‘Look at Bernhoven’, hospitals at the negotiating table with insurers have been told time and again in recent years. “There in Uden a lot less can be treated and operated on. They can.”
The advocates of ‘sensible care’ – a movement against the needless treatment of patients – were dealt a blow this week. Wednesday was announced that Bernhoven hospital is in crisis. It must reduce its workforce by 100 to 120 people. In order to make the hospital healthy, there will have to be a €20 million “turnaround” over the next two years – by cutting back and generating more revenue.
Until recently, Bernhoven in North Brabant was the showpiece of health insurers, because the hospital managed to shrink, despite the aging population. What got it into trouble?
Bernhoven’s idiosyncratic story began when Peter Bennemeer became a hospital chief in 2011, after a career of 27 years in the food industry. Bennemeer was surprised about the differences between the business world and the healthcare world, as he would later describe in the book The procedure. He saw a culture of “congealed mistrust.” Between doctors and the board, and between the hospital and health insurers, with the annual contract negotiations as the lowest point.
In business, Bennemeer was used to thinking from the perspective of account managers who maintain relationships with large customers. CZ and VGZ are responsible for 80 percent of Bernhoven’s turnover. All the more reason to build up a good relationship with them.
Bennemeer also saw perverse financial incentives in the hospital. “An open secret in the sector is that towards the end of the year, even in hospitals, directors are calling for more turnover – just like in regular companies,” he writes. High turnover gives hospitals a strong negotiating position towards insurers. “Medical specialists are able to produce the necessary turnover – as if it were magic.” Examples abound: “Deliberately not referring patients back to the GP; perform keyhole surgery to see clearly what is going on; reducing the outpatient time from 30 to 20 minutes to allow for larger numbers.”
At the same time, much care can actually be provided just as well (and cheaper) by the general practitioner or other care providers outside the hospital. Bennemeer realized: “what society needs from hospitals is that less care is provided.”
Bennemeer set to work with this insight. He strengthened ties with CZ and VGZ, which concluded very generous five-year contracts with him from 2015 due to the promise of contraction, so that they no longer had to come to the negotiating table every year.
Doctors started having other conversations with the patient. For example, if it was an inguinal hernia, they took the time to explain the pros and cons. As a result, many patients decided against the procedure.
The doctors were employed. Because their income was no longer partly determined by the number of admissions and operations, the incentive to treat too much disappeared. Bennemeer chose a pricey tactic: doctors received the salary they also earned as self-employed.
In a joint study by IQ Healthcare, the CPB and the Dutch Healthcare Authority, in 2020 that turnover in Bernhoven fell by 13 percent in five years, but that patients did not move to other hospitals. In other words: care has evaporated.
Health insurers applaud Uden’s story and screen with the example during contract negotiations with other hospitals. The success is also a source of inspiration for national agreements that hospitals may no longer grow in turnover from 2022. If other hospitals were to follow ‘operation Bernhoven’, Bennemeer writes in his book, that would save at least 3 billion euros annually.
Declare less turnover
But over the years, the hospital slowly headed for financial problems. They have several causes.
First of all, because of the favorable agreements with health insurers, doctors and nurses are less and less concerned with the claims they submit. It was once the custom in Uden, as elsewhere, that the costs charged were added up via the nationally agreed reimbursement system. The more surgery and treatment, or the more severe the diagnosis, the higher the declaration value.
In the hospital, for example, it happened that the medical specialist briefly entered a conversation that was actually being conducted by the nurse. Handshake consultations, it was called indoors. That was part of the game to drive up the fees.
In Bernhoven, doctors and nurses were no longer concerned with the claim value of the treatment they gave, or the diagnosis they made, thanks to the trust and generous reimbursement of insurers.
Thanks to the strategy of sensible care – more prevention and consultation, less treatment – the hospital was able to declare less turnover in the first place, says Hans Feenstra. He was hired as an interim director to get the hospital back on track financially. “Doctors, for example, come to the conclusion that instead of surgery, physical therapy is sufficient. That takes more time in the consultation room and results in fewer interventions, fewer follow-up treatments and therefore less money.”
The Dutch Healthcare Authority and the Healthcare Institute, authoritative bodies in the healthcare world, also see these wrong incentives in healthcare. In 2020, they wrote in a report that the payment system has made healthcare too much of a revenue model.
Foot too big
But not only did the system fail in sensible care, there was also enough going wrong on Bernhoven’s side. According to Feenstra, doctors and nurses have stopped keeping track of exactly what is being done per patient and therefore too little was declared.
Due to the comfortable arrangement with insurers, the hospital also started living too much. Operating costs were high compared to other hospitals. Too much overhead was attracted for a small hospital, for example for (research) projects related to meaningful care.
In addition, a disadvantage of less production is that the fixed costs – such as the expensive new construction by Bernhoven, the secretaries and innovative equipment – do not fall. Those fixed costs are high. The direct, patient-related costs per treatment, such as nutrition, bandages and implants, are relatively low. It turns out that the hospital cannot be left with much less money if less treatment is given.
When the generous contracts with insurers expire, Bernhoven’s financial starting point is not good. Operational management is expensive, the declared production is low.
In October 2021 the then CEO Geert van den Enden complains in the Zorgvisie trade journal about the attitude of insurers. It was no longer possible to reach a new long-term agreement with VGZ. CZ succeeded in doing so, through an ambitious contract. For example, it has been agreed to reduce the number of doctors in hospital and to have more done by general practitioners.
“But then the corona crisis came in between cycling,” says Van den Enden in the trade journal. That is why more doctors and care providers are needed. Another plan to spend less on medical devices also falls through the cracks as the prices of face masks and protective equipment skyrocket. Van den Enden: “According to the agreements in the multi-year contract, health insurers do collect the agreed reduction in turnover.”
Corona regulation worked poorly
The corona regulation for 2020 that is being agreed nationally to keep hospitals afloat also turns out badly for Bernhoven. This is based on financial support based on production, for which the hospital does not declare much.
In 2021 Bernhoven will eventually lose. How much exactly is not yet known, says interim director Feenstra. With the help of consultancy firm KPMG that Bernhoven has screened, he is now busy putting things in order. The reduction of the workforce by 100 to 120 FTEs is expected to have an impact mainly on the support services.
Bernhoven will remain a fully-fledged hospital, Feenstra says, the emergency departments will remain open, for example. It does, however, want to collaborate intensively with a larger hospital in the area. And from now on, staff must better register for insurers which actions are performed, even if this does not necessarily benefit patients.
The intervention is by no means the end of sensible care, says Feenstra, that remains the starting point for the future.
Peter Bennemeer has been away from the hospital since 2017. He sees the problems from the sidelines “with some disappointment”. He certainly does not want to exonerate Bernhoven, because too many people have been hired. “But we now mainly see that sensible care is not rewarded in the way in which healthcare is financed. I hope that instead of having a good strategy killwill correct the system.”