1. Introduction
Ageing and the corresponding lack of workforce, climate change, and political and financial instability make healthcare systems face challenges that may seriously endanger their sustainability in terms of both the expenditure and the revenue side (Costa-Font and Levaggi, Reference Costa-Font and Levaggi2020; Doetsch et al., Reference Doetsch, Schlösser, Barros, Shaw, Krafft and Pilot2023; Karanikolos et al., Reference Karanikolos, Mladovsky, Cylus, Thomson, Basu, Stuckler, Mackenbach and McKee2013).
Enhancing value for money in healthcare is a priority for every administration, and in this respect, capacity management (CM) plays an increasingly important role, both at national and supranational level. In this paper, we propose using cross-border patient mobility across European Union (EU) countries to pool demand and reduce excess capacity.
Healthcare expenditure is mostly publicly funded in EU member states (OECD and European Commission, 2016; Paris et al., Reference Paris, Devaux and Wei2010), but its per capita composition is quite heterogeneous (Eurostat, 2024a). The same is true for available medical equipment. According to Eurostat (2024b), Belgium has the highest amount of equipment per 10,000 inhabitants (2.7) and Estonia the lowest (0.3), while the distribution of positron emission tomography (PET) scans (per 10,000 inhabitants) ranges from about 0.1 for Lithuania and Romania to 0.9 for Denmark. Finally, radiation therapy units have the highest concentration in Slovakia and Denmark (1.18) and the lowest in Portugal, Romania, and Estonia (0.5) (Eurostat, 2024b). The number of tests per inhabitant is often not in line with this observed heterogeneity, suggesting that in some countries there may be excess capacity (Eurostat, 2024b). This picture coexists with widespread evidence of unmet needs. The proportion of individuals that feel there are barriers to receiving healthcare was about 2.4 per cent in the EU 27 in 2023, varying from 0.2 per cent in Germany to 12.9 per cent in Estonia. Buso et al. (Reference Buso, Bordignon, Levaggi, Turati, Costa-Font, Batinti and Turati2023) estimate that by spending more efficiently, member states could have an extra 180,000 million euros’ (in PPS) worth of resources available, which could be used to improve healthcare provision and reduce inequalities among states.
This evidence calls for better CM decisions. CM is increasingly becoming a priority at both hospital and national levels, as limited resource capacity is detrimental to quality (due to significant rises in waiting times, while having too much idle capacity is equally undesirable) given the significant investments required. In some cases, and for some treatments, the quality (in terms of reduced risk) of the service provided even decreases with the number of annual treatments due to increased experience with the procedure (Mesman et al., Reference Mesman, Faber, Berden and Westert2017). The literature has studied the problem mostly with reference to hospital mergers (Van der Schors et al., Reference Van der Schors, Roos, Kemp and Varkevisser2023) and collaboration among providers (Postma and Roos, Reference Postma and Roos2016; Van der Schors et al., Reference Van der Schors, Roos, Kemp and Varkevisser2021). We propose employing a similar collaboration model among national governments to enhance the use of resources and to reduce unmet needs.
Although the organisation and financing of healthcare systems differ in many aspects across EU member states (Levaggi and Levaggi, Reference Levaggi and Levaggi2020; Siciliani et al., Reference Siciliani, Chalkley and Gravelle2017), EU law (Article 168(7) TFEU) indicates that member states should basically retain control over the organisation, delivery, and financing of health services, although the unchanged text of EU primary law has been extended both in European Court of Justice (ECJ) case law and following the Covid-19 pandemic under the policy concept of the European Health Union. We show that CM across Europe can be improved through governments’ choice to use providers abroad to treat their patients.
The idea is not new: in the 2000s, the UK attempted to persuade their patients to be treated for hip replacements in France to reduce waiting lists in the UK, but the policy was short-lived because of bottlenecks in rehabilitation (Medical Tourism Magazine, 2015; The Connexion, 2018; The Independent, 2002). In this paper, we build on this experience to propose the use of patient mobility to improve CM, and we also suggest which legal instruments could be used to make it compatible with the present EU rules. Currently, patient mobility across Europe is quite limited (EU Publications Mullan et al., Reference Mullan, Wilson and Guillermo-Ramirez2022; Office, 2023; Olsson et al., Reference Olsson, Smedt and Wispelaere2023); it is driven by border mobility (Frischhut and Levaggi, Reference Frischhut and Levaggi2024), mostly derived from patients’ decision to be treated abroad (Frischhut and Levaggi, Reference Frischhut and Levaggi2015, Reference Frischhut and Levaggi2024), and is politically contentious (De Wispelaere and Berki, Reference De Wispelaere and Berki2021; Stan and Erne, Reference Stan and Erne2021; Stan et al., Reference Stan, Erne and Gannon2021).
