Hospital Competition in the Netherlands: An Empirical Investigation

TILEC Discussion Paper No. 2019-008

CentER Discussion Paper No. 2019-018

31 Pages Posted: 22 May 2019 Last revised: 29 May 2019

See all articles by Caroline Berden

Caroline Berden

Dutch Healthcare Authority

Ramsis Croes

Dutch Healthcare Authority; Erasmus University Rotterdam (EUR) - Institute of Health Policy and Management

Ron Kemp

Wageningen UR; Authority for consumers and Markets

Misja Mikkers

Dutch Healthcare Authority; Tilburg Law and Economics Center (TILEC)

Rob van der Noll

Netherlands Authority for Consumers and Markets (ACM)

Victoria Shestalova

Dutch Healthcare Authority

Jan Svitak

Netherlands Authority for Consumers and Markets (ACM); Tilburg University - Tilburg University School of Economics and Management

Date Written: May 7, 2019

Abstract

The Dutch government introduced managed competition to the health care sec-tor in 2006. In this regulatory framework insurers compete for enrollees and providers compete for contracts with insurers. The resulting contracts are determined by bargaining, which outcome depends on the relative position of the provider. In this paper, we compare how commonly used market power indicators predict bargaining outcomes. We combine 2013 transaction data with bilateral contract data. Our empirical models explain the relative differences in hospitals’ revenues while controlling for differences in the complexity of patients. Four indicators are used: the logit competition index (LOCI), willingness-to-pay (WTP), Elzinga-Hogarty market share and a rule-of-thumb market share. We find that WTP and LOCI perform best empirically.

Keywords: Hospital competition, Market power, Bargaining

JEL Classification: I11, L44, L13, D22

Suggested Citation

Berden, Caroline and Croes, Ramsis and Kemp, Ron and Mikkers, Misja and van der Noll, Rob and Shestalova, Victoria and Svitak, Jan, Hospital Competition in the Netherlands: An Empirical Investigation (May 7, 2019). TILEC Discussion Paper No. 2019-008, CentER Discussion Paper No. 2019-018, Available at SSRN: https://ssrn.com/abstract=3383564

Caroline Berden

Dutch Healthcare Authority ( email )

Postbus 3017
Utrecht, 3502 GA
Netherlands

Ramsis Croes

Dutch Healthcare Authority ( email )

Postbus 3017
Utrecht, 3502 GA
Netherlands

Erasmus University Rotterdam (EUR) - Institute of Health Policy and Management ( email )

Netherlands

Ron Kemp

Wageningen UR ( email )

Hollandseweg 1
Wageningen, 6706KN
Netherlands

Authority for consumers and Markets ( email )

P.O. Box 16326
Muzenstraat 41
The Hague, 2500 BH
Netherlands

Misja Mikkers (Contact Author)

Dutch Healthcare Authority ( email )

Postbus 3017
Utrecht, 3502 GA
Netherlands

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Rob Van der Noll

Netherlands Authority for Consumers and Markets (ACM) ( email )

PO Box 16326
2500 BH The Hague
Netherlands

Victoria Shestalova

Dutch Healthcare Authority ( email )

Postbus 3017
Utrecht, 3502 GA
Netherlands

Jan Svitak

Netherlands Authority for Consumers and Markets (ACM) ( email )

PO Box 16326
2500 BH The Hague
Netherlands

Tilburg University - Tilburg University School of Economics and Management

PO Box 90153
Tilburg, 5000 LE Ti
Netherlands

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