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Market Structure, Efficiency and Performance: Empirical evidence from South Africa’s Healthcare Insurer Market

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  • Ndlovu, Thabang

Abstract

This study assessed the relationship between market structure, conduct and performance in the South African healthcare insurer market for the period 2011 to 2017 using data obtained from the Council of Medical Schemes. Three hypotheses were tested: the structure-conduct-performance (SCP) paradigm, the relative market power (RMP) paradigm and the efficient structure (ES) hypothesis. The empirical evidence reveals that both the SCP and ES hypotheses can be rejected in relation to South African medical schemes. The empirical evidence reveals support for differing hypotheses for open and restricted medical schemes. Moreover, the empirical results suggest that the market for restricted medical schemes is highly concentrated and operating under a reduced efficiency level which produces less than desirable outcomes. In regard to open medical schemes, the empirical results reveal strong support for the RMP hypothesis which suggests that open medical schemes with more differentiated product and/or service offerings will achieve higher market share, be in a position to exercise market power and thus able to set higher prices and earn higher profit.

Suggested Citation

  • Ndlovu, Thabang, 2022. "Market Structure, Efficiency and Performance: Empirical evidence from South Africa’s Healthcare Insurer Market," MPRA Paper 115505, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:115505
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    More about this item

    Keywords

    Healthcare Insurance; DEA; Competition; Market Structure; Market Conduct; Market Performance; South Africa;
    All these keywords.

    JEL classification:

    • L00 - Industrial Organization - - General - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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