Hostname: page-component-586b7cd67f-r5fsc Total loading time: 0 Render date: 2024-11-28T06:10:23.951Z Has data issue: false hasContentIssue false
  • English
  • Français

The impact of geographic market definition on the stringency of hospital merger control in Germany and the Netherlands

Published online by Cambridge University Press:  21 February 2012

Marco Varkevisser  and
Frederik T. Schut
Marco Varkevisser*
Affiliation:
Associate Professor of Health Economics, Institute of Health Policy & Management (iBMG), Erasmus University Rotterdam, The Netherlands
Frederik T. Schut
Affiliation:
Professor of Health Economics, Institute of Health Policy & Management (iBMG), Erasmus University Rotterdam, The Netherlands
*
*Correspondence to: Professor Marco Varkevisser, Institute of Health Policy & Management (iBMG), Erasmus University Rotterdam, Room J8-03, P.O. Box 1738, Rotterdam 3000, The Netherlands. Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

In markets where hospitals are expected to compete, preventive merger control aims to prohibit anticompetitive mergers. In the hospital industry, however, the standard method for defining the relevant market (SSNIP) is difficult to apply and alternative approaches have proven inaccurate. Experiences from the United States show that courts, by identifying overly broad geographic markets, have underestimated the anticompetitive effects of hospital mergers. We examine how geographic hospital markets are defined in Germany and the Netherlands where market-oriented reforms have created room for hospital competition. For each country, we discuss a landmark case where definition of the geographic market played a decisive role. Our findings indicate that defining geographic hospital markets in both countries is less complicated than in the United States, where antitrust analysis must take managed care organisations into account. We also find that different methods result in much more stringent hospital merger control in Germany than in the Netherlands. Given the uncertainties in defining hospital markets, the German competition authority seems to be inclined to avoid the risk of being too permissive; the opposite holds for the Dutch competition authority. We argue that for society the costs of being too permissive with regard to hospital mergers may be larger than the costs of being too stringent.

Type
Articles
Information
Health Economics, Policy and Law , Volume 7 , Issue 3 , 10 July 2012 , pp. 363 - 381
Copyright
Copyright © Cambridge University Press 2012

