Patient choice, competition and antitrust enforcement in Dutch hospital markets. Marco Varkevisser. Patient choice, Marco Varkevisser

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1 Marco Varkevisser is an assistant professor of Health Economics at the institute of Health Policy and Management (ibmg), Erasmus University Rotterdam. After graduating from the Erasmus School of Economics in 1998, his research focused on competition and regulation issues in various industries. Over the years he has specialised in competition and antitrust enforcement in health care markets. Patient choice, competition and antitrust enforcement in Dutch hospital markets The ultimate goal of the market-based health care reform in the Netherlands is to increase the efficiency of health care provision by stimulating provider competition. This PhD thesis focuses on the feasibility of hospital competition in the Netherlands. Effective hospital competition first requires the availability of a sufficient number of substitutes. Since hospital consolidation reduces the number of choices, preventive merger control is of crucial importance. Antitrust enforcement agencies are, however, struggling with the assessment of proposed hospital mergers. Most importantly, more than in any other industry, geographic market definition is rather complicated in hospital markets. In addition to a sufficient number of hospital substitutes, effective competition at least also requires market transparency and patient responsiveness to observed quality differences. Little is known, however, about patient choice behaviour in the Netherlands. The aim of this thesis is to improve the understanding of patient choice, competition, and antitrust enforcement in Dutch hospital markets. Marco Varkevisser Patient choice, competition and antitrust enforcement in Dutch hospital markets Marco Varkevisser

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3 Patient choice, competition and antitrust enforcement in Dutch hospital markets Marco Varkevisser

4 ISBN Marco Varkevisser, All rights reserved. Chapters reprinted with kind permission of Cambridge University Press (chapter 3) and Springer Berlin / Heidelberg (chapters 4 and 5). Cover image taken by Stéphanie van der Geest and edited by Optima Grafische Communicatie BV. Printed by Optima Grafische Communicatie BV, Rotterdam.

5 Patient Choice, Competition and Antitrust Enforcement in Dutch Hospital Markets Keuzegedrag van patiënten, concurrentie en mededingingsbeleid in Nederlandse ziekenhuismarkten Proefschrift ter verkrijging van de graad van doctor aan de Erasmus Universiteit Rotterdam op gezag van de rector magnificus prof.dr. H.G. Schmidt en volgens besluit van het College voor Promoties. De openbare verdediging zal plaatsvinden op donderdag 14 januari 2010 om uur door Marco Varkevisser geboren te Leiderdorp.

6 Promotiecommissie Promotor Prof.dr. F.T. Schut Overige leden Prof.dr. M.F.M. Canoy Prof.dr. M.C.W. Janssen Prof.dr. W.P.M.M. van de Ven

7 Contents Chapter 1 General introduction 7 Chapter 2 Hospital merger control: an international comparison 21 Chapter 3 Defining hospital markets for antitrust enforcement: new approaches and their applicability to the Netherlands 53 Chapter 4 Why do patients bypass the nearest hospital? An empirical analysis for orthopaedic care and neurosurgery in the Netherlands 77 Chapter 5 Assessing hospital competition when prices don t matter to patients: the use of time-elasticities 93 Chapter 6 Quality competition in regulated hospital markets: consumer information and patient choice for angioplasty 117 Chapter 7 Summary and conclusion 151 Samenvatting 161 Dankwoord 167 Curriculum Vitae 169 PhD Portfolio 171

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9 166 Samenvatting van (reis)tijdelasticiteiten momenteel de meest geschikte methode om de geografische omvang van ziekenhuismarkten af te bakenen. Deze nieuwe methode zou dan ook door de NMa moeten worden toegepast. De methode is ook van toegevoegde waarde voor de Nederlandse Zorgautoriteit (NZa) wanneer zij antwoord moet geven op de vraag of individuele ziekenhuizen al dan niet over aanmerkelijke marktmacht beschikken. 3. Om de voordelen van concurrentie tussen ziekenhuizen te kunnen realiseren is het noodzakelijk dat meer en betere kwaliteitsinformatie beschikbaar komt. Mede omdat de huidige prestatie-indicatoren van de Inspectie voor de Gezondheidszorg (IGZ) geen rekening houden met verschillen in zorgzwaarte, kan een toename van de onderlinge concurrentie ziekenhuizen onder de huidige omstandigheden aanzetten tot maatschappelijk ongewenst gedrag, zoals risicoselectie. 4. Om beter inzicht te krijgen in de werking van markten voor ziekenhuiszorg en de effecten van ziekenhuisfusies in het bijzonder, verdient het aanbeveling dat de NMa in nauwe samenwerking met de NZa een onderzoeksprogramma opstart naar het voorbeeld van een programma van de Amerikaanse FTC (Federal Trade Commission). Ten einde de ontwikkeling van innovatief onderzoek op dit gebied te stimuleren, is het van belang de hiervoor benodigde kwantitatieve gegevens beschikbaar te stellen voor wetenschappelijk onderzoek.

