Hospital budgeting in Holland: aspects, trends and effects

Global hospital budgeting was introduced in 1983 in Holland; it was expected to be a much more effective instrument to cost containment than classic retrospective output reimbursement. Several underlying assumptions of hospital budgeting are discussed: it will encourage hospitals to improve efficiency; it will have no negative impact upon the quality of health care; it restores hospital autonomy to some extent; hospital managers are capable to implement more efficiency. Attention is also paid to the design of external budgeting and its implications for the link between planning and budgeting as well as the relationship between hospitals and insurers. The second part deals with several effects of hospital budgeting. There are indications that hospital budgeting is effective from a cost containment perspective; it goes along with a decrease in hospital production; it also affects the organization and policy-making of hospitals as well as the public-private mix in health care. A general conclusion is that the effects of hospital budgeting far exceed the effects for cost containment.