Page 104 - Effective healthcare cost containment policies Using the Netherlands as a case study - Niek W. Stadhouders

Chapter 5
Abstract
Background: Strategic purchasing is advocated to improve the allocation of healthcare resources. To stimulate strategic purchasing in the Netherlands, managed competition was implemented in the hospital sector in 2006. Meanwhile, non-competitive purchaser systems were retained for long-term care, home care and personal budgets. To test whether active purchasing is higher in a managed competition system, we compare sectors on one possible outcome of strategic purchasing: the extent of reallocation of provider budgets. We design a Market Volatility Index (MVI) and apply this metric to Dutch health care markets. Our aim is to explore whether managed competition reallocates more market shares between
providers than the non-competitive purchaser systems.
Methods: We derive provider budgets from annual statements from 2006 to 2014. We calculate the MVI by expressing cumulative changes in market share between providers as percentage of the total market. We compare the MVI between markets. As robustness checks, we adjusted for the influence of market entry and exit, provider size, selective contracting and percentage of fixed costs.
Results: In the managed competition system, between 2% and 3% of the total budget for hospital care is reallocated between providers annually. In the non-competitive long-term care system similar MVI are found, of 2.5% in elderly care and 2.1% in disability care on average. A substantially larger MVI, respectively 8.7% and 10.3%, is found for municipalities (single payers) and personal budget holders. All sector MVI decline over time. We reject our hypothesis that budget reallocations are higher in the managed competition market. Our additional analyses confirm that active purchasing by means of budget reallocations seems to be low.
Conclusion: Market reallocations are low in both single- and multi-payer systems, suggesting purchasers in either system are not actively engaged in reallocating budgets between providers. Although the Dutch reform aimed to stimulate active purchasing by multiple payers, we do not observe higher market dynamics. Furthermore, reallocations decreased over time, suggesting that managed competition did not live up to its promise of increasing allocative efficiency through active purchasing.
The authors thank Raf van Gestel for constructive comments on an earlier version
Acknowledgements
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