Rethinking Reallocations: Conceptual Limits of the Market Activity Index as a Measure of Competition and Purchasing; Comment on “Measuring Active Purchasing in Healthcare: Analyzing Reallocations of Funds Between Providers to Evaluate Purchasing Systems Performance in the Netherlands”

Articles in Press

Document Type : Commentary

Author

1 Health Technology and Services Research (HTSR), Faculty of Behavioural, Management and Social Sciences (BMS), University of Twente, Enschede, The Netherlands

2 Centre for Healthcare Operations Improvement and Research, University of Twente, Enschede, The Netherlands

Abstract

Stadhouders et al1 introduce the Market Activity Index (MAI) to assess the performance of healthcare systems, concluding that low budget reallocations in the hospital sector cast doubt on the effectiveness of managed competition and purchasing. We argue that while the MAI is a valuable descriptive tool, its interpretation as a proxy for competition is conceptually problematic. The index captures realized revenue flows, which may result from patient mobility, exogenous shocks, or administrative changes, rather than insurer behavior. Furthermore, selective contracting may be used for objectives such as risk selection rather than provider efficiency, particularly in segments of the market with low utilization. Without a normative benchmark or ability to disentangle strategic from structural effects, the MAI risks conflating system dynamics with market failure. We conclude that the MAI is best viewed as a measure of budgetary volatility, not a standalone indicator of competitive intensity or purchaser effectiveness.

Keywords

References

  1. Stadhouders NW, Koolman X, Tanke MA, Maarse H, Jeurissen PP. Measuring active purchasing in healthcare: analysing reallocations of funds between providers to evaluate purchasing systems performance in the Netherlands. Int J Health Policy Manag. 2023;12:7506. doi:34172/ijhpm.2023.7506
  2. Frech HE III, Langenfeld J, McCluer RF. Elzinga-Hogarty tests and alternative approaches for market share calculations in hospital markets. Antitrust Law J. 2003;71(3):921-947.
  3. Capps C, Dranove D, Satterthwaite M. Competition and market power in option demand markets. Rand J Econ. 2003;34(4):737-763.
  4. Bijlsma M, Boone J, Zwart G. Competition leverage: how the demand side-affects optimal risk adjustment. Rand J Econ. 2014;45(4):792-815. doi:1111/1756-2171.12071
International Journal of Health Policy and Management

Articles in Press, Corrected Proof
Available Online from 22 November 2025

Files

History

  • Received Date: 14 July 2025
  • Revised Date: 22 October 2025
  • Accepted Date: 04 November 2025
  • First Published Date: 18 November 2025
  • Published Date: 22 November 2025

Share

How to cite

Statistics