Total healthcare costs of deinstitutionalized long-term care provision in the Netherlands: an instrumental variable...

The Netherlands has reformed its long-term care (LTC) system to improve its financial sustainability by reducing access to in-kind nursing-home care and stimulating care within the home setting. This reform led to the rise of small-scale homelike nursing homes (SHNH) that are publicly financed by home-care packages. Small-scale care may require additional financial resources and personnel. Our aim is to compare the total healthcare costs of institutional in-kind nursing homes and deinstitutionalized home-like care homes.

We conducted an instrumental variable (IV) analysis to adjust for selection effects between both groups, using nationwide data including all LTC users. We use distance to the nearest provider as an instrument. In addition, we conducted semi-structured interviews with managers and policymakers to provide context for the quantitative data and validate our findings.

Baseline statistics demonstrate that while LTC costs are lower in deinstitutionalized settings, total healthcare costs are higher, mainly due to additional medical costs outside the LTC system. After adjustment for observable and unobservable user characteristics, no significant cost differences were found.

This study may suggest that deinstitutionalization of LTC provision through publicly funded SNHNs primarily resulted in selection effects and spillover effects to other healthcare sectors, while for the marginal client, no clear difference in healthcare costs was observed.