Measuring Active Purchasing in Healthcare: Analysing Reallocations of Funds Between Providers to Evaluate Purchasing Systems Performance in the Netherlands

Document Type : Original Article

Authors

1 Scientific Institute for Quality of Healthcare (IQ Healthcare), Radboud University Medical Center, Nijmegen, The Netherlands

2 School of Business and Economics, Vrije Universiteit, Amsterdam, The Netherlands

3 Department of Health Services Research, School for Public Health and Primary Care (Caphri), Faculty of Health, Medicine and Life Sciences, Maastricht University, Maastricht, The Netherlands

Abstract

Background 
Purchasing systems aim to improve resource allocation in healthcare markets. The Netherlands is characterized by four different purchasing systems: managed competition in the hospital market, a non-competitive single payer system for long-term care (LTC), municipal procurement for home care and social services, and selfprocurement via personal budgets. We hypothesize that managed competition and competitive payer reforms boost reallocations of provider market share by means of active purchasing, ie, redistributing funds from high-quality providers to low-quality providers.

Methods 
We define a Market Activity Index (MAI) as the sum of funds reallocated between providers annually. Provider expenditures are extracted from provider financial statements between 2006 and 2019. We compare MAI in six healthcare sectors under four different purchasing systems, adjusting for reforms, and market entry/exit. Next, we perform in-depth analyses on the hospital market. Using multivariate linear regressions, we relate reallocations to selective contracting, provider quality, and market characteristics.

Results 
No difference was found between reallocations in the hospital care market under managed competition and the non-competitive single payer LTC (MAI between 2% and 3%), while MAI was markedly higher under procurement by municipalities and personal budget holders (between 5% and 15%). While competitive reforms temporarily increased MAI, no structural effects were found. Relatively low hospital MAI could not be explained by market characteristics. Furthermore, the extent of selective contracting or hospital quality differences had no significant effects on reallocations of funds.

Conclusion 
Dutch managed competition and competitive purchaser reforms had no discernible effect on reallocations of funds between providers. This casts doubt on the mechanisms advocated by managed competition and active purchasing to improve allocative efficiency.

