The impact of hospital competition and insurer concentration on health care volume and cost in Dutch hospitals

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Abstract

This study analyses the effect of spatial concentration of general hospitals, the appearance of independent treatment centers (in Dutch: Zelfstandige Behandelcentra: ZBCs) and the concentration of health insurers on production volume and costs since the introduction of market-oriented health care reforms in the Netherlands. We use regression analyses of 1,345,144 patient-level hospital data for fifteen major diagnosis treatment combinations (in Dutch: Diagnose Behandeling Combinaties: DBCs), representing 70% of the managed competition segment (the so-called B-segment). We find that spatial concentration of hospitals and concentration of insurers do not affect health care production volume. More competitive hospital markets are associated with higher cost of most DBCs studied. Surprisingly, hospitals operating under insurers with high monopsonic power incur higher average DBC-cost than hospitals operating under insurers with more dispersed power. The number of independent treatment centers in the hospital’s vicinity is positively related to health care volume and average cost.

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The effects of market structure and bargaining position on hospital prices.

Glenn A Melnick, Jack Zwanziger, Anil Bamezai … (1992)

PPOs and HMOs have gained widespread acceptance due in part to the belief that excess capacity and competitive market conditions can be leveraged to negotiate lower prices with health care providers. We investigated prices obtained in different types of markets by the largest PPO in California. Our findings indicate that greater hospital competition leads to lower prices. Furthermore, as the importance of a hospital to the PPO in an area increases, the price rises substantially. Our testing of alternative methods for defining hospital geographic markets reveals that the common practice of using counties to define the market leads to an underestimate of the price-increasing effects of a merger.

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The effects of hospital competition and the Medicare PPS program on hospital cost behavior in California.

G Melnick, J Zwanziger (1988)

Previous studies of hospital competition have found that greater competition leads to higher hospital costs. In this paper we report how the behavior of California's hospitals has changed since the introduction of programs intended to contain the rate of increase of hospital costs. Using data that cover the period preceding and following the introduction of these programs, we found that hospitals in more competitive markets have lowered their costs significantly.