10 Curriculum Vitae 169 Curriculum Vitae Marco Varkevisser (1974) is an assistant professor of Health Economics at the institute of Health Policy and Management (ibmg), Erasmus University Rotterdam (EUR). After graduating from the Erasmus School of Economics in 1998, he started working as a research fellow at the Research Centre for Economic Policy (OCFEB), a joint venture of the Ministry of Economic Affairs, the Ministry of Finance, the Ministry of Social Affairs and Employment, De Nederlandsche Bank, and the Erasmus University Rotterdam. From 1998 to 2004, his research focused on competition and regulation issues in various industries (e.g. provision of drinking water, waste management, retail gasoline markets, health care markets). In 2004 he started working as a research fellow at the EUR research institute SEOR (until 2009) as well as ibmg. From 2005 to 2009 he worked on his dissertation. During this period Marco published articles in the European Journal of Health Economics, Health Economics, Policy and Law, and the International Journal of Health Care Finance and Economics. In addition to these international publications, he also published many articles in national journals (e.g. Economisch Statistische Berichten) and Dutch newspapers (Het Financieele Dagblad, Trouw, NRC Handelsblad). Since starting his dissertation, he has specialised in competition and antitrust enforcement in health care markets. Next to the research included in his PhD thesis, he also worked on projects for third-parties including the Ministry of Health, Welfare and Sports (VWS), the Netherlands Competition Authority (NMa), and the Dutch Healthcare Authority (NZa). As a teacher, Marco is involved in both ibmg s bachelor programme and its master programme Health Economics, Policy and Law (HEPL). He teaches the economics of health care (bachelor), competition law and economics in health care (master), and the economics and financing of health care systems (master). Additionally, Marco supervised several bachelor and master theses. Marco is a member of the Board of Directors of the Dutch-Flemish Association for Health Economics (Vereniging voor Gezondheidseconomie) and editor-in-chief of its journal, the VGE Bulletin.

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12 PhD Portfolio 171 PhD Portfolio Name: Marco Varkevisser University: Erasmus University Rotterdam (EUR) Department: institute of Health Policy and Management (ibmg) PhD period: Promotor: Prof.dr. F.T. Schut Presentations on competition and antitrust enforcement in health care (selection) - VU University, Amsterdam, guest lecture Erasmus Honours Programme, Rotterdam, guest lecture Dutch Healthcare Authority (NZa), Utrecht, seminar Netherlands Competition Authority (NMa), The Hague, seminar Erasmus Honours Programme, Rotterdam, guest lecture th Academy Health Annual Research Meeting, Washington DC, poster 2008 presentation - Health Economics Interest Group Meeting, Washington DC, oral 2008 presentation - Bundeskartellamt, Bonn, seminar Erasmus University Rotterdam, seminar University of Oslo, guest lecture and seminar Netherlands Competition Authority (NMa), The Hague, workshop Dutch Healthcare Authority (NZa), Utrecht, seminar th European Conference on Health Economics, Budapest, oral 2006 presentation - University of Bologna, guest lecture th World Congress of the international Health Economics Association, Barcelona, oral presentation 2005 Publications in English - Leunis, A. and M. Varkevisser, Internal medicine residents perceptions of the learning environment in Dutch teaching hospitals, Medical Teacher, forthcoming - Boonen, L.H.H.M., S.A. van der Geest, F.T. Schut and M. Varkevisser, Pharmaceutical policy in the Netherlands: from price regulation toward managed competition, in A. Dor (ed.), Advances in Health Economics and Health Services Research, volume 22, forthcoming

13 172 PhD Portfolio - Varkevisser, M., S.A. van der Geest and F.T. Schut, Assessing hospital competition when prices don t matter to patients: the use of timeelasticities, International Journal of Health Care Finance and Economics, forthcoming - Varkevisser, M., C.S. Capps and F.T. Schut, Defining hospital markets for antitrust enforcement: new approaches and their applicability to the Netherlands, Health Economics, Policy and Law, 3(1): Varkevisser, M. and S.A. van der Geest, Why do patients bypass the nearest hospital? An empirical analysis for orthopaedic care and neurosurgery in the Netherlands, European Journal of Health Economics, 8(3): Publications in Dutch (selection) Articles in national journals - Varkevisser, M., S.A. van der Geest, M. Appelman en J.N. Struijs, Regionale machtspositie zorggroepen baart zorgen, Economisch Statistische Berichten, 94(4572): Geest, S.A. van der en M. Varkevisser, Kwaliteitsinformatie en de marktaandelen van IVF-centra, Economisch Statistische Berichten, 93(4549): Varkevisser, M. en F.T. Schut, Consumentenbelang gaat boven concurrentenbelang (reactie), Economisch Statistische Berichten, 93(4534): Varkevisser, M. en F.T. Schut, NMa moet strenger zijn bij toetsen ziekenhuisfusies, Economisch Statistische Berichten, 93(4532): Geest, S.A. van der, I. Mosca, F. Pellikaan en M. Varkevisser, In beweging voor de fysiotherapeut, Economisch Statistische Berichten, 92(4516): Varkevisser, M., S.A. van der Geest, E. Maasland en F.T. Schut (2007), Opleiden medisch specialisten moet transparanter, Economisch Statistische Berichten, 92(4511): Schut, F.T. en M. Varkevisser, Zorgautoriteit moet niet alleen blaffen, maar ook kunnen bijten, Economisch Statistische Berichten, 91(4479): Varkevisser, M., N. Polman en S.A. van der Geest, Zorgverzekeraars moeten patiënten kunnen sturen, Economisch Statistische Berichten, 91(4478):

