More than a third of the spending of the Swiss health system is allocated to hospitals: hospitals have to face strong political influences and suffer the consequences of particular interests too often. A three phase treatment would boost competition in this sector and improve the price-quality ratio. In its new publication, Avenir Suisse calls for more transparency in the allocation process of public interest benefits, the creation of new insurance models with additional patient involvement and the elimination of the cantonal lists of hospitals.

Despite a strong Swiss health system, costs in relation to the gross domestic product remain high. Internationally, the United States is the only country that spends more. In 2015, Swiss health spending reached 77.7 billion francs, equivalent to 782 francs per person per month. Some 35% of health costs are borne by Swiss hospitals. It has therefore become necessary to closely examine the reforms undertaken in this area to date.

In 2012, a new hospital financing system introduced important competitive elements. Since then, patients have been allowed to choose a hospital in all of Switzerland, either among public or even private institutions, and hospitals receive per-case payments. It is worth noting Swiss hospitals have not only maintained their excellence, but even increased standards slightly. But cost growth, despite a small decline, could not be slowed  as significantly as planned. The concentration, in various hospitals, on reduced groups of services did not occur either. This evolution was mainly due to a lack of transparency on the quality of services, restrictive admission criteria in the list of hospitals and opaque cantonal subsidies. A new strategic study by Avenir Suisse, led by Jérôme Cosandey, Noémie Roten and Samuel Rutz, calls for a three-point treatment for the hospital sector:

  1. More transparency in grants: a more transparent and equitable organization of the procedure for awarding public benefits, either through calls for proposals or explicit approval by cantonal parliaments. In 2015 alone, the cantons granted 1.8 billion francs in subsidies, in the form of public benefits with very different cantonal procedures. While the canton of Zug spent only 8 francs per capita in 2015, the canton of Geneva spent 947 francs. 97% of public benefits were paid to public hospitals, which distorts competition between private and public hospitals.
  2. Active patient participation: patients – in other words the end customers – should have a say. New insurance models, in which health insurance companies advise their patients before a hospital stay, would raise awareness among the insured about differences in quality and cost. If you were to choose a cheaper offer, but of equivalent quality, you could be rewarded with a credit note or obtain lower premiums in return for the savings incurred.
  3. Removing the cantonal list of hospitals: cantonal lists of approved hospitals should be replaced by common quality standards valid throughout Switzerland. They would be established and monitored on a scientific basis by a financially and politically independent organization – a Swiss agency for hospital quality. All hospitals that meet the conditions could bill their services to the patient’s health insurer and canton of residence. As the Swiss Confederation does not explicitly state in what areas hospitals should be operated, cantons could be deemed responsible for providing medical services, as is already the case in other areas of health policy (pharmacies, medical practices, home care). If the market does not provide the desired services locally, cantons could then respond in a subsidiary fashion to regional need by granting public benefits.

Mobility for private hospitals

If cantons lose the possibility to protect their own hospitals from rivals and competition were to rise thanks to this increased transparency and awareness of the costs by patients, ultimately, autonomy and privatization of public hospitals would be required. There is a need for more entrepreneurial flexibility to survive in an increasingly competitive environment. In this case, autonomy primarily translates into the creation of sound corporate governance structures, which ensure the political independence of supervisory and management bodies. The choice of the legal status can also contribute towards this autonomy. Lastly, it is important that hospitals are able to freely dispose of their real estate and define their operation sites themselves.