Assessing hospital competition when prices don’t matter to patients: the use of time-elasticities

Abstract

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.

Household Catastrophic Health Expenditure Due To Tuberculosis: Analysis From Particularly Vulnerable Tribal Group, Central India

“…It was reported that availability of services proved to be positively correlated with catastrophic spending in low and middle income countries but not in high income countries [27,28]. In many other European countries health insurance coverage is very comprehensive and OOP payments are either absent or do not differ across provider alternatives [29]. In low and middle income countries, supply constraints limit the use of services, so countries with greater supply show higher levels of use and more financial catastrophe.…”

Patient choice modelling: how do patients choose their hospitals?

“…They find that the probability of bypassing a hospital decreases by between 2% and 10% when waiting times are less than the average. Travelling time is also considered in further work by [38] in order to estimate competition in the hospital markets. The effect of waiting times is summarised effectively by [33] using waiting time elasticities, using a case study of cataract surgery.…”

Preferred Primary Healthcare Provider Choice Among Insured Persons in Ashanti Region, Ghana

“…Consequently, patients may substitute distant healthcare providers for nearer ones due to differences in quality care, waiting times, and hospital reputation. [6][7][8][9] In certain cases, purchasers (insurers) have limited and/or specified healthcare providers from which their patients can seek treatment, and usually, purchasers' (insurers) bargaining power partly depends on patients' willingness to change provider. 5 In early 2012, Ghana's National Health Insurance Authority (NHIA) offered its enrolees in the Ashanti Region the option to choose their own primary healthcare providers via a patient list system called preferred primary healthcare provider (PPP).…”