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Ashenfelter, O., Hosken, D., Vita, M.Weinberg, M. (2011), ‘Retrospective analysis of hospital merger cases’, International Journal of the Economics of Business, 18(1): 5–16.CrossRefGoogle Scholar
Bangard, A. (2007), ‘Krankenhausfusionskontrolle’ (‘Hospital merger control’), Zeitschrift für Wettbewerbsrecht (Journal of Competition Law), 2: 183–238.CrossRefGoogle Scholar
Badtke, F. (2008), ‘Die Anwendbarkeit der deutschen und europäischen Fusionskontrolle auf Zusammenschlüsse von Krankenhäusern’ (‘The applicability of German and European merger control to hospital mergers’), Dissertation, Humboldt-Universität, Berlin.CrossRefGoogle Scholar
Bundesgerichtshof (BGH) (2008), Beschluss KVR26/07 – Kreiskrankenhaus Bad Neustadt, Bonn: Bundesgerichtshof.Google Scholar
Bundeskartellamt (BKA) (2005a), Beschluss B10-123/04 – Rhön-Klinikum AG – Landkreis Rhön-Grabfeld, Bonn: Bundeskartellamt.Google Scholar
BKA (2005b), Beschluss B10-109/04 – Rhön-Klinikum AG – Krankenhaus Eisenhüttenstadt GmbH – Stadt Eisenhüttenstadt, Bonn: Bundeskartellamt.Google Scholar
Campbell, T. (2007), ‘Defending hospital mergers after the FTC's unorthodox challenge to the Evanston Northwestern – Highland Park transaction’, Annals of Health Law, 16(2): 213–239.Google Scholar
Capps, C. S., Dranove, D., Greenstein, S.Satterthwaite, M. (2002), ‘Antitrust policy and hospital mergers: recommendations for a new approach’, Antitrust Bulletin, 47(4): 677–714.CrossRefGoogle Scholar
Carlton, D. W. (2007), ‘Does antitrust need to be modernized?’, Journal of Economic Perspectives, 21(3): 155–176.CrossRefGoogle Scholar
Commonwealth Fund (2010), International Profiles of Health Care Systems: Australia, Canada, Denmark, England, France, Germany, Italy, the Netherlands, New Zealand, Norway, Sweden, Switzerland, and the United States, New York/Washington, DC.Google Scholar
Conners, J. R. (2003), ‘A critical misdiagnosis: how courts underestimate the anticompetitive implications of hospital mergers’, California Law Review, 91: 543–578.CrossRefGoogle Scholar
Danger, K. L.Frech, H. E. (2001), ‘Critical thinking about “critical loss” in antitrust’, Antitrust Bulletin, 46(2): 339–355.CrossRefGoogle Scholar
Denzel, S., Krolop, S.Dürr, D. M. (2010), ‘Auswirkungen der Fusionskontrolle auf den deutschen Krankenhaussektor’ (‘The impact of hospital merger control on the German hospital market’), Zeitschrift fur öffentliche and gemeinwirtschaftliche Unternehmen (Journal for Public and Nonprofit Services), 38: 53–71.Google Scholar
Dranove, D.Sfekas, A. (2009), ‘The revolution in health care antitrust: new methods and provocative implications’, Milbank Quarterly, 87(3): 607–632.CrossRefGoogle ScholarPubMed
Elzinga, K. G.Swisher, A. W. (2011), ‘Limits of the Elzinga–Hogarty test in hospital merger: the Evanston case’, International Journal of the Economics of Business, 18(1): 133–146.CrossRefGoogle Scholar
European Commission (EC) (2007), Case No COMP/M.4367 – APW/APSA/Nordic Capital/Capio, Brussels: European Commission.Google Scholar
Farrell, J., Pautler, P. A.Vita, M. G. (2009), ‘Economics at the FTC: retrospective merger analysis with a focus on hospitals’, Review of Industrial Organization, 35(4): 369–385.CrossRefGoogle Scholar
Federal Trade Commission (FTC) (2004), In the Matter of Evanston Northwestern Healthcare Corporation: Complaint, Washington, DC: The Federal Trade Commission, Docket No. 9315.Google Scholar
FTC (2005), In the Matter of Evanston Northwestern Healthcare Corporation: Initial Decision, Washington, DC: The Federal Trade Commission, Docket No. 9315.Google Scholar
FTC (2007), In the Matter of Evanston Northwestern Healthcare Corporation: Opinion of the Commission, Washington, DC: The Federal Trade Commission, Docket No. 9315.Google Scholar
Gaynor, M.Vogt, W. B. (2000), ‘Antitrust and Competition in Health Care Markets’, in A. J. Cuyler and J. P. Newhouse (eds), Handbook of Health Economics, vol. I, Amsterdam: Elsevier Science, 1405–1487.Google Scholar
Greaney, T. L. (2002), ‘Whither antitrust? The uncertain future of competition law in health care’, Health Affairs, 21(2): 185–196.CrossRefGoogle ScholarPubMed
Harris, B. C.Argue, D. A. (2006), ‘FTC v. Evanston Northwestern: a change from traditional hospital merger analysis?’, Antitrust, Spring: 34–40.Google Scholar
