Choosing cooperation over competition; hospital strategies in response to selective contracting

Summary With the introduction of market competition in health care, the Dutch government enabled health insurers to contract hospital care selectively. The assumption is that “selective contracting” will stimulate efficiency, effectiveness, and innovation and will diminish overcapacity. In 2010, the first Dutch health insurers started experimenting with “selective contracting” by setting a minimum treatment volume per year for complex treatments. In an explorative, multiple case study among 15 hospitals in five regions, we found that instead of competing, hospitals started to cooperate and strengthen their networks. The government intended to remove redundant hospital capacity and improve quality by stimulating specialization and concentration. Our study showed that specialization was indeed stimulated, which may have increased quality of care. However, facilitated by the absence of a countervailing power (government or insurer), hospitals in our cases negotiated to the effect of preserving hospital capacity. Within the current political debate between supporters of competition and advocates of a national health service, the importance and role of the (medical) networks should be taken into account. Otherwise, the outcomes of health care governance will be different than intended by either party.