt repayment. Income is received on the basis of services provided, an episode payment model utilising the DRG classification is universal
  • From 2008/9 two major transitions are underway:
    • A phased (over several years) shift towards a full market principle, where hospitals increasingly compete on a price / quality basis for service delivery contracts – with the insurance funds
    • The removal of the state safety net for capital finance. Hospitals now take out loans for capital investment at full commercial risk. There is no longer (in principle) any state underwriting in the event of debt default.
  • The two case studies are projects that started under the former capital asset model, but have been commissioned and are operating under the new healthcare delivery principles
  • Furthermore both hospitals reached the final stages of construction (Orbis) and operation (Groningen) just as the credit crisis struck. Both are now faced with managing under a more rigorous and austere financial regime in addition to changes in the structural basis of funding
  • In both cases the changes were to some extent anticipated but interestingly they have adopted quite different approaches to ensure sustainability of functional and economic effectiveness.

 

Orbis Medical Park, Sittard, Netherlands

 

 

  • Orbis medical group provides mainly hospital based services for a population of about 200,000. A key characteristic is that it is an ageing population.
  • It is geographically close to three teaching hospitals including one in Belgium and one in Germany. There is a history of close cross border cooperation.
  • The group is not adopting a conventional single building model for its new facility but instead is planning to develop a medical park providing a wider mix of services including acute care, rehabilitation, nursing care, mental health services, a diagnostic centre and retail outlets providing health related products.
  • The cost will be €360 million. This is 15% more than normal construction costs; the increase is due to the extra costs of designing and building an adaptable patient environment and investing heavily in a fully integrated technology (ICT) system.
  • The central vision is built around the principle of integrated patient care pathways with an emphasis on what is known as work process systemisation.
  • Systemisation of clinical and care processes is not seen as an end in itself but a means of developing a patient centred care model, creating a seamless chain of care across all Orbis facilities and including between the primary and secondary sectors. It is also useful as a means of integrating health facility design with workforce processes and ensuring a dynamic response to changing care needs
  • This new integrated approach to capital investment coupled with the higher than normal capital cost resulted in Orbis having difficulty in obtaining capital financing.
  • Orbis identified the electronic patient records as a key requirement in introducing and managing the new integrated care model – it also required significant capital investment which needed to run concurrently with building development so that both were commissioned and operable at the same time
  • Orbis also adopted a high degree of standardisation for its buildings as a means of controlling cost and ensuring a high degree of adaptability in use.

 

Strengths

 

  • A patient centred approach that facilitates the integration of care across different components of service delivery – in particular between primary and secondary care
  • A more flexible (medical park) model as an aid to integration and easier access by patients to a wider range of complementary services – in the same location
  • A strong focus on quality through systemisation facilitated by state of the art ICT support
  • Anticipates the impact of demographic change – an ageing population

 

Weaknesses

 

  • High capital cost and a non-conventional design making financing more difficult
  • Needs a commitment from the workforce to the principle of continuous change

 

Sructural Fund relevance – very high

 

  • Provides a catalyst for service redesign and integration
  • Creates the stimulus for innovation and growth in local associated health related commerce – significant potential economic benefit
  • A highly transferable model either for single (campus) sites or dispersed provision of the various elements linked by ICT systems – it has considerable potential for tackling geographically linked health inequalities. It also has the potential to encourage economic regeneration if some elements (buildings) are located in needy urban or rural communities

 

Postcript

 

The final stages of building and commissioning were badly affected by the recent credit crisis:

  • The principal financing bank was taken over by the state
  • Banks considering taking over the financing debt were put off by what they saw as a higher than normal risk model (including the high building costs)
  • A closer examination of project costs showed that actual costs had spiralled well above the approved budget – the project overall was not well controlled
  • There are plans for Orbis to merge with another hospital to help manage the uncertainty over funding and stabilise the project.

 

Download the detailed description of the case study from here.

 

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