Does competition improve hospital performance: a DEA based evaluation from the Netherlands.

Many countries have introduced competition among hospitals aiming to improve their performance. We evaluate the introduction of competition among hospitals in the Netherlands over the years 2008-2015. The analysis is based on a unique longitudinal data set covering all Dutch hospitals and health insurers, as well as demographic and geographic data. We measure hospital performance using Data Envelopment Analysis and distinguish three components of competition: the fraction of freely negotiated services, market power of hospitals, and insurer bargaining power. We present new methods to define variables for each of these components which are more accurate than previously developed measures. In a multivariate regression analysis, the variables explain more than half of the variance in hospital efficiency. The results indicate that competition between hospitals and the relative fraction of freely negotiable health services are positively related to hospital efficiency. At the same time, the policy measure to steadily increase the fraction of health services contracted in competition may well have resulted in a decrease in hospital efficiency. The models show no significant association between insurer bargaining power and hospital efficiency. Altogether, the results offer little evidence that the introduction of competition for hospital care in the Netherlands has been effective.

Choosing cooperation over competition; hospital strategies in response to selective contracting.

With the introduction of market competition in health care, the Dutch government enabled health insurers to contract hospital care selectively. The assumption is that "selective contracting" will stimulate efficiency, effectiveness, and innovation and will diminish overcapacity. In 2010, the first Dutch health insurers started experimenting with "selective contracting" by setting a minimum treatment volume per year for complex treatments. In an explorative, multiple case study among 15 hospitals in five regions, we found that instead of competing, hospitals started to cooperate and strengthen their networks. The government intended to remove redundant hospital capacity and improve quality by stimulating specialization and concentration. Our study showed that specialization was indeed stimulated, which may have increased quality of care. However, facilitated by the absence of a countervailing power (government or insurer), hospitals in our cases negotiated to the effect of preserving hospital capacity. Within the current political debate between supporters of competition and advocates of a national health service, the importance and role of the (medical) networks should be taken into account. Otherwise, the outcomes of health care governance will be different than intended by either party.

Productivity and quality of Dutch hospitals during system reform.

This study addresses the productivity of Dutch hospitals since the start of the health systems reform in 2005. We consider DEA based measures, which include efficiency and quality for the complete set of Dutch hospitals and present cross-sectional and longitudinal analysis. In particular, we consider how hospital efficiency has developed. As the reform created an environment of regulated competition, we pay special attention to relative efficiency. Our results suggest that the differences in efficiency among hospitals have become larger. In the years 2009-2010, the number of hospitals identified as (close to) efficient by DEA analysis decreased.