However, most of the legal instruments and reimbursement rules that regulate such flow could also be used for the type of patient mobility (government driven) we propose, so that the latter would be compatible with EU legislation.
Our paper is organised as follows. We first describe a framework where both location and setting a reimbursement scheme are at stake. We then present a situation where one country has already adopted the technology. This is followed by a discussion, comprising the issues of compatibility with EU legal requirements and the economic framework.
2. The model
We consider a communityFootnote 1 like the EU, but divided into two countries, A and B. For each country, the decision to take up a facility to treat a specific type of patient is made through a health technology assessment (HTA) process.
HTA rules indicate that the technology should be adopted if the cost per unit of health gained is below a specific threshold (Appleby et al., Reference Appleby, Devlin, Parkin, Buxton and Chalkidou2009; Berdud et al., Reference Berdud, Ferraro and Towse2020; Levaggi and Levaggi, Reference Levaggi and Levaggi2011), ie.
${\Delta C_{i} \over \Delta H}\leq TH_{i}$
where ΔC i is the extra cost per patient (which is country specific), ΔH is the health gain, and TH i represents the maximum willingness to pay for a unit increase in health that is country specific (ie. the cost-effectiveness threshold; see Claxton et al., Reference Claxton, Martin, Soares, Rice, Spackman, Hinde, Devlin, Smith and Sculpher2015; McCabe et al., Reference McCabe, Claxton and Culyer2008). We assume that individuals need a specific treatment that for the purposes of the Patient Mobility Directive (PMD; Art. 8(2) – European Parliament and Council, 2011) would qualify as ‘hospital treatment’ and therefore would always require prior authorisation. Examples include specialised types of diagnostics such as the above-mentioned PET, chimeric antigen receptor T-cell (CAR-T) therapy, or surgical treatment with some sophisticated equipment, such as the Da Vinci robot. Demand is equal to Q i = A, B and known. This facility has a fixed capacity equal to K and a fixed cost F K , regardless of the country where it is located.Footnote 2 Marginal costs are country specific and equal to m i , and the health gain is equal to H, ie. all the patients have the same benefit from being treated. If they are not treated, they do not suffer any damage, but their incremental health gain is equal to zero. The quality of the treatment is the same in both countries – an assumption that may be justified by the observation that for very specialised treatments with sophisticated technologies, quality is determined by the facility rather than country-specific inputs. If one country decides to take up the facility, it will be able to treat up to K patients, but it will have to bear the cost of an excess capacity equal to K − Q i if K > Q i .Footnote 3 The decision is taken through an HTA assessment like the one described above. As shown in Appendix 1, the rule in Equation (1) can be written in terms of net benefit from the adoption of the technology, ie.
$v_{i}Q_{i}-m_{i}Q_{i}-F_{K}\geq 0$
where v
i
is the money equivalent gain enjoyed in country i by adopting the technology, while m
i
Q
i
+ F
K
is the total cost. If both countries take up the facility, the number of patients that can potentially be treated is 2K, but only
$\sum _{i=A,B}Q_{i}\leq 2K$
will benefit from this expenditure despite the 2F
k
cost of the investment.Footnote
4
In contrast, if Equation (2) is negative for both countries, the technology is not adopted, while asymmetric adoption may occur when Equation (2) is positive for one country and negative for the other.
While the demand for the treatment in each country is equal to Q i , if travelling abroad is necessary, only a fraction z i Q i with z i ≤ 1 may choose this option. This is due to the non-monetary cost related to travelling to another country and depends on the characteristics of the population as regards age, health literacy, and other medical and personal conditions. According to Article 7(4)(2) PMD, travelling costs (which in our paper are denoted by t) may be reimbursed by a member state (since it is also their decision not to adopt the technology), but non-financial barriers may reduce demand if treatment is offered abroad. Finally, if both z A Q A + Q B and z B Q B + Q A ≥ K, no matter which country is chosen, rationing has to be implemented and is imposed on actual demand (ie. on the number of patients that are willing to receive treatment). In our model, we denote with r i ≤ 1 the proportion of patients that can be treated.