Keywords

References

  1. Ham C. World class commissioning: a health policy chimera? J Health Serv Res Policy. 2008;13(2):116-121. doi:1258/jhsrp.2008.007177
  2. Arrow KJ. Uncertainty and the Welfare Economics of Medical Care (American Economic Review, 1963). Duke University Press; 2003.
  3. Enthoven AC. On the ideal market structure for third-party purchasing of health care. Soc Sci Med. 1994;39(10):1413-1424. doi:1016/0277-9536(94)90236-4
  4. Schiff GD, Bindman AB, Brennan TA. A better-quality alternative. Single-payer national health system reform. Physicians for a National Health Program Quality of Care Working Group. JAMA. 1994;272(10):803-808. doi:1001/jama.272.10.803
  5. Beauchamp DE, Rouse RL. Universal New York Health Care. A single-payer strategy linking cost control and universal access. N Engl J Med. 1990;323(10):640-644. doi:1056/nejm199009063231005
  6. Mikkers M, Ryan P. "Managed competition" for Ireland? The single versus multiple payer debate. BMC Health Serv Res. 2014;14:442. doi:1186/1472-6963-14-442
  7. Mays N, Hand K. A Review of Options for Health and Disability Support Purchasing in New Zealand. New Zealand Treasury; 2000.
  8. Klasa K, Greer SL, van Ginneken E. Strategic purchasing in practice: comparing ten European countries. Health Policy. 2018;122(5):457-472. doi:1016/j.healthpol.2018.01.014
  9. Chandra A, Finkelstein A, Sacarny A, Syverson C. Health care exceptionalism? Performance and allocation in the US health care sector. Am Econ Rev. 2016;106(8):2110-2144. doi:1257/aer.20151080
  10. Smith J, Mays N, Dixon J, et al. A Review of the Effectiveness of Primary Care-Led Commissioning and its Place in the NHS. London: The Health Foundation; 2004.
  11. Glied S. Single payer as a financing mechanism. J Health Polit Policy Law. 2009;34(4):593-615. doi:1215/03616878-2009-017
  12. Wranik D. Healthcare policy tools as determinants of health-system efficiency: evidence from the OECD. Health Econ Policy Law. 2012;7(2):197-226. doi:1017/s1744133111000211
  13. Figueras J, Robinson R, Jakubowski E. Purchasing to Improve Health Systems Performance. McGraw-Hill Education (UK); 2005.
  14. Jeong HS, Niki R. Divergence in the development of public health insurance in Japan and the Republic of Korea: a multiple‐payer versus a single‐payer system. Int Soc Secur Rev. 2012;65(2):51-73. doi:1111/j.1468-246X.2012.01428.x
  15. Enthoven AC. The history and principles of managed competition. Health Aff (Millwood). 1993;12 Suppl:24-48. doi:1377/hlthaff.12.suppl_1.24
  16. Enthoven AC. Managed competition: an agenda for action. Health Aff (Millwood). 1988;7(3):25-47. doi:1377/hlthaff.7.3.25
  17. van de Ven WP, Beck K, Buchner F, et al. Preconditions for efficiency and affordability in competitive healthcare markets: are they fulfilled in Belgium, Germany, Israel, the Netherlands and Switzerland? Health Policy. 2013;109(3):226-245. doi:1016/j.healthpol.2013.01.002
  18. Maarse H, Jeurissen P, Ruwaard D. Results of the market-oriented reform in the Netherlands: a review. Health Econ Policy Law. 2016;11(2):161-178. doi:1017/s1744133115000353
  19. van de Ven WP, Schut FT. Universal mandatory health insurance in the Netherlands: a model for the United States? Health Aff (Millwood). 2008;27(3):771-781. doi:1377/hlthaff.27.3.771
  20. Jeurissen P, Maarse H. The Market Reform in Dutch Health Care: Results, Lessons and Prospects. Copenhagen, Denmark: European Observatory on Health Systems and Policies; 2021.
  21. Marktscan Zorgverzekeringsmarkt 2017. Utrecht: NZa; 2017.
  22. Marktscan Zorgverzekeringen 2021. Utrecht: NZa; 2021.
  23. Schut E, Sorbe S, Høj J. Health Care Reform and Long-Term Care in the Netherlands. OECD Economics Department Working Papers, No. 1010. Paris: OECD Publishing; 2013. doi:1787/5k4dlw04vx0n-en
  24. Mot ES, Aouragh A. The Dutch System of Long-Term Care. ENEPRI; 2010.
  25. Uenk N. Commissioning of Social Care Services: Municipal Commissioning Approaches for Social Care Services-Evidence from a Countrywide Live Experiment [dissertation]. Universiteit Utrecht; 2019.
  26. Putters K, Grit K, Janssen M, Schmidt D, Meurs P. Governance of Local Care and Social Service. Erasmus School of Health Policy & Management (ESHPM); 2010.
