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

Abstract

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.

Approach in Inputs & Outputs Selection of Data Envelopment Analysis (DEA) Efficiency Measurement in Hospital: A Systematic Review

“…While others detailed the model as Radial, Non-Radial and Oriented, Non-Radial and Non-Oriented, and Radial and Non-Radial [23,126]. The majority of the research that were included used Radial DEA models (72 of 89, 80.90%) [46,48–52,54–62,65–77,79,80,82–86,89–94,96–100,102–116,118–124,127–130]. BCC, CCR or combination of both models were the specific model utilized in measuring efficiency via radial change of input and output values.…”

“…In other words, either output expansion or input decrease is the primary evaluation goal. More than half of the studies (55.06%, 49 of 89) [46–48,50–54,58,60,64–69,71–73,75–77,80,91–94,96,98,99,103–107,109–111,113–116,118,121,124,127,128,130,135] applied input-orientated DEA models. The researchers indicated that the choice of input orientation was made to be in line with the fact that the majority of healthcare units aim to minimize inputs given a goal level of output.…”

“…Three of these 31 studies, specifically used cost-related inputs only in their research [63,102,120]. While majority of these 31 studies (90.32%) utilized combination of either capacity-related inputs and staff-related inputs in their research [46–48,51,56,62–64,70,75–79,83,91,94,95,101,102,109,111,112,114,116,120,125,129,130,132,133]. The most often used cost-related input in the research was the total operating cost, followed by the fixed costs, finally both service costs and consumable costs.…”

“…Looking at the output, almost all of the studies used production-related output (98.88%, 88 of 89) [46–92,94–125,127–135]. Eight studies applied combination of production-related output with quality-related output [61,73,84,87,95,98,128,133].…”

“…Among the studies, 80 (89.89%) conducted extended analysis in their research [46–56,58–64,66–69,71–77,79–94,96–98,101–116,118–125,128–135]. The type of data applied were almost equally distributed among the studies 51 (57.30%) [47,49,52,58–60,67,70–73,75–77,79,80,83–85,88,91,92,94,96,97,100,101,103,105–109,111,112,114–116,120–122,124,125,127,129–135] used panel data and 38 (42.70%) [46,48,50,51,53–57,61–66,68,69,74,78,81,82,86,87,89,90,93,95,98,99,102,104,110,113,117–119,123,128] used cross sectional data in their research. Forty extended analyses were identified within the included studies.…”