Studies of Competition in Private Health Care Markets

Abstract

Finland's private health care sector is a significant part of the Finnish economy and health care system. The increased demand has attracted capital investors to the industry, and since the 1990’s the industry has been the subject of numerous acquisitions, concentrating the market structure. However, research on the change in the competitive environment, the market structure or the competition in the industry has been very scarce. In the international health economics literature, competition is assumed to function poorly, as health care markets severely violate the criteria of perfect competition. According to most empirical studies, health care companies react according to competition theories, but generalizing the results from one institutional environment to another is challenging.

In my dissertation, I studied the price competition in Finland’s private health care market from different perspectives. First, with expert interviews mapping the industry's competitive environment, we determined how National Health Insurance affects the industry’s competitive environment. In the following parts of the study, the National Health Insurance reimbursement register was used to analyze the development of the market structure by region and service, the association between the market structure and price level, and the effect of price disclosure on prices. Multilevel modeling and difference-in-differences methods were used in the analyses.

According to the interviews, the National Health Insurance reimbursements did not significantly affect the demand of companies, but the criteria of compensability had a steering effect on service development. The market structure varied significantly by region and service, and it became more concentrated during the review period. Especially outside the largest urban sub-regions, a monopoly was common, if services were available at all. For general practitioners’ services, concentrated market structure was associated with higher prices, consistent with the theory. Additionally, the disclosure of prices led to a decline in MRI prices, supporting the conclusion that price transparency promotes price competition.

The research produces new information on the competition in the Finnish health care market and, for example, on containing increasing costs by promoting competition. It also complements the international literature on patient-driven competition with high-quality data set and unique research design.

Full text (in Finnish) (utupub.fi)

Author

Riina Hiltunen

Additional Information

• Peer-Reviewed: no.
• Open access: yes.
• Cite as: Hiltunen, R. (2024). Tutkimuksia yksityisen terveysmarkkinan kilpailusta [väitöskirja]. Turun yliopisto. https://urn.fi/URN:ISBN:978-951-29-9860-9