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ACM market study: medical-diagnostics sector is searching for the right balance between efficiency and options

There are many businesses, laboratories, and hospitals that perform medical diagnoses. In general, this market for medical diagnostics is a fragmented market, yet some regions have a high concentration of laboratories. Concentration of laboratories can be good as it means that the often expensive equipment in these laboratories is utilized efficiently. However, it can also lead to higher prices and a greater dependence on a handful of suppliers. This is a dilemma for health insurers buying medical-diagnostic services, according to a market study carried out by the Netherlands Authority for Markets and Consumers (ACM) into the market for medical diagnostics.

Findings of the market study

The market for medical diagnostics is a dynamic market at the moment. Several market participants have indicated that the right balance between efficiency and sufficient options has not yet been found. The number of suppliers and the type of suppliers (such as hospitals and laboratories) vary greatly per region. This is partly caused by the way in which several health insurers buy medical-diagnostic services. In certain regions, some health insurers buy health care from one or several laboratories, while other health insurers buy health care from various laboratories. In regions with overcapacity, health insurers are able to contract selectively, which then actually happens.

In addition, several mergers and acquisitions took place, which has resulted in the emergence of large laboratories. Several mergers were carried out by international laboratories that are owned by investment firms. These firms have thus secured a market position in the Netherlands. ACM will use these new market insights in, for example, its assessments of future mergers and acquisitions.

What are medical-diagnostic services?

Medical diagnostics involves the identification of medical conditions through testing. Medical diagnoses are performed in laboratories and hospitals, among other places. These involve, for example, allergy tests, blood analyses, punctures, and CT scans or MRIs. The more efficiently and the better it can be determined if, and if so, what treatment is necessary, the sooner a suitable treatment can be started. Well-functioning diagnostic markets are able to contribute greatly to the quality, affordability, and accessibility of health care.

Previous quantitative study into medical diagnostics

Last year, ACM conducted an explorative quantitative study into the sector for medical-diagnostic services using claims data from 2017. In the follow-up study, ACM sat down with various market participants, such as hospitals, laboratories, and health insurers, to get a better understanding of how the market works.

See also:

08-07-2022 Explorative quantative study into the sector for medical diagnostics (in Dutch)