We will analyse excess CM in two different settings:
-
• neither country has adopted this technology yet, so they have to decide: 1) whether to pool their demand; 2) if so, where to locate the facility; and 3) the reimbursement scheme to use for the treatment;
-
• one country has already adopted the technology, so the other country has to choose whether to pool demand and bargain a reimbursement scheme with the first country.
The decision to pool capacity depends on which option maximises welfare. Since the decision to pool also depends on where the technology will be located, we first determine the best strategy in terms of location and price setting, and we will then assess which conditions make pooling a viable alternative.
2.1. Locating the facility
To choose the location, two different approaches may be used:
-
• cost minimisation;
-
• total welfare maximisation.
While the technology has the same fixed cost, variable costs are country dependent: for minimising cost, the facility will be located in the country where the total cost is minimised. For total welfare maximisation, the choice depends not only on running costs but also on the number of individuals that give up treatments because they have to travel.
If all the patients eligible for treatment choose to be treated, independently of the location of the technology, the two approaches produce the same result. This is not necessarily true if a proportion of the patients give up treatment because of the need to travel, especially if this share is asymmetrical across countries. For example, let us assume that the number of patients needing treatment in both countries is the same, but patients in B are less willing to travel than those in A. In this case, the costs for locating the facility in A may be lower not because of efficiency but simply owing to the drop in the number of treatments due to the dropout in B.
As can be seen in Appendix 2, it is possible to define a threshold for the marginal cost in A below which this country is the preferred location. Table 1 records the results under the two approaches presented above.
Threshold level for the marginal cost in a to be used to decide the location
Table 1. Long description
The table compares thresholds for cost minimization and welfare maximization. It includes two main columns: one for the threshold for cost minimization and one for the threshold for welfare maximization. Each column contains mathematical expressions involving variables and constants. The expressions are written in a linear format, with clear indications of operations such as addition, subtraction, multiplication, and division. The table does not include specific values or labels beyond the mathematical expressions.
The two prices differ by
$v_{A}-{r_{B}Q_{B}+r_{B}z_{A}Q_{A} \over r_{A}\left(Q_{A}+z_{B}Q_{B}\right)}v_{B,}$
which is a proxy for the welfare loss of individuals that give up treatment because of the need for cross-border travel. In our analysis where some patients give up treatment, we have preferred to use the threshold marginal price that allows welfare maximisation as the location criterion. However, from a practical perspective, while costs may be easier to observe, the dropout rate may be more difficult to predict.
2.2. Reimbursement setting
For
$m_{A}\leq v_{A}-{r_{B}Q_{B}+r_{B}z_{A}Q_{A} \over r_{A}\left(Q_{A}+z_{B}Q_{B}\right)}v_{B}+{m}_{A}^{C}$
, the best alternative is to locate the facility in A. Let us now define a reimbursement system for the use of such a facility: one paid by country A and another paid by country B. The price system we propose is a variant of a diagnosis-related group DRG average-based costing (Leister and Stausberg, Reference Leister and Stausberg2005; O’Reilly et al., Reference O’Reilly, Busse, Häkkinen, Or, Street and Wiley2012) and is made up of two parts:
-
• the marginal cost m j ;
-
• a contribution x; y to the payment of the fixed cost F K, which should be at least sufficient to cover production costs.
