Delving into public-expenditure elasticity: Evidence from a National Health Service acute-care hospital network.

INTRODUCTION: The sustainability of public hospital financing in Spain is a recurring issue, given its representativeness in annual public healthcare budgets which must adapt to the macroeconomic challenges that influence the evolution of spending. Knowing whether the responsiveness of hospital expenditure to its determinants (need, utilisation, and quasi-prices) varies according to the type of hospital could help better design strategies aimed at optimising performance. METHODS: Using SARIMAX models, we dynamically assess unique nationwide monthly activity data over a 14-year period from 274 acute-care hospitals in the Spanish National Health Service network, clustering these providers according to the average severity of the episodes treated. RESULTS: All groups showed seasonal patterns and increasing trends in the evolution of expenditure. The fourth quartile of hospitals, treating the most severe episodes and accounting for more than 50% of expenditure, is the most sensitive to quasi-price factors, particularly the number of beds per hospital. Meanwhile, the first quartile of hospitals, which treat the least severe episodes and account for 10% of expenditure, is most sensitive to quantity factors, for which expenditure showed an elasticity above one, while factors of production were not affected. CONCLUSIONS: Belonging to one or another cluster of hospitals means that the determinants of expenditure have a different impact and intensity. The system should focus on these differences in order to optimally modulate expenditure not only according to the needs of the population, but also according to the macroeconomic situation, while leaving hospitals room for manoeuvre in case of unforeseen events. The findings suggest strengthening a network of smaller hospitals (Group 1)-closer to their reference population, focused on managing and responding to chronicity and stabilising acute events-prior to transfer to tertiary hospitals (Group 4)-larger but appropriately sized, specialising in solving acute and complex health problems-when needed.

Factors underlying the growth of hospital expenditure in Spain in a period of unexpected economic shocks: A dynamic analysis on administrative data.

AIMS: We sought to understand the evolution of Spanish public hospital expenditure by assessing its elasticity to volume versus price, controlling for need and case severity, from January 2003 to December 2015, a period of unexpected economic shocks. METHOD: Observational study of administrative data characterising hospitals in the Spanish National Health System. Public hospital expenditure was modelled using SARIMAX in a two-step approach aiming at: a) eliciting structural changes in the monthly time-series; and, b) analysing the reaction of expenditure to the behaviour of its direct underlying factors over the sub-periods identified in the first step. RESULTS: From January 2003 to December 2015, two structural changes were elicited, splitting this time-span into three sub-periods. The quantities of hospital services offered (mainly inpatient medical and surgical activity) were consistently shown as the main drivers of expenditure. Overall, hospital expenditure was inelastic to all the factors analysed, specially to quasi-prices; similar results were obtained across sub-periods of analysis. CONCLUSION: Factors associated to quantities (as compared to quasi-prices) were the main drivers of hospital expenditure in the period analysed, particularly after the economic shock. However, hospital expenditure was inelastic to both factors giving prominence to the economic cycle fluctuations as a strong inducer of the hospital expenditure trends in Spain.