  27. Maarse JA, Jeurissen PP. The policy and politics of the 2015 long-term care reform in the Netherlands. Health Policy. 2016;120(3):241-245. doi:1016/j.healthpol.2016.01.014
  28. Jaarverantwoording in de zorg (DigiMV). In: CIBG, ed. Den Haag; 2007-2019.
  29. van den Broek-Altenburg EM, Atherly AJ. The relation between selective contracting and healthcare expenditures in private health insurance plans in the United States. Health Policy. 2020;124(2):174-182. doi:1016/j.healthpol.2019.12.008
  30. Gaynor M, Vogt WB. Antitrust and competition in health care markets. In: Handbook of Health Economics. Vol 1. Elsevier; 2000:1405-1487. doi:1016/s1574-0064(00)80040-2
  31. Schneider JE, Li P, Klepser DG, Peterson NA, Brown TT, Scheffler RM. The effect of physician and health plan market concentration on prices in commercial health insurance markets. Int J Health Care Finance Econ. 2008;8(1):13-26. doi:1007/s10754-007-9029-4
  32. Mosca I, Pomp M, Shestalova V. Market Share and Price in Dutch Home Care: Market Power or Quality? CPB Netherlands Bureau for Economic Policy Analysis; 2007.
  33. Gaynor M, Ho K, Town RJ. The industrial organization of health-care markets. J Econ Lit. 2015;53(2):235-284. doi:1257/jel.53.2.235
  34. Wackers E, Dulmen SV, Berden B, Kremer J, Stadhouders N, Jeurissen P. Improving Performance in Complex Surroundings: A Mixed Methods Evaluation of Two Hospital Strategies in the Netherlands. Int J Health Policy Manag. 2023;12:7243. doi:34172/ijhpm.2023.7243
  35. Rijksbegroting 2014, XVI Volksgezondheid, Welzijn en Sport. https://www.rijksfinancien.nl/jaarverslag/2014/XVI2014.
  36. van Eijkel R, Kattenberg M. Competition and Pricing Behavior in Long Term Care Markets: Evidence from the Market for Assistance in Daily Housekeeping Activities. CPB Netherlands Bureau for Economic Policy Analysis; 2018.
  37. Greer SL, Klasa K, E VANG. Power and purchasing: why strategic purchasing fails. Milbank Q. 2020;98(3):975-1020. doi:1111/1468-0009.12471
  38. Brereton L, Vasoodaven V. The Impact of the NHS Market. London: Civitas; 2010.
  39. Bevan G, van de Ven WP. Choice of providers and mutual healthcare purchasers: can the English National Health Service learn from the Dutch reforms? Health Econ Policy Law. 2010;5(3):343-363. doi:1017/s1744133110000071
  40. Le Grand J. Competition, cooperation, or control? Tales from the British National Health Service. Health Aff (Millwood). 1999;18(3):27-39. doi:1377/hlthaff.18.3.27
  41. Porter A, Mays N, Shaw SE, Rosen R, Smith J. Commissioning healthcare for people with long term conditions: the persistence of relational contracting in England's NHS quasi-market. BMC Health Serv Res. 2013;13(Suppl 1):S2. doi:1186/1472-6963-13-s1-s2
  42. Salampessy BH, Portrait FRM, van der Hijden E, Klink A, Koolman X. On the correlation between outcome indicators and the structure and process indicators used to proxy them in public health care reporting. Eur J Health Econ. 2021;22(8):1239-1251. doi:1007/s10198-021-01333-w
  43. Werner RM, Asch DA. The unintended consequences of publicly reporting quality information. JAMA. 2005;293(10):1239-1244. doi:1001/jama.293.10.1239
  44. Mukamel DB, Mushlin AI. Quality of care information makes a difference: an analysis of market share and price changes after publication of the New York State Cardiac Surgery Mortality Reports. Med Care. 1998;36(7):945-954. doi:1097/00005650-199807000-00002
  45. Rosenthal MB, Frank RG. What is the empirical basis for paying for quality in health care? Med Care Res Rev. 2006;63(2):135-157. doi:1177/1077558705285291
  46. Baker DW, Einstadter D, Thomas C, Husak S, Gordon NH, Cebul RD. The effect of publicly reporting hospital performance on market share and risk-adjusted mortality at high-mortality hospitals. Med Care. 2003;41(6):729-740. doi:1097/01.mlr.0000064640.66138.9a
  47. Howard DH. Quality and consumer choice in healthcare: evidence from kidney transplantation. Top Econ Anal Policy. 2006;5(1):1349. doi:2202/1538-0653.1349
  48. Beukers PDC, Kemp RGM, Varkevisser M. Patient hospital choice for hip replacement: empirical evidence from the Netherlands. Eur J Health Econ. 2014;15(9):927-936. doi:1007/s10198-013-0535-7
  49. Varkevisser M, van der Geest SA, Schut FT. Do patients choose hospitals with high quality ratings? Empirical evidence from the market for angioplasty in the Netherlands. J Health Econ. 2012;31(2):371-378. doi:1016/j.jhealeco.2012.02.001
