Breadcrumb

News

Risks for price and quality if hospitals in different regions negotiate collectively

25-07-2019

Hospitals are allowed to collaborate with each other in many different ways. However, there are also boundaries, for example, if the collaboration leads to higher prices or reduced health-care quality for patients or insured. Such risks may arise, for example, if hospitals are closely located to each other, but, in some cases, those risks can also arise if hospitals are active in different regions or if they do not offer the same types of health care. By negotiating collectively with health insurers, hospitals are able to form a bloc and ask higher prices. An opinion written by the Netherlands Authority for Consumers and Markets (ACM) for the hospitals that are part of the Santeon group has revealed that such risks can also arise when hospitals are not direct competitors of each other. ACM is of the opinion that, when facing collaborations of hospitals, health insurers should be able to decide for themselves if they wish to negotiate with the bloc or with the individual hospitals.

New insights into stronger bargaining positions of collaborating hospitals

ACM increasingly sees indications of possibly negative effects of stronger bargaining positions of hospitals that wish to negotiate collectively but that are not located close to each other. Health insurers say that, as a result, they could be forced, for example, to accept higher prices if hospitals link their individual health care services to those of the other hospitals. In that way, hospitals are able to make themselves indispensable. Recent market studies also show that mergers between health care providers that are located close to one another can lead to higher prices.

Changes to opinion on collaborations between hospitals

These developments are one of the reasons for changing ACM’s 2015 opinion for the hospitals that are part of the Santeon group hospitals. ACM has reassessed this collaboration following the expansion of this group, and because it started to collaborate in more areas. In the previous opinion, ACM said it did not see any anticompetitive risks if these hospitals were to negotiate collectively with regard to breast cancer care, because these hospitals were located across the Netherlands, and were therefore not competitors of each other. ACM does see risks now, particularly if the hospitals form a bloc in negotiations. Santeon has responded to ACM’s revised opinion. On the basis of that response, ACM establishes that health insurers are allowed to negotiate with each individual hospital that are part of the Santeon group. Health insurers are not required to contract all hospitals that are part of the collaboration. Furthermore, the hospitals do not exchange any commercially sensitive information. As such, the Santeon hospitals have eliminated the anticompetitive risks.

Health care providers or health insurers that have any questions about collective bargaining may contact ACM.