The scheme can be written in general terms as:
$p_{A}=m_{A}+x$
$p_{B}=m_{A}+y$
where p A and p B are the tariffs for treating a patient living in A and B, respectively. Since the first part of the pricing mechanism is the marginal cost, it is sufficient to find a fixed unit cost share x and y for which the F K is always covered. The following constraint allows this objective to be achieved:
$x{r_{A}}Q_{A}+yr_{A}z_{B}Q_{B}=F_{K}$
This implies that y should be equal to
$y={F_{K}-x{r_{A}}Q_{A} \over r_{A}z_{B}Q_{B}}$
The welfare gain deriving from pooling should be evaluated against two alternatives: doing nothing and replicating the technology depending on the sign of Equation (1). If adopting the technology is viable, the welfare difference is between possibly rationing and sharing the facility or no rationing but excess capacity. On the other hand, if Equation (1) is negative, the welfare difference is simply the gain from sharing the technology. The two alternatives can be written as:
\begin{align}\Delta {W_A} =& \left( {v{r_A}{Q_A} - {m_A}{r_A}\left( {{Q_A} + {z_B}{Q_B}} \right) - {F_K} - {p_A}{r_A}{Q_A} + {p_A}{r_A}{Q_A} + {p_B}{r_A}{z_B}{Q_B}} \right) \\ &- \left( {v - {m_A} - {{{F_K}} \over {{Q_A}}}} \right){Q_A}\end{align}
$\quad\quad\;\;\; \Delta {W_A} = \left( {v{r_A}{Q_A} - {m_A}{r_A}\left( {{Q_A} + {z_B}{Q_B}} \right) - {F_K} - {p_A}{r_A}{Q_A} + {p_A}{r_A}{Q_A} + {p_B}{r_A}{z_B}{Q_B}} \right) - 0$
For B, the welfare difference is represented by the option to send patients to A to be treated or adopting the technology locally (Equation (1) >0), or doing nothing (Equation (1) <0):
$\eqalign{ \Delta {W_B}& = \left( {v - {p_B} - t} \right){r_A}{z_B}{Q_B} - \left( {v - {m_B} - {{{F_K}} \over {{Q_B}}}} \right){Q_B} \cr & = \left( {v - {p_B} - t} \right){r_A}{z_B}{Q_B} - \left( {v - {m_B}} \right){Q_B} + {F_K} \cr \Delta {W_B} & = \left( {v - {p_B} - t} \right){r_A}{z_B}{Q_B} - 0 \cr}$
By defining
${L_i} = \{ {\mathop{ {( {v - {m_i} - {{{F_K}} \over {{Q_i}}}} ){Q_i}}}\limits_0 }$
it is possible to write a single equation for each welfare difference:
$\eqalign{ & \Delta {W_A} = \left( {v{r_A}{Q_A} - {m_A}{r_A}({Q_A} + {z_B}{Q_B}) - {F_K} + {p_B}{r_A}{z_B}{Q_B}} \right) - {L_A} \cr & \Delta {W_B} = \left( {v - {p_B} - t} \right){r_A}{z_B}{Q_B} - {L_B} \cr}$
Given that the current EU legislation indicates that MSs are principally responsible for healthcare within their boundaries, only a bargaining between the two countries may determine p A and p B and ultimately how the benefits from pooling are shared between the two countries. In this case, the relative welfare weight depends on the relative bargaining power of the two countries.
Following the existing literature (Gamba et al., Reference Gamba, Pertile and Vogler2020; Levaggi and Levaggi, Reference Levaggi and Levaggi2024), the Nash bargaining process between the countries under the budget balance constraint (cost equal to revenue) is equivalent to finding the level of p A and p B that maximises the weighted total welfare difference with respect to the status quo (technology adopted locally or no adoption according to the sign of Equation (2)):
$\eqalign{ & Ma{x_{{p_B}}}\Delta {W_A} + \Delta {W_B} \cr & \quad = \alpha\; ln \left( {\left( {{p_B} - {m_A}} \right){r_A}{z_B}{Q_B} - \left( {v - {m_A}} \right)\left( {1 - {r_A}} \right){Q_A} - {L_A}} \right) \cr & \quad\quad+ \left( {1 - \alpha } \right)\;ln \left( {\left( {v - {p_B} - t} \right){r_A}{z_B}{Q_B} - \left( {v - {m_B}} \right){Q_B} + {F_K} - {L_B}} \right) \cr & s.t \cr & {p_B} = {m_A} + y \cr & y = {{{F_K} - x{r_A}{Q_A}} \over {{r_A}{z_B}{Q_B}}} \cr}$
where α ∈ [0,1] is the relative bargaining power of each member state. The bargaining proposed determines a rule by which the two countries share the cost of excess capacity by defining a cost-plus price (marginal cost plus a fraction of the fixed cost).
