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Market Concentration in Secondary Health Services Under a Purchaser–Provider Split: The New Zealand Experience

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  • Toni Ashton
  • David Press

Abstract

The separation of purchaser and provider in government‐funded health systems enables competition to develop between providers. Competition is seen as a means to drive technical efficiencies by providers. While it is difficult to assess comprehensively the level of competition in a market taking into account contestability and substitutability effects, it is possible to measure the degree of market concentration. This paper employs the Hirschman–Herfindahl index to provide measures of market concentration in selected secondary health care markets in New Zealand immediately prior to (1992) and following (1994) implementation of a purchaser–provider split. The results show that, generally, the selected markets are highly concentrated and that there has been little change in the degree of concentration over the 2 year period under investigation. The paper also discusses some of the methodological problems associated with the measurement of market concentration and acknowledges the limitations of such measures as indicators of competition. © 1997 by John Wiley & Sons, Ltd.

Suggested Citation

  • Toni Ashton & David Press, 1997. "Market Concentration in Secondary Health Services Under a Purchaser–Provider Split: The New Zealand Experience," Health Economics, John Wiley & Sons, Ltd., vol. 6(1), pages 43-56, January.
    • Handle: RePEc:wly:hlthec:v:6:y:1997:i:1:p:43-56
    DOI: 10.1002/(SICI)1099-1050(199701)6:1<43::AID-HEC241>3.0.CO;2-I
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    References listed on IDEAS

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    1. Robinson, James C. & Luft, Harold S., 1985. "The impact of hospital market structure on patient volume, average length of stay, and the cost of care," Journal of Health Economics, Elsevier, vol. 4(4), pages 333-356, December.
    2. Noether, Monica, 1988. "Competition among hospitals," Journal of Health Economics, Elsevier, vol. 7(3), pages 259-284, September.
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    Cited by:

    1. Sarv Devaraj & Rajiv Kohli, 2003. "Performance Impacts of Information Technology: Is Actual Usage the Missing Link?," Management Science, INFORMS, vol. 49(3), pages 273-289, March.
    2. Ashton, Toni & Mays, Nicholas & Devlin, Nancy, 2005. "Continuity through change: The rhetoric and reality of health reform in New Zealand," Social Science & Medicine, Elsevier, vol. 61(2), pages 253-262, July.
    3. Catherine Goodman & S. Patrick Kachur & Salim Abdulla & Peter Bloland & Anne Mills, 2009. "Concentration and drug prices in the retail market for malaria treatment in rural Tanzania," Health Economics, John Wiley & Sons, Ltd., vol. 18(6), pages 727-742, June.
    4. Blazej Lyszczarz, 2014. "Market concentration and performance of general hospitals in Poland," Ekonomia i Prawo, Uniwersytet Mikolaja Kopernika, vol. 13(4), pages 499-510, December.
    5. Howden-Chapman, Philippa & Ashton, Toni, 2000. "Public purchasing and private priorities for healthcare in New Zealand," Health Policy, Elsevier, vol. 54(1), pages 27-43, November.

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