Page 105 - Effective healthcare cost containment policies Using the Netherlands as a case study - Niek W. Stadhouders

Do managed competition and active purchasing go hand in hand?
Chapter 5
Do managed competition and active purchasing go hand in hand?
To increase efficiency, many countries have sought to improve the purchaser function in health care (Ham, 2008). However, literature provides an unclear image which payer system leads to better outcomes in terms of costs and quality of purchased care (Figueras et al., 2005; Glied, 2009; Jeong and Niki, 2012; Smith et al., 2004; Wranik, 2012). Strategic or active purchasing involves selective reallocation of resources from poor performers to best performers (supply-side steering) and channelling patients from poor to best performers, e.g. by patient education, consultation or prior authorization (demand-side steering) (Beauchamp and Rouse, 1990; Mays and Hand, 2000; Mikkers and Ryan, 2014; Schiff et al., 1994). Active purchasing implies that provider budget allocations change over time. We propose a simple indicator of allocative activity that measures the percentage of the total market share that is reallocated between providers annually. We apply this measure to assess purchaser activity in different healthcare sectors in the Netherlands.
5.1 Introduction
The theory of regulated competition postulates that third-party payers can steer healthcare market to more efficient outcomes by rewarding well-performing providers and disciplining underperforming providers (Enthoven, 1993). The Netherlands implemented a system of managed competition in the hospital sector in 2006, which included, among others, competition between insurers, room for free-pricing and selective contracting and the liberalization of the certificate-for-need regulations (Van de Ven & Schut, 2008; Maarse, Jeurissen & Ruwaard, 2015; Schut et al, 2013). However, the institutional context of purchasing varies significantly between hospital care and three other Dutch healthcare sectors: long-term care, social services and personal budgets. This provides a good case study to assess the effect of system differences on active purchasing.
Our general hypothesis is that the extent of active purchasing depends on the institutional structure: the more the rules of the game stimulate active purchasing, the more purchasers will opt for active purchasing. To our knowledge, this is the first paper that empirically assesses the effects of active purchasing. The remainder of this paper is structured as follows: first, a theoretical framework is presented. Next, data and methods are discussed. Third, results and robustness checks are presented. The final section includes a critical discussion of the results of our study.
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