The marginal benefits of healthcare spending in the Netherlands: Estimating cost-effectiveness thresholds using a translog production function

Health Econ. 2019 Nov;28(11):1331-1344. doi: 10.1002/hec.3946. Epub 2019 Aug 30.


New technologies may displace existing, higher-value care under a fixed budget. Countries aim to curtail adoption of low-value technologies, for example, by installing cost-effectiveness thresholds. Our objective is to estimate the opportunity cost of hospital care to identify a threshold value for the Netherlands. To this aim, we combine claims data, mortality data and quality of life questionnaires from 2012 to 2014 for 11,000 patient groups to obtain quality-adjusted life-year (QALY) outcomes and spending. Using a fixed effects translog model, we estimate that a 1% increase in hospital spending on average increases QALY outcomes by 0.2%. This implies a threshold of €73,600 per QALY, with 95% confidence intervals ranging from €53,000 to €94,000 per QALY. The results stipulate that new technologies with incremental cost effectiveness ratios exceeding the Dutch upper reference value of €80,000 may indeed displace more valuable care.

Keywords: QALY; cost-effectiveness; health care spending; threshold; translog function.

Publication types

  • Research Support, Non-U.S. Gov't

MeSH terms

  • Adolescent
  • Adult
  • Age Factors
  • Aged
  • Aged, 80 and over
  • Child
  • Child, Preschool
  • Cost of Illness
  • Cost-Benefit Analysis* / statistics & numerical data
  • Female
  • Health Expenditures / statistics & numerical data*
  • Humans
  • Infant
  • Infant, Newborn
  • Life Expectancy
  • Male
  • Middle Aged
  • Mortality
  • Netherlands / epidemiology
  • Quality of Life
  • Quality-Adjusted Life Years
  • Surveys and Questionnaires
  • Young Adult