The Impact of Contracting on the Portuguese National Health System

GUALTER COUTO

School of Business and Economics and CEEAplA

University of Azores

9500-321 Ponta Delgada, Portugal

PORTUGAL

PEDRO PIMENTEL

School of Business and Economics and CEEAplA

University of Azores

9500-321 Ponta Delgada, Portugal

PORTUGAL

JACINTO GARRIDO VELARDE

Department of Social Sciences, Languages and Literatures, University of Extremadura, 06071

and

College of Business and Economics, University of Johannesburg

PO Box 524, Auckland Park

SOUTH AFRICA

Abstract: All treatments, materials, instruments, exams, vaccines, tests, hospitalizations, surgeries, human

resources, investigations, medicines, autopsies, among many other services provided by the National Health

System (SNS). Therefore, funding is required, and the external services and supplies to which the SNS must

constantly update its technologies and the necessary and continuous training and essential maintenance and

after the entire process and development of the work, it is concluded that the contracting had a negligible impact.

The repercussion that it had on the economic performance of Portuguese Hospitals was in a negative sense. In

the statistical analyses it was used tests of differences between averages, to check the behavior of the economic

performance of hospitals towards the contracting process. It was taken data of reports and accounts from a sample

Key-Words: Contracting, Economic performance, Health System.

Received: May 7, 2021. Revised: December 8, 2021. Accepted: December 30, 2021. Published: January 3, 2022.

Health is a vital sector in the economy and society. It

has a significant impact not only on a personal level

but also on a social level, in the development of

All health systems currently in existence were based

on their development and evolution on two primary

models: the Bismarckian Model and the Beveridgean

Model. These models are based on the principle

that access to health care does not depend on

citizens' ability to pay, but only on their needs,

so the contribution depends on income

(Carrondo, 2014) [1].

mandatory; intends to guarantee the risk coverage of

workers for others; its funding comes from social

contributions based on wages, in charge of employers

and workers, and the management of each benefit is

organized in boxes, which are managed by the State,

with the participation of taxpayers.

Although it is based on social insurance, where

access to citizens is universal, this insurance is

conditioned by the employment situation - once it is

like Austria, Holland, or Switzerland [3].

performance of Portuguese Hospitals was negative.

Health financing has been a significant concern in the

national and international context, as health spending

is growing faster than economic growth.

on companies. This model was subject to some

Asset Pricing Model (CAPM), the Cost of Equity

Capital (Kcp), the Cost of Equity Capital (Kca), and

Weighted Average Cost of Capital (CMPC).

To determine the Cost of Equity (Kcp), CAPM was

used, according to Equation 1 [8].

E(r)=rf+βL (rm-rf) (1)

For the calculation, it was necessary to obtain the

removed from the website: investing.com. Then, a

rate of return was calculated for each day and, finally,

the average return for each year was calculated. From

the average of all the years under analysis, we

obtained an estimator for the average profitability of

the market.

To measure the β_U, first, a synthetic β was

determined, through the Degree of operational

leverage, by Equation 2 [8]:

process, a difference test between means was also

carried out, using a database between 2003 and 2004

referring to the period before contracting and 2005 to

2017, corresponding to the period after contracting.

It should be noted that there were many aggregations

of hospitals, starting in 2008, and not all the

necessary reports and accounts were available, so the

sample is not the best.

hospitals is presented.

Tables 3 and 4 show all values obtained for

profitability indicators, namely ROE and ROA.

negative, and this means that the operating results

were negative, that is, that the Hospitals have

operating costs and losses higher than operating

income and gains.

Tables 5, 6, 7, and 8 show the EVA and MVA

indicators' values. In order to simplify, the following

numbering was assigned to the acronym MVA;

MVA1- is the MVA, calculated by updating the

EVA; MVA2- refers to the MVA estimated using the

multiple PER to reach the market value of the

update method.

devalued, was the Portuguese Institute of Oncology

of Porto São Francisco Gentil.

In order to further develop this analysis, a hypothesis

test was applied to test the normality of the data,

where the Hypothesis null (H0) means that the data

distribution is normal and Hypothesis 1 (H1) implies

that the data distribution is not normal. The test used

to test the data's normality was the Shapiro Wilk test

since the sample is small and less than 30. The level

of significance considered in the study was 5%. Thus,

table 9, appendix A and B, shows that only the data

Table 9: Normality test.

Subsequently, on the ROA, ROE, EVA, and MVA

indicators, where the null hypothesis was rejected in

the previous normality test, a non-parametric test of

the difference between means was applied, whose

name is Mann Whitney test for two different samples.

For the MVA3 indicator, where the null hypothesis

was accepted in the previous normality test, a

the means of the indicators. The level of significance

considered was 5% (Table 10). When observing the

results obtained in Table 10, it can be concluded that

the null hypothesis is accepted in all variables, so

there is a statistical similarity between the means of

the indicators, as all parameters are higher than the

5% significance level. Thus, it appears that the

economic indicators are statistically equal when

compared before and after contracting.

Contextually, there is still no other study that

analyzes the impact of contracting the national health

system on hospital profitability and economic

performance indicators. So, this is an innovative

study.

and the health of all taxpayers and compromise future

generations. This is a very appreciated and essential

topic these days, so it needs to be analyzed and

studied.

As study limitations, it is possible to emphasize the

absence of accounting data in the period before

contracting, since only data related to the years 2003

and 2004 were found. Besides, there was a scarcity

of studies developed with the same object of

research, the inexistence (or lack of knowledge) of a

similar study, and the sample size (despite being a

sample for convenience).

This work may be a starting point for other studies

This study may also be a useful contribution to the