High inflation rates can induce significant disparities in Dutch hospital margins: a mixed methods study

BackgroundHospital inflation reflects changes in prices of labour, materials, energy, and capital. Depending on actual cost structures and contracts, individual hospitals may experience different price pressures on their budgets. If hospitals are compensated uniformly for inflation, high inflation can induce significant disparities in profitability.ObjectiveTo analyse the differential impact of inflation on hospitals in the Netherlands.MethodsWe test the hypothesis that differences in hospital-specific inflationary pressures were reflected in hospital compensation for inflation. Under this hypothesis, hospital-specific inflation rates correlate with overall budget growth. Using hospital financial data, we calculated hospital-specific inflation rates by combining cost categories with corresponding inflation rates for 2006-2023. Using linear regression analysis, we tested whether hospital-specific inflation rates correlated with reimbursements between 2006-2021. Next, we simulated differential impact for hospitals of high inflation in 2022-2023. Five stakeholder interviews validated results and explored inflation compensation mechanisms in practice.ResultsWe found that inflation causes significant variance in individual hospital inflation rates, magnified after 2021 by high overall inflation. Linear regression showed no significant correlation between variation in observed hospital reimbursement and variation in hospital specific inflation rates, indicating that historically no differential inflation adjustments occurred. Interviewees stated that insurers do not explicitly take into account differential inflation impact between hospitals, and that hospitals were only partly compensated for general inflation.ConclusionsDutch hospitals are not fully compensated for cost inflation and health insurers do not differentiate for differences in hospital-specific inflation rates. High inflation rates could thus induce significant disparities in hospital profitability.