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Market Structure and Hospital-Insurer Bargaining in the Netherlands

Author

Listed:
  • Halbersma, R.S.
  • Mikkers, M.C.
  • Motchenkova, E.

    (Tilburg University, TILEC)

  • Seinen, I.

Abstract

In 2005, competition was introduced in part of the hospital market in the Netherlands. Using a unique dataset of transaction and list prices between hospitals and insurers in the years 2005 and 2006, we estimate the influence of buyer and seller concentration on the negotiated prices in the first two years after the institutional change. First, we use a traditional Structure- Conduct-Performance model (SCP-model) along the lines of Melnick et al. (1992) to estimate the effects of buyer and seller concentration on price-cost margins. Second, we model the interaction between hospitals and insurers in the context of a generalized bargaining model (Brooks et al., 1997). In the SCP-model, we obtain that the concentration of hospitals (insurers) has a significantly positive (negative) impact on the hospital price-cost margin. In the bargaining model, we also find a significant negative effect of insurer concentration on the bargaining share of hospital, but no significant effect of hospital concentration on the division of the gains from bargaining. In both models we find a significant impact of idiosyncratic effects on the market outcomes, consistent with the fact that the Dutch hospital sector is not yet in a long-run equilibrium.

Suggested Citation

  • Halbersma, R.S. & Mikkers, M.C. & Motchenkova, E. & Seinen, I., 2007. "Market Structure and Hospital-Insurer Bargaining in the Netherlands," Discussion Paper 2007-006, Tilburg University, Tilburg Law and Economic Center.
  • Handle: RePEc:tiu:tiutil:055ce443-750b-410f-acc0-00f6d4f6e6fe
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Ron Kemp & Nikki Kersten & Astrid Severijnen, 2012. "Price Effects of Dutch Hospital Mergers: An Ex-post Assessment of Hip Surgery," De Economist, Springer, pages 237-255.
    2. Lazrak, F. & Nijkamp, P. & Rietveld, P. & Rouwendal, J., 2011. "The market of listed heritage: An urban economic application of spatial hedonic pricing," Serie Research Memoranda 0027, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    3. Siciliani, Luigi & Chalkley, Martin & Gravelle, Hugh, 2017. "Policies towards hospital and GP competition in five European countries," Health Policy, Elsevier, vol. 121(2), pages 103-110.
    4. Westra, Daan & Angeli, Federica & Carree, Martin & Ruwaard, Dirk, 2017. "Understanding competition between healthcare providers: Introducing an intermediary inter-organizational perspective," Health Policy, Elsevier, vol. 121(2), pages 149-157.
    5. Martin Gaynor & Kate Ho & Robert J. Town, 2015. "The Industrial Organization of Health-Care Markets," Journal of Economic Literature, American Economic Association, pages 235-284.
    6. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, Elsevier.
    7. Y. J. F. M. Krabbe-Alkemade & T. L. C. M. Groot & M. Lindeboom, 2017. "Competition in the Dutch hospital sector: an analysis of health care volume and cost," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(2), pages 139-153, March.
    8. Mikkers, Misja, 2016. "The Dutch Healthcare System in International Perspective," Other publications TiSEM 800704a0-24ee-4830-8659-2, Tilburg University, School of Economics and Management.
    9. repec:spr:hecrev:v:7:y:2017:i:1:d:10.1186_s13561-017-0156-4 is not listed on IDEAS
    10. Ilaria Mosca & Marc Pomp & Victoria Shestalova, 2010. "Market Share and Price in Dutch Home Care: Market Power or Quality?," De Economist, Springer, vol. 158(1), pages 61-79, April.
    11. Alfons Palangkaraya & Jongsay Yong, 2013. "Effects of competition on hospital quality: an examination using hospital administrative data," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(3), pages 415-429, June.
    12. Schut, Frederik T. & Varkevisser, Marco, 2017. "Competition policy for health care provision in the Netherlands," Health Policy, Elsevier, vol. 121(2), pages 126-133.
    13. Pierre Polzin & Jose Borges & Antonio Coelho, 2017. "Applying an Extended Kernel Density 4-Step Floating Catchment Area Method to Identify Priority Districts to Promote New Publicly Financed Supply of Gastroenterology Exams," Journal of Management and Sustainability, Canadian Center of Science and Education, vol. 7(1), pages 1-10, March.
    14. Schmid, Andreas & Ulrich, Volker, 2013. "Consolidation and concentration in the German hospital market: The two sides of the coin," Health Policy, Elsevier, vol. 109(3), pages 301-310.
    15. Pierre Polzin & Pierre Polzin & José Borges & António Coelho, 2016. "Applying an Extended Kernel Density 4-Step Floating Catchment Area method to identify priority districts to promote new publicly financed supply of gastroenterology exams," EcoMod2016 9584, EcoMod.
    16. Marc Pomp & Victoria Shestalova & I. Mosca, 2007. "Market share and price in Dutch home care: market power or quality?," CPB Discussion Paper 95, CPB Netherlands Bureau for Economic Policy Analysis.

    More about this item

    Keywords

    Competition; Market Structure; Hospitals; Insurers; Bargaining;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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