  50. Stadhouders NW, Kremer JAM, Jeurissen PPT, Tanke MAC. Do quality improvements in assisted reproduction technology increase patient numbers in a managed competition setting? Int J Health Plann Manage. 2019;34(2):e1312-e1322. doi:1002/hpm.2778
  51. Bes RE, Curfs EC, Groenewegen PP, de Jong JD. Selective contracting and channelling patients to preferred providers: a scoping review. Health Policy. 2017;121(5):504-514. doi:1016/j.healthpol.2017.03.008
  52. Schut FT, Varkevisser M. Competition policy for health care provision in the Netherlands. Health Policy. 2017;121(2):126-133. doi:1016/j.healthpol.2016.11.002
  53. Frakt AB. How much do hospitals cost shift? A review of the evidence. Milbank Q. 2011;89(1):90-130. doi:1111/j.1468-0009.2011.00621.x
  54. van der Schors W, Kemp R, Varkevisser M. Collaboration and competition policy in a market-based hospital system: a case study from the Netherlands. J Compet Law Econ. 2020;16(2):262-288. doi:1093/joclec/nhaa009
  55. van Dulmen S, Stadhouders N, Westert G, Wackers E, Jeurissen P. Op weg naar hoge kwaliteit en lage kosten in de medisch specialistische zorg. Nijmegen: IQ healthcare; 2020.
  56. van Leersum N, Bennemeer P, Otten M, Visser S, Klink A, Kremer JAM. Cure for increasing health care costs: the Bernhoven case as driver of new standards of appropriate care. Health Policy. 2019;123(3):306-311. doi:1016/j.healthpol.2019.01.002
  57. CPB Policy Brief. Evaluation Programmes Beatrix Hospital and Bernhoven. CPB Netherlands Bureau for Economic Policy Analysis; 2020.
  58. Varkevisser M, van der Geest SA. Why do patients bypass the nearest hospital? An empirical analysis for orthopaedic care and neurosurgery in the Netherlands. Eur J Health Econ. 2007;8(3):287-295. doi:1007/s10198-006-0035-0
  59. van der Hulst FJP, Holst L, Brabers AEM, de Jong JD. To what degree are health insurance enrollees in the Netherlands aware of the restrictive conditions attached to their policies? Health Policy. 2022;126(7):693-703. doi:1016/j.healthpol.2022.05.006
  60. Petsoulas C, Allen P, Checkland K, et al. Views of NHS commissioners on commissioning support provision. Evidence from a qualitative study examining the early development of clinical commissioning groups in England. BMJ Open. 2014;4(10):e005970. doi:1136/bmjopen-2014-005970
  61. Hughes D, Allen P, Doheny S, Petsoulas C, Vincent-Jones P. Co-operation and conflict under hard and soft contracting regimes: case studies from England and Wales. BMC Health Serv Res. 2013;13(Suppl 1):S7. doi:1186/1472-6963-13-s1-s7
  62. Kifmann M. Competition policy for health care provision in Germany. Health Policy. 2017;121(2):119-125. doi:1016/j.healthpol.2016.11.014
  63. Checkland K, Harrison S, Snow S, McDermott I, Coleman A. Commissioning in the English National Health Service: what's the problem? J Soc Policy. 2012;41(3):533-550. doi:1017/s0047279412000232
  64. Zwanziger J, Melnick GA, Bamezai A. The effect of selective contracting on hospital costs and revenues. Health Serv Res. 2000;35(4):849-867.
  65. Mobley LR. Effects of selective contracting on hospital efficiency, costs and accessibility. Health Econ. 1998;7(3):247-261. doi:1002/(sici)1099-1050(199805)7:3<247::aid-hec319>3.0.co;2-j
  66. Boonen LH, Schut FT. Preferred providers and the credible commitment problem in health insurance: first experiences with the implementation of managed competition in the Dutch health care system. Health Econ Policy Law. 2011;6(2):219-235. doi:1017/s1744133110000320
  67. Stadhouders N, Koolman X, Tanke M, Maarse H, Jeurissen P. Policy options to contain healthcare costs: a review and classification. Health Policy. 2016;120(5):486-494. doi:1016/j.healthpol.2016.03.007
  68. Greaves F, Harris M, Goodwin N, Dixon A. The commissioning reforms in the English National Health Service and their potential impact on primary care. J Ambul Care Manage. 2012;35(3):192-199. doi:1097/JAC.0b013e31823e838f
International Journal of Health Policy and Management

Articles in Press, Corrected Proof
Available Online from 02 September 2023

Files

History

  • Receive Date: 01 July 2022
  • Revise Date: 17 August 2023
  • Accept Date: 30 August 2023
  • First Publish Date: 02 September 2023

Share

How to cite

Statistics