14 PhD Portfolio 173 Book contributions - Schut, F.T. en M. Varkevisser, Marktordening in de gezondheidszorg, in F.T. Schut en F.F.H. Rutten (red.), Economie van de gezondheidszorg, leerboek voor universitair en hoger onderwijs, , Maarssen: Elsevier Gezondheidszorg - Geest, S.A. van der, F.T. Schut en M. Varkevisser, Gezondheidszorg, in C.A. de Kam en A.P. Ros (red.), Jaarboek overheidsfinanciën 2006, 57-86, Den Haag: Sdu Uitgevers - Geest, S.A. van der, F.T. Schut en M. Varkevisser, Gezondheidszorg, in C.A. de Kam en A.P. Ros (red.), Jaarboek overheidsfinanciën 2005, , Den Haag: Sdu Uitgevers Op-Eds - Brouwer, W.B.F. en M. Varkevisser, Voorrangszorg met voorrang 2009 mogelijk maken, Het Financieele Dagblad, 11 mei - Schut, F.T., M. Varkevisser en W.P.M.M. van de Ven, In VS blijken fusies 2009 [van zorgverzekeraars en ziekenhuizen] succes voor patiënten, NRC Handelsblad, 2 februari - Varkevisser, M., W.B.F. Brouwer en R. van Duuren, Bevrijd ziekenhuizen 2008 van juk winstverbod, NRC Handelsblad, 17 december - Schut, F.T. en M. Varkevisser, Fusiedrang bedreigt ontluikende 2008 marktwerking, Zorgvisie, nummer 11 / november - Geest, S.A. van der en M. Varkevisser, Verbeter informatie over farmacie, 2008 Het Financieele Dagblad, 9 augustus - Varkevisser, M., Gehandicapte kan in instelling gelukkig zijn, Trouw, april - Brouwer, W.B.F. en M. Varkevisser, Vragen rond zorgstelsel liggen nog 2006 voor ons, Trouw, 3 november - Varkevisser, M., Repareer met spoed de Ziekenfondswet, Trouw, 7 juni 2005 Teaching at ibmg - Economics and financing of health care systems, master HEPL, now lecturer and course coordinator (since 2009) - Algemene economie van de gezondheidszorg, bachelor, lecturer now - Law and economics of competition policy in health care, master now HEPL, lecturer - Zorgstelsel en zorgverzekering, bachelor, lecturer now - Bachelor thesis, supervisor now - Master HEPL thesis, supervisor now

15 Marco Varkevisser is an assistant professor of Health Economics at the institute of Health Policy and Management (ibmg), Erasmus University Rotterdam. After graduating from the Erasmus School of Economics in 1998, his research focused on competition and regulation issues in various industries. Over the years he has specialised in competition and antitrust enforcement in health care markets. Patient choice, competition and antitrust enforcement in Dutch hospital markets The ultimate goal of the market-based health care reform in the Netherlands is to increase the efficiency of health care provision by stimulating provider competition. This PhD thesis focuses on the feasibility of hospital competition in the Netherlands. Effective hospital competition first requires the availability of a sufficient number of substitutes. Since hospital consolidation reduces the number of choices, preventive merger control is of crucial importance. Antitrust enforcement agencies are, however, struggling with the assessment of proposed hospital mergers. Most importantly, more than in any other industry, geographic market definition is rather complicated in hospital markets. In addition to a sufficient number of hospital substitutes, effective competition at least also requires market transparency and patient responsiveness to observed quality differences. Little is known, however, about patient choice behaviour in the Netherlands. The aim of this thesis is to improve the understanding of patient choice, competition, and antitrust enforcement in Dutch hospital markets. Marco Varkevisser Patient choice, competition and antitrust enforcement in Dutch hospital markets Marco Varkevisser