Market concentration in secondary health services under a purchaser-provider split: the New Zealand experience

Identification of hospital catchment areas using clustering: an example from the NHS

OBJECTIVE

To develop a method of hospital market area identification using multivariate data, and compare it with existing standard methods.

DATA SOURCES

Hospital Episode Statistics, a secondary dataset of admissions data from all hospitals in England, between April 2005 and March 2006.

STUDY DESIGN

Seven criteria for catchment area definition were proposed. K-means clustering was used on several variables describing the relationship between hospitals and local authority districts (LADs) to enable the placement of every LAD into or out of the catchment area for every hospital. Principal component analysis confirmed the statistical robustness of the method, and the method was compared against existing methods using the seven criteria.

PRINCIPAL FINDINGS

Existing methods for identifying catchment areas do not capture desirable properties of a hospital market area. Catchment areas identified using K-means clustering are superior to those identified using existing Marginal methods against these criteria and are also statistically robust.

CONCLUSIONS

K-means clustering uses multivariate data on the relationship between hospitals and geographical units to define catchment areas that are both statistically robust and more informative than those obtained from existing methods.

Concentration and drug prices in the retail market for malaria treatment in rural Tanzania

The impact of market concentration has been little studied in markets for ambulatory care in the developing world, where the retail sector often accounts for a high proportion of treatments. This study begins to address this gap through an analysis of the consumer market for malaria treatment in rural areas of three districts in Tanzania. We developed methods for investigating market definition, sales volumes and concentration, and used these to explore the relationship between antimalarial retail prices and competition.The market was strongly geographically segmented and highly concentrated in terms of antimalarial sales. Antimalarial prices were positively associated with market concentration. High antimalarial prices were likely to be an important factor in the low proportion of care-seekers obtaining appropriate treatment.Retail sector distribution of subsidised antimalarials has been proposed to increase the coverage of effective treatment, but this analysis indicates that local market power may prevent such subsidies from being passed on to rural customers. Policymakers should consider the potential to maintain lower retail prices by decreasing concentration among antimalarial providers and recommending retail price levels.

Continuity through change: the rhetoric and reality of health reform in New Zealand

New Zealand, like most other developed economies, has struggled to establish the best way of organising and delivering publicly financed health care services. Before the 1990s, hospitals and some related services were planned and provided by regionally based, locally elected health boards. This system was replaced in 1993 with a quasi-market structure in which separate organisations were responsible for the purchasing and provision of services. This in turn was replaced in 2001 by a system of locally elected boards that is remarkably similar to that which existed in the 1980s. The change to and subsequent abandonment of the quasi-market structure implies major changes to the way that health services are organised in New Zealand and suggests policy U-turns in (at least) three key areas: from cooperation to competition (and back); from integration of the roles of purchaser and provider to contractual arrangements (and back); and from local decision-making to centralised decision-making (and back). The aims of this paper are to examine the depth of system change in practice and to consider the extent to which the stated goals of reformers have disguised the degree of continuity between reform eras. We conclude that simplistic distinctions between structural approaches often fail to capture salient influences upon decision-making. New Zealand has not, in fact, been "to market and back" as the rhetoric would have us believe. Key aspects of the health system have endured throughout the reform period and these arguably have more importance for system functioning and performance than the high-level structural changes.

Reform and counter reform: how sustainable is New Zealand's latest health system restructuring?

New Zealand's health care sector has undergone almost continual restructuring since the early 1980s. In the latest set of reforms, 21 district health boards (DHBs) have been established with responsibility for promoting health, purchasing services for their populations and delivering publicly owned health services. Boards will be governed by a mix of elected and appointed members, will be responsible for arranging the delivery of primary and community health services, and will own and run public hospitals and related facilities. We clarify the differences and continuities between earlier reforms and the 2000/01 structures, as well as the current reforms' potential strengths and weaknesses. The paper discusses whether the DHB model was the only feasible option for restructuring and whether the dynamics of the new system may lead to further changes, particularly on the purchaser side of the system. Given that DHBs face potential conflict between their purchasing and provision roles, and given the potential advantages that primary care organisations may have as purchasers, we conclude that it is possible that all or part of the purchasing function of DHBs might eventually shift to primary care organisations, leaving the DHBs as hospital-based provider organisations.

Markets for hospital services in Zambia

Hospital reforms involving the introduction of measures to increase competition in hospital markets are being implemented in a range of low and middle-income countries. However, little is understood about the operation of hospital markets outside the USA and the UK. This paper assesses the degree of competition for hospital services in two hospital markets in Zambia (Copperbelt and Midlands), and the implications for prices, quality and efficiency. We found substantial differences among different hospital types in prices, costs and quality, suggesting that the hospital service market is a segmented market. The two markets differ significantly in their degree of competition, with the high cost inpatient services market in Copperbelt relatively more competitive than that in the Midlands market. The implications of these differences are discussed in terms of the potential for competition to improve hospital performance, the impact of market structure on equity of access, and how the government should address the problem of the mine hospitals.

Public purchasing and private priorities for healthcare in New Zealand

The 1993 Health and Disability Services Act heralded a range of structural reforms in the New Zealand health care system. Despite these reforms considerable resources being spent on convincing consumers of their merits, have failed to gain widespread public approval. This paper examines two key issues that have arisen during the reform process. These are the difficulties associated with trying to set priorities in ways which are effective and politically acceptable, and the relationship between the public and private sectors. Unacknowledged conflicts of interest have helped to undermine the priority setting process. The discussion suggests that it may be increasingly difficult for any government in future to determine the allocation of resources without taking private sector interests and rising public concern into account. It remains to be seen which of these factors is more powerful.

Measuring concentration in primary care

There is evidence that patient choice and the quality of service delivery in primary care can be influenced by the organisation and structure of provision at the local level. However, the formal measurement of structure in primary care has yet to be undertaken. Using data for Coventry, standard concentration measures are estimated, which show that concentration varies considerably across the city and tends to be higher in areas of lower deprivation. Assuming that patient choice is an important consideration in health care planning, concentration measurement may provide a useful tool for health authorities in making decisions about GP numbers, practice mergers and re-location.