Cost containment in a statutory health insurance scheme by substitution of outpatient for inpatient care? The case of the Bavarian Contract

Abstract

Among manifold attempts at containing the rapid growth of health care expenditure, one which attracted considerable attention was the 1979 agreement between Bavarian sick-funds and the office-based physicians of Bavaria that, in some ways, reshaped the remuneration scheme for ambulatory medical treatment. This so-called ‘Bavarian Contract’ tried to approach cost containment by initiating transsectoral substitution processes in favour of outpatient medical care and to the disfavour of, above all, the hospital sector of the health care system. This paper deals with the question whether in Bavaria (between 1979 and 1983/84) the structure of services and prescriptions was modified in a way that indicates the occurrence of substitution processes as intended by the ‘Bavarian Contract’; also, whether there is any evidence of cost containment effects brought about by intensifying the ambulatory services of office-based physicians. The study results provide some weak hints at substitution processes in favour of ambulatory services; but there is no evidence that expanding ambulatory medical services may help to contain the growth of health care expenditure.