Heyer, K. (2006), ‘Welfare standards and merger analysis: why not the best?’, Competition Policy International, 2(2): 29–54.Google Scholar
Kallfass, H. H., Kuchinke, B. A. (2006), ‘Die räumliche Marktabgrenzung bei Zusammenschlüssen von Krankenhäusern in den USA und in Deutschland: eine wettbewerbsökonomische Analyse’ (‘Geographic market definition in hospital merger cases in the United States and in Germany: an antitrust analysis’), Diskussionspapier Nr. 52, Institut für Volkswirtschaftslehre, Technische Universität Ilmenau.Google Scholar
Kemp, R.Severijnen, A. (2010), Price effects of Dutch hospital mergers: an ex post assessment of hip surgery, NMa Working Papers No. 2, The Hague: Netherlands Competition Authority.Google Scholar
Lévêque, F. (2006), ‘Antitrust enforcement in the electricity and gas industries: problems and solutions for the EU’, The Electricity Journal, 19(5): 27–34.CrossRefGoogle Scholar
Lisac, M., Reimers, L., Henke, K. D.Schlette, S. (2010), ‘Access and choice – competition under the roof of solidarity in German health care: an analysis of health policy reforms since 2004’, Health Economics, Policy and Law, 5(1): 31–52.CrossRefGoogle ScholarPubMed
Motta, M. (2004), Competition Policy: Theory and Practice, Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Nederlandse Mededingingsautoriteit (NMa) (2004a), Visiedocument ziekenhuiszorg (‘Position Document Hospital Care’), Den Haag: Nederlandse Mededingingsautoriteit.Google Scholar
NMa (2004b), Besluit betreffende zaak 3897/Ziekenhuis Hilversum – Ziekenhuis Gooi-Noord: meldingsfase, Den Haag: Nederlandse Mededingingsautoriteit.Google Scholar
NMa (2005), Besluit betreffende zaak 3897/Ziekenhuis Hilversum – Ziekenhuis Gooi-Noord: vergunningfase, Den Haag: Nederlandse Mededingingsautoriteit, (English translation available at www.nmanet.nl/engels/home/Decisions/2005/3897BVC_engels.asp).Google Scholar
NMa (2009), NMa Imposes Strict Conditions on Hospital Merger, The Hague: press release.Google Scholar
NMa (2010), Richtsnoeren voor de zorgsector (‘Guidelines for the Health Care Industry’), Den Haag: Nederlandse Mededingingsautoriteit.Google Scholar
Oberlandesgericht Düsseldorf (OGD) (2007), Beschluss VI-Kart 6/05 (V), Düsseldorf: Oberlandesgericht Düsseldorf.Google Scholar
Pittman, R. (2007), ‘Consumer surplus as the appropriate standard for antitrust enforcement’, Competition Policy International, 3(2): 205–224.Google Scholar
Richman, B. D. (2007), ‘Antitrust and nonprofit hospital mergers: a return to basics’, University of Pennsylvania Law Review, 156: 121–150.Google Scholar
Schut, F. T.van de Ven, W. P. M. M (2011), ‘Effects of purchaser competition in the Dutch health system: is the glass half full or half empty?’, Health Economics, Policy and Law, 6(1): 109–123.CrossRefGoogle ScholarPubMed
Schulten, T. (2006), Liberalisation, Privatisation and Regulation in the German Healthcare Sector/Hospitals, Düsseldorf: Wirtschafts- und Sozialwissenschaftliches Institut (WSI), Hans-Böckler-Stiftung.Google Scholar
Simpson, J. (2003), ‘Geographic markets in hospital mergers: a case study’, International Journal of the Economics of Business, 10(3): 291–303.CrossRefGoogle Scholar
Varkevisser, M., Capps, C. S.Schut, F. T. (2008), ‘Defining hospital markets for antitrust enforcement: new approaches and their applicability to The Netherlands’, Health Economics, Policy and Law, 3(1): 7–29.CrossRefGoogle ScholarPubMed
Varkevisser, M., van der Geest, S. A.Schut, F. T. (2010), ‘Assessing hospital competition when prices don't matter to patients: the use of time-elasticities’, International Journal of Health Care Finance and Economics, 10(1): 43–60.CrossRefGoogle Scholar
Vita, M. G.Sacher, S. (2001), ‘The competitive effects of not-for-profit hospital mergers: a case study’, Journal of Industrial Economics, 49(1): 63–84.CrossRefGoogle Scholar
Vogt, W. B., Town, R. (2006), How has Hospital Consolidation Affected the Price and Quality of Hospital Care?, Research Synthesis Report No. 9, Robert Wood Johnson Foundation, Princeton, NJ.Google Scholar
Weil, T. P. (2010), ‘Hospital mergers: a panacea?’, Journal of Health Services Research & Policy, 15(4): 251–253.CrossRefGoogle ScholarPubMed