Page 117 - 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?
in market structure, such as the level of outpatient care, cannot fully explain the relatively low volatility found for the hospital sector.
Active purchasing is an important mechanism to improve healthcare efficiency. One aspect of active purchasing is reallocation of budgets from underperforming providers to well- performing providers. One consequence of this aspect of active purchasing is increased volatility in the market. In order to measure the extent of market reallocations, a Market Volatility Indicator (MVI) was developed. We measured volatility in four Dutch health markets with different institutional settings. We find that for three of four markets, volatility is in line with our hypothesis. In long-term care, regional single payers have few incentives to purchase actively, and we find relatively low volatility. For social care, municipalities were expected to purchase more actively than LTC payers due to higher financial risk. Indeed, we find the market for social care to be much more volatile than the LTC-market. Because patients eligible for LTC can opt-out and self-purchase using personal budgets, it is expected that personal budget care is more volatile than LTC care, which we also find. For hospital care, managed competition principles dictate that insurers purchase actively. However, we did not find more volatility in the hospital market compared to the LTC market. This suggests that for the hospital market, managed competition did not result in increased active purchasing by means of market share reallocations. Our robustness checks confirm this conclusion. The results are also in line with international evidence, showing little qualitative evidence for strategic purchasing by health insurers in the Netherlands, nor in nine other countries (Klasa et al., 2018). The UK, for example, has implemented waves of purchaser reforms, with little effect on provider practice (Bevan and van de Ven, 2010; Brereton and Vasoodaven, 2010; Le Grand, 1999; Porter et al., 2013; Smith et al., 2004). Furthermore, we showed few structural differences between the single payer LTC system and the multi-payer hospital care system, in line with international comparisons (Figueras et al., 2005; Glied, 2009; Jeong and Niki, 2012; Smith et al., 2004; Wranik, 2012). Although budget reallocations in the hospital sector are only one aspect of active purchasing under managed competition, the results suggest that managed competition in the Netherlands does not fully function as expected.
5.5 Discussion
This research is the first that empirically investigates market volatility as the result of (one aspect of) active purchasing. However, factors unrelated to purchasing may influence market volatility. We have assessed a number of factors in our robustness analysis, such as
5.5.1. Strengths and limitations
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