The optimal p A and p B (see Appendix 2) can be written as:
$\eqalign{ & {p_A} = {m_A} + {{1 - \alpha } \over {{r_A}{Q_A}}}{F_K} - {{{Q_A}(1 - \alpha )\left( {1 - {r_A}} \right)} \over {{r_A}{Q_A}}}\left( {v - {m_A}} \right) + {{\alpha {Q_B}\left( {1 - {r_A}{z_B}} \right)} \over {{r_A}{Q_A}}}\left( {v - {m_B}} \right) \cr & \,\,\,\,\,\,\,\,\,\,\,\,+ \alpha {r_A}{z_B}{Q_B}\left( {{{t - {m_B} + {m_A}} \over {{r_A}{Q_A}}}} \right) \cr & {p_B} = {m_A} + \bigg(\alpha {{{F_K}} \over {{r_A}{z_B}{Q_B}}} + \alpha \left( {{m_B} - {m_A} - t} \right) + {{{Q_A}(1 - \alpha )\left( {1 - {r_A}} \right)} \over {{r_A}{z_B}{Q_B}}}\left( {v - {m_A}} \right) \cr & \,\,\,\,\,\,\,\,\,\,\,\,- {{\alpha {Q_B}\left( {1 - {r_A}{z_B}} \right)} \over {{r_A}{z_B}{Q_B}}}\left( {v - {m_B}} \right)\bigg) \cr}$
In Appendix 2, we also show that these tariffs (for any level of α) are compatible with the welfare difference for both countries being higher than zero, ie. both countries are willing to pool resources since they obtain a benefit. Since the bargaining is defined in terms of welfare difference and the price cannot be lower than the marginal price, the solution is in fact always welfare improving for both countries.
2.3. One country has already taken up the facility
One country may decide in favour of early adoption of a new technology even though Q i < K. In actual fact, technology adoption is not symmetric across countries; for example, as regards drugs, an important gap exists between commercialisation in Europe and the US (Mason et al., Reference Mason, Drummond, Ramsey, Campbell and Raisch2010), and the same is true for medical devices and health technologies in general (Hatz et al., Reference Hatz, Schreyögg, Torbica, Boriani and Blankart2017; Packer et al., Reference Packer, Simpson and Stevens2006). In our context, we assume that for one country Equation (1) is positive, while for the other it is negative. The framework presented above may also be used in this case. For simplicity, we assume that A has adopted it and that Q A patients are treated. In this case, B chooses whether to adopt the technology locally or to send rz B Q B patients to A. In this case, if rationing is necessary, only patients in country B will be affected since at the time of the decision to pool, the treatment has already been granted to all of the patients in A.
In Appendix 3, we show that in this case, p A and p B can be written as:
$\eqalign{ & {p_A} = {m_A} + {{1 - \alpha } \over {{Q_A}}}{F_K} + \alpha \left( {{Q_B}{{r{z_B}} \over {{Q_A}}}\left( {{m_A} - {m_B} + t} \right) + {{{Q_B}(1 - r{z_B})} \over {{Q_A}}}\left( {v - {m_B}} \right)} \right) \cr & {p_B} = {m_A} + \alpha \left( {{m_B} - {m_A} - t - {{{Q_B}\left( {1 - r{z_B}} \right)} \over {{z_B}{Q_B}}}\left( {v - {m_B}} \right) + {{{F_K}} \over {{z_B}{Q_B}}}} \right) \cr}$
which are quite similar to the solution presented above in Equation (7) One of the most notable differences is that p A is higher in this case, due to the asymmetric rationing. The discussion on the legal and economic aspects related to its implementation is then the same as in the case where neither country has adopted the (additional) technology.
3. Discussion
The model presented above shows that cross-border patient mobility may be used to improve efficiency and access to healthcare across the EU and the rest of the European Economic Area (Frischhut, Reference Frischhut, Müller and Schroeder2020). As shown below, our proposal is compatible with the present EU legislation because it originates from a government decision to (partially or totally) offer a treatment abroad.
The framework we propose is general so as to allow different settings to be included. For example, by setting r A ; r B = 1, we can consider the case where capacity allows all the patients to be treated, while z A ; z B = 1 mimics a scenario without dropouts. However, before discussing cross-country reimbursements, it is necessary to understand whether this solution can be made compatible and viable with current EU legislation.
3.1. Compatibility with EU legal requirements
The EU legal framework for healthcare consists of both EU primary and secondary law, with EU primary law (Article 168(7) TFEU, European Union, 2016) affirming that member states basically retain control over the organisation, delivery, and financing of health services, despite the above-mentioned increased impact of EU health law via EU secondary law and case law. Nevertheless, under the principles of free movement, two key EU legal instruments – the PMD and the Social Security Coordination Regulations (SSCR) European Parliament and Council, 2004 – allow patients to access cross-border healthcare under certain conditions, primarily involving prior authorisation (see, for example, Frischhut and Levaggi, Reference Frischhut and Levaggi2023, 15–29).
