In countries with market -based health care systems, insurance companies generally negotiate contracts and prices with medical service providers (1). The insurance company due to the premium competition assumes that it attempts to negotiate a uniformly low price over all providers of the same medical products. However, a significant study shows that the price of similar hospital management products is greatly distributed. Cooper et al. (2) For example, 50%of the changes in health care expenditures in the US (US) hospital have proved to be the result of price distribution. This large amount of price distribution has been observed for almost homogeneous treatment services, suggesting that the dispersion did not occur only due to the difference in case mixing or quality (2, 3). The price is largely divided between insurance companies as well as medical service providers (4). Surprisingly, the price distribution exists within the insurance company and negotiates the commercial plan for two to three times more than the Medicare Advantage plan for the same insurance company, providers and services (5). Douvent et al. (6) We studied the diversification of prices between hospitals, which were negotiated by one of the largest Dutch health insurers. They showed that 30% of hospital products were more than 20% or lower than the average, so the price distribution was significant. Above all, the author mentioned the strategic adjustment of the product price to generate a lump sum payment according to the difference in cost calculation, uncertainty about the basic cost, or as possible (6).
Some countries, which were previously considered commercially sensitive, negotiated prices to increase transparency and reduce prices. For example, in the United States, negotiated prices in January 2021 due to the mandatory hospital price transparency rules of mandatory Medicare and Medicaid Services (CMS) are increasingly provided to the public (7). In the Netherlands, the government mandated the publication of the product price of the provider insurance company negotiation hospital in 2016 (8).
These price transparency initiatives are likely to increase the perception of consumers, insurers and providers on the price difference between the same health care products. They can reduce information asymmetry and thus increase price competition, reducing the price distribution of the same health care products. The remaining price distribution can then be caused by the difference in case mixing or quality. Two channels with higher price transparency can theoretically reduce price distribution.
First, the price transparency initiative promotes the decision -making of patients based on information, allowing patients who are sensitive to a low -cost provider, especially patients, can choose a ‘shopping’ hospital service that pays for the cost. This can narrow the price range of hospital products and increase the price level by increasing the competition for providers (9). Review of Zhang et al. However, (10) But the absorption of price transparency information in the patient was weak. Among many potential descriptions, information asymmetry related to the price set system and the necessary health care services can be an important barrier that prevents patients from using price information. The health care system may be complicated to explore, the patient cannot find (11), and it has been shown to depend greatly on the recommended doctor (12). Moreover, the scope of insurance coverage requires only a relatively small share of the patient, so it keeps the search for a low price. Therefore, the beneficial effect of increased price transparency through this first channel will be appropriate. If the price information is used at all, there is a study that the patient selects an expensive provider by associated with higher quality (13). This may reduce the price distribution, but strengthening the provider’s leverage to negotiate a higher price can increase the overall price level.
Second, price transparency can reduce price distribution through interaction between insurers and providers. Increasing price transparency can encourage insurers and providers to change prices as they increase competition (9, 14). Insurance companies have previously compared their own negotiation prices for all suppliers, but the providers can compare their own price negotiated with all insurers, but they can now compare the price that competitors negotiate directly through the price publication order. Providers and insurance companies can use the prices announced by competitors as benchmarks, compared them with the price they negotiated, and use the average price per product of suppliers and/or insurance companies.
As benchmark prices increase, price distribution decreases. However, over time, whether the average price level will be lowered depends on the negotiations of insurance companies and providers in the health care market. Insurers and providers’ market power affects the degree of higher price information or to negotiate cheaper prices. On the other hand, insurers with sufficient market force can negotiate using price information. lower Prices with relatively expensive suppliers (15, 16). On the other hand, providers with relatively low prices with sufficient market power can negotiate using information. higher Price with insurers (17, 18).
The paper will study the price distribution of up to 885 euros (eg, outpatients clinic visits or small procedures) over the providers of the Dutch hospital market after the 2016 duty of price transparency. Douven et al. (6) In the first year of the power of attorney, we studied only one insurance company and we investigated the price of the negotiated hospital product of three insurers dealing with several years. This allows you to explore whether the increasing availability of benchmark price information is related to decrease in price distribution among providers over time. In addition, we investigate whether the potential decline in price distribution is different among health insurers, which can show the difference in the ability or tendency to use price information. To this end, we collected price data from three major Dutch insurers for more than 200 hospital products between 2016 and 2022. The data was analyzed using the description statistics, graphs and linear regression.
This white paper is configured as follows: First, we explain the Dutch institutional context. Then explain the data and empirical methodology. We summarize the results and conclude this paper about the results.
