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Using data for 2003, we find that both for non-emergency orthopaedic care (38%) and neurosurgery (54%) numerous Dutch patients did not visit the nearest hospital. Our estimation results show that extra travel time negatively influences the probability of hospital bypassing. Good waiting time performance by the nearest hospital also significantly decreases the likelihood of a bypass decision. Patients seem to place a lower negative value on extra travel time for orthopaedic care than for neurosurgery. The valuation of shorter waiting time also varies between these two types of hospital care. A good performance of the nearest hospital on waiting time decreases the likelihood of a bypass decision most for neurosurgery. In both samples, patients are more likely to bypass the nearest hospital when it is a university medical centre or a tertiary teaching hospital. Patient attributes, such as age and social status, are also found to significantly affect hospital bypassing. From our analysis it follows that both patient and hospital care heterogeneity should be taken into account when assessing the substitutability of hospitals.

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In the Dutch health care system, hospitals are expected to compete. A necessary condition for competition among hospitals is that patients do not automatically choose the nearest hospital, but are-at least to some extent-sensitive to differences in hospital quality. In this study, an analysis is performed on the underlying features of patient hospital choice in a setting where prices do not matter for patients as a result of health insurance coverage. Using claims data from all Dutch hospitals over the years 2008-2010, a conditional logit model examines the relationship between patient characteristics (age, gender and reoperations) and hospital attributes (hospital quality information, waiting times on treatments and travel time for patients to the hospitals) in the market for general non-emergency hip replacement treatments. The results show that travel time is the most important determinant in patient hospital choice. From our analysis, however, it follows that publicly available hospital quality ratings and waiting times also have a significant impact on patient hospital choice. The panel data used for this study (2008-2010) is rather short, which may explain why no coherent and persistent changes in patient hospital choice behaviour over time are found.

Health care reforms in several European countries provide health insurers with incentives and tools to become prudent purchasers of health care. The potential success of this strategy crucially depends on insurers' bargaining leverage vis-à-vis health care providers. An important determinant of insurers' bargaining power is the willingness of consumers to consider alternative providers. In this paper we examine to what extent consumers are willing to switch hospitals when they are fully covered for hospital services, which is typical for many European countries. Since prices do not matter to these patients, we estimate time-elasticities to assess hospital substitutability. Using data from a large Dutch health insurer on non-emergency neurosurgical outpatient hospital visits in 2003, we estimate a conditional logit model of patient hospital choice taking both patient heterogeneity and hospital characteristics into account. We use the parameter estimates to simulate the demand effect of an artificial increase in travel time by 10% for every patient, holding all other hospital attributes constant. Overall, the resulting point estimates of hospitals' time-elasticities are fairly high, although variation is substantial (-2.6 to -1.4). Sensitivity tests reveal that these estimates are very robust and differ significantly across individual hospitals. This implies that all hospitals in our study sample have at least one close substitute which is an important precondition for effective hospital competition.

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