We show that, within this EU legal framework, patient mobility may allow welfare to be improved in a setting where the number of patients requiring a specific treatment is fixed, but the facility (a hospital, or a lab where a technology is used) requires a fixed capacity, which cannot be adapted to demand. The treatment we have in mind may be a diagnostic procedure such as the one described above, or it could be a surgical treatment with highly sophisticated robots (Goh and Ali, Reference Goh and Ali2022; Probst, Reference Probst2023). In any case, this will basically qualify as ‘hospital treatment’ under the PMD and will therefore always require prior authorisation (Article 8(2)(a) PMD), which the PMD does not allow in the case of outpatient care (Frischhut and Levaggi, Reference Frischhut and Levaggi2023, 15–29). Since making a change to EU primary law is not a realistic option, our focus will be on what can be achieved under the existing framework of EU secondary law (ie. PMD and SSCR).
We argue that a ‘joint implementation’ mechanism like the one proposed for the initial implementation of a directive (Frischhut and Levaggi, Reference Frischhut and Levaggi2024) could also be employed at a later stage, whereby member states could also use bilateral agreements, where countries define the target population that is allowed to be treated abroad. Two (or more) member states could conclude such a bilateral agreement to enhance excess CM via member states-driven patient mobility. Such an agreement could be helpful from a practical perspective; however, due to the need to comply with EU law, in the following we will focus on the requirements of EU legislation based on the PMD, the SSCR, and the relevant ECJ case law.
A member state can (but does not have to) ask for prior authorisation, in order to plan the outflow of patients to another member state. In practical terms, under the SSCR this is done via the S2 form. While the initiative traditionally comes from the patient, the reasoning behind prior authorisation (ie. the need for planning) can also lead to the initiative coming from the member state, with the S2 form serving less as an authorisation and more as a practical confirmation that cross-border healthcare can be used. Under the PMD there is no such form, as patients have to pay upfront in the country of treatment and apply for reimbursement afterwards while facing some degree of uncertainty.
As long as the patient exercises free decision-making, the fact that the member state is nudging the patient to seek treatment abroad would not be an issue. In the Smits and Peerbooms case (European Court of Justice, 2001), the ECJ accepted that in the case of treatment received in a hospital, planning must be possible with respect to ‘the number of hospitals, their geographical distribution, the mode of their organisation and the equipment with which they are provided, and even the nature of the medical services which they are able to offer’ (para 76). These planning activities are legitimate insofar as they pursue the objective of ‘ensuring that there is sufficient and permanent access to a balanced range of high-quality hospital treatment in the State concerned’ (para 78). Besides quality, the objective of controlling costs was also accepted by the ECJ (para 79). While the ECJ, based on these considerations, accepted prior authorisation to avoid outflows of patients that put a health system at risk, in our opinion this should also be possible to encourage such outflows and to support a joint effort of two or more member states ‘to avoid the phenomena of hospital overcapacity, imbalance in the supply of hospital medical care and logistical and financial wastage’ (para 106). Or, in other words, instead of keeping patients from going abroad, the same planning rationale (in terms of quality and cost) should also allow patients to be encouraged to access services at a joint facility in another member state.
Travel expenses may be reimbursed by a member state as it is freely entitled to decide to pay for such costs. The only limitation is the principle of non-discrimination, according to which a decision to pay for travel and accommodation expenses incurred in their country then also triggers an obligation to pay for such costs in cases of cross-border treatment. If member states want to nudge patients to seek treatment abroad, they would be well advised to offer the relevant information and to cover travel (and, if appropriate, accommodation) costs in a kind of comprehensive package, so to speak.
Therefore, in this situation, CM can lead to a position where two (or more) member states decide to operate one supply centre in one member state. The legitimate aim to plan hospital treatment can then overrule patients’ aspirations to receive treatment close to home, if this centre is the only available facility. However, if the two (or more) member states each have a facility locally that does not allow all the patients to be treated so that they pool the rest of the patients to be treated in an extra facility, say in country 1, two interesting questions arise: which patients should move to country 1 from country 2, and who decides which patients have to move?
