The "opportunity cost" of public health care systems

Institutional Communication Service

29 March 2020

The Covid-19 pandemic is putting pressure on health care systems in many countries. In Lombardy, Italy, hospitals are on the verge of collapse, while in Ticino, strict measures have been put in place to avoid overloading intensive care units. But on the sidelines of the daily news of this crisis, the discussion on the cost of public health has resurfaced, and above all that on investments in the sector and the choices made in the past which, in the wake of the coronavirus emergency, require new debate. Fabrizio Mazzonna, Associate professor in Economics and Health policy at the USI Institute of Economic, spoke on the TV show "Tempi Moderni" (RSI) to share his views on the situation from an economic point of view. 

There are 280 hospitals and 23,000 beds in Switzerland, at an annual cost of CHF 29 billion, or almost 35% of total healthcare expenditure, which amounts to CHF 83 billion. According to research made by the consulting firm PwC (reported in the RSI TV show), one in ten hospitals in our country is at risk of closure. Even with rising healthcare costs, revenues for medical facilities are declining, as so is their profitability, impacting their capacity to make the investments required to stay competitive. For Prof. Mazzonna, "the issue should be set in economic terms, i.e. 'opportunity cost', or the implicit cost that we sustain by investing resources in the same direction, when we can instead employ them in other potentially more profitable sectors. For example, instead of investing only in health facilities, more resources could be directed towards training and education, which has positive effects in economic terms in the long term and, therefore, on our ability to support the whole health system". 

The relentless rise in healthcare costs has several causes and effects. Among the causes are the increasingly expensive treatments, which, however, also result from advances in medicine and technology. Among the effects, on the other hand, there is the problem of so-called "unnecessary" treatments. According to Mazzonna, "the problem is well known, but it is the effect of a health care system that has no incentive to curb costs, on the contrary, the incentives go in the opposite direction. This also applies to the research made for new therapies and treatments, which often prove to be only marginally more effective than previous treatments". 

The Swiss health system as a whole - facilities, public health policies, preventive measures, insurance - is nevertheless sound. However, the coronavirus crisis has revealed certain aspects that need to be improved, such as hospital planning and coordination between the various players at cantonal, intercantonal and federal level. "Greater concentration in certain areas could be useful, for example when economies of scale are significant and allow for significant gains," says Prof. Mazzonna, who adds "even greater coordination between cantons, or even within the cantons themselves (between hospitals and other healthcare facilities, for example) could bring benefits not only in terms of efficiency, but also in terms of equity, i.e. less variability in the quality of treatments". But there is another basic aspect of the system which, according to Prof. Mazzonna, should be reviewed: "It would be appropriate to put the family doctor back at the heart of the system, who would thus act as a 'gateway' to the health care system. This, however, implies a adequate remuneration model, which could be assumed to be developed at federal, or even cantonal level, and which should not depend on the number of patients treated or visited, which is the fundamental problem fueling the disincentive to contain the costs of the current system", concludes Mazzonna. 

The interview with Prof. Mazzonna, broadcast on March 13, 2020 on RSI La 1, is available on the online portal of the program "Tempi Moderni" (in Italian):  www.rsi.ch/play/tv/tempi-moderni/video/sistema-ospedaliero-svizzero?id=12841561

(from minute 1:40 to 13:20)

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