Hospital Competition in the Netherlands: An Empirical Investigation

Carolien Berden, R. Croes, R. Kemp, Misja Mikkers, Rob van der Noll, V. Shestalova, Jan Svitak

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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 de-
termined by bargaining, which outcome depends on the relative position of the
provider. In this paper, we compare how commonly used market power indi-
cators predict bargaining outcomes. We combine 2013 transaction data with
bilateral contract data. Our empirical models explain the relative dierences in
hospitals' revenues while controlling for dierences 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
nd that WTP and LOCI perform best empirically.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages31
Volume2019-018
Publication statusPublished - 20 May 2019

Publication series

NameCentER Discussion Paper
Volume2019-018

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Keywords

  • hospital competition
  • market power
  • bargaining

Cite this

Berden, C., Croes, R., Kemp, R., Mikkers, M., van der Noll, R., Shestalova, V., & Svitak, J. (2019). Hospital Competition in the Netherlands: An Empirical Investigation. (CentER Discussion Paper; Vol. 2019-018). Tilburg: CentER, Center for Economic Research.