In this context, EU primary law would not allow unjustified discrimination (ie. unjustified differentiation) based on nationality (Article 56 TFEU). While space precludes a detailed overview, in the context of accessing healthcare services, EU secondary law also forbids discrimination based on race, ethnic origin,Footnote 5 or sex.Footnote 6 Discrimination based on religion, disability, age, or sexual orientation should have been covered, but the planned directive was not realised (Frischhut, Reference Frischhut2025, 544). Therefore, accordingly, with respect to the above-mentioned situation, each member state could decide which patients should move, provided the differentiation is based on objective and evidence-based criteria. This situation assumes that the member state – in line with the above-mentioned planning requirement – organises and selects which patients should move.
On the other hand, a member state could decide to offer all patients the option of moving or being treated in their country of residence. If nobody chooses to travel, a waiting list will start to form and patients will have to journey abroad unless they are prepared to wait a very long time. While the above-mentioned planning requirement allows member states to operate a system of waiting lists, according to the Watts case they have to take into account the individual circumstances and medical situation of each patient.Footnote 7
Based on what has been stated so far, provided a member state uses objective criteria it could speculate that some patients would not accept the burden of travelling abroad and therefore offer them treatment locally. For example, elderly or fragile patients with multiple ailments might be less willing to travel, whereas younger ones might not see this as a burden. Paying for travel expenses could be used as an incentive to encourage patients to seek treatment abroad.
Finally, two countries – for example, Italy and Austria – could negotiate over whether, for instance, Italian patients have to go to Austria. However, a challenge may arise if a patient is offered the opportunity to go to Austria but does not want to take it up. For whatever reason, this patient could find a facility in, say, France that offers this treatment. How does EU law balance the patient’s aspiration to seek treatment in France while Italy wants them to be treated in Austria? Under EU law, a patient is entitled to seek treatment abroad if the treatment is part of the basket of care and cannot be provided in due course. In the Petru case, the ECJ clarified that the impossibility of getting treatment abroad has to be determined ‘by reference to all the hospital establishments in the Member State of residence that are capable of providing the treatment in question’ (European Court of Justice, 2014; Frischhut and Levaggi, Reference Frischhut and Levaggi2015). We argue that this clarification (all hospitals in this country) should be extended to facilities operated by two (or more) member states even if outside its territory. However, the country is still under the obligation to provide the treatment without undue delay (see Watts case, European Court of Justice, 2006).
3.2. The economic framework and the EU role
As shown in the previous section, the location of the additional facility should be chosen in order to maximise welfare, ie. to balance costs with accessibility to patients. In this respect, the choice will have to be negotiated at national level because the EU cannot have a say in this decision (Article 168(7) TFEU). For patient-driven mobility, the EU rule (Article 7 PMD) is that the country reimburses the treatment abroad, but under the two limitations of its own tariffs at home and also limited by the acutal cost of what the patient paid abroad. In this way, the national healthcare system does not bear any extra cost. However, when the issue of mobility arises because of member states-driven mobility – for instance, operationalised via an agreement between the two countries – several other reimbursement schemes are compatible with welfare maximisation (Frischhut and Levaggi, Reference Frischhut and Levaggi2024), and they determine how the benefits from excess CM are shared. Although the cost of providing treatment is the same for residents and non-residents, price differentiation may allow the benefits of pooling to be distributed in a more equitable way, since equity is one of the EU’s health values, along with universality, access to good-quality care, and solidarity (Council Conclusions on Common values and principles in EU Health Systems, OJ 2006 C 146/1). From a technical point of view, our reimbursement scheme is similar to an average-based DRG tariff (Busse et al., Reference Busse, Geissler, Aaviksoo, Cots, Hakkinen, Kobel, Mateus, Or, O’Reilly, Serden, Street, Tan and Quentin2013; Levaggi et al., Reference Levaggi, Moretto and Pertile2014), where the allocation of fixed costs also takes into account welfare considerations. To enable us to better understand this point, let us rewrite the welfare gain for an ‘equitable’ reimbursement, ie. a set p A , p B for which the welfare gain is split equally between the two countries (Eq. A1.10 in the Appendix) and a reimbursement based on an average cost (see Eq. A1.12 in the Appendix) in the destination country, which may be similar to what is paid nowadays for most patient-driven mobility. The welfare difference can be written as:
\begin{align}{W_A} - W_A^u =& {1 \over 2}{F_K}{{{Q_A} - {z_B}{Q_B}} \over {{Q_A} + {z_B}{Q_B}}} + {{{Q_A}\left( {1 - {r_A}} \right)\left( {v - {m_A}} \right)} \over 2} + {{\left( {{m_B} - {m_A} - t} \right){r_A}{z_B}{Q_B}} \over 2} \\&- {{{Q_B}\left( {1 - {r_A}{z_B}} \right)\left( {v - {m_B}} \right)} \over 2}\end{align}
\begin{align}\;\;\;{W_B} - W_B^u =& - {1 \over 2}{F_K}{{{Q_A} - {z_B}{Q_B}} \over {{Q_A} + {z_B}{Q_B}}} - {{{Q_A}\left( {1 - {r_A}} \right)\left( {v - {m_A}} \right)} \over 2} - {{\left( {{m_B} - {m_A} - t} \right){r_A}{z_B}{Q_B}} \over 2} \\&+ {{{Q_B}\left( {1 - {r_A}{z_B}} \right)\left( {v - {m_B}} \right)} \over 2}\end{align}
For each country, this welfare difference can be positive or negative according to the parameters, and it is equal to zero only if t = 0, r A = z i = 1.
The intuition behind this result is that, in pooling demand, the benefits and the costs of this option are asymmetric. Provided the reimbursement paid by B is at least equal to the marginal cost m A , the only welfare loss suffered by A derives from rationing. Patients in B, on top of rationing, have to pay an extra cost to be treated, and some may give up treatment because of non-monetary costs.
The implementation of these prices may need further coordination. National governments use a variety of reimbursement schemes ranging from DRG-based to performance-based ones, which may be difficult to reconcile in a negotiation, but for the type of care for which we propose capacity pooling, it may be easier to agree on a cost-based price.
In the current assignment of competences, the role of the EU may be to promote CM by collecting data on excess capacity and by making them available to national decision-makers; in this way, capacity pooling would require less effort on the part of countries. This procedure would also allow matching costs to be reduced because each facility would know where to send their data on excess capacity, and each national decision-maker would know where to look to match supply to their demand. As regards reimbursement, the EU may suggest general rules, but only bargaining between countries is currently viable.
4. Conclusion
Ensuring value for money in healthcare provision is crucial for the long-term sustainability of health systems across the EU. In this paper, we have explored how cross-border patient mobility can serve as a tool for enhancing CM in a setting where treatment demand is fixed and capacity cannot be flexibly adjusted. From an economic perspective, we have demonstrated that facilitating cross-border healthcare enables more efficient use of existing resources and can improve overall welfare. From a legal standpoint, we have shown that such mobility is compatible with current EU law, including both primary and secondary legislation, as well as relevant ECJ case law. These legal frameworks acknowledge that planning and cost containment can justify restrictions on patient mobility but also support its encouragement when principles of non-discrimination and proportionality are upheld. For excess capacity, a ‘joint implementation’ mechanism like the one proposed for border mobility (Frischhut and Levaggi, Reference Frischhut and Levaggi2024) could be used.
A key factor in operationalising cross-border care is the pricing mechanism, which determines how the benefits of capacity sharing are distributed among member states. While a uniform price may not always ensure equity, allowing lower prices for countries with lower average incomes can promote greater solidarity within the EU. Importantly, although the EU legal framework allows for cooperation, the actual organisation of healthcare remains primarily within the competence of member states, thereby limiting the EU’s ability to take a proactive coordinating role.
From a policy perspective, solidarity could be enhanced by the EU being able to determine reimbursements. In a decentralised system, it is the bargaining power α of the two countries that determines the outcome. If the EU could set reimbursement prices, the latter could be set in a way that favours the most disadvantaged countries, as shown in Appendix 4, but this is not possible under the present EU legislation. A possible solution in the short run could be to use cohesion funds to cover the difference in healthcare costs between richer and poorer MSs, as trialled in a pilot project on cross-border care in the Czech–Austrian borderland (Böhm and Kurowska-Pysz, Reference Böhm and Kurowska-Pysz2019; Stan et al., Reference Stan, Erne and Gannon2021).
In scenarios involving more than two countries, managing excess capacity becomes more complex and may require some level of supranational coordination. While current legal limitations restrict the EU’s involvement, our interdisciplinary findings highlight the potential for enhanced cross-border cooperation to improve efficiency, equity, and solidarity in European healthcare systems, even within existing legal boundaries.
Supplementary material
The supplementary material for this article can be found at https://doi.org/10.1017/S1744133126100632.
Acknowledgements
None.
Financial support
Financial support from European Commission, Horizon Europe programme under grant agreement No. 101095424.
Competing interests
The authors have no competing interest to declare.
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