Abstract
In continental Portugal, the publicly financed supply of gastroenterology exams was limited since the end of the last century, restricted to a fixed set of private providers that was hired by the Portuguese state. This way of contracting created market entry barriers and is inefficient, since prices are administratively set. Besides, it produced access inequalities, because of the way that the supply was geographically distributed. This paper applies the Extended Kernel Density 4-Step Floating Catchment Area (EKD4SFCA) method to identify priority districts for the promotion of new supply by the state, in order to choose the appropriate way of contracting new private supply, as determined by current law, and to reduce access inequalities. The applied method enables the identification of the Portuguese regions with strong competition between health care providers and where patients’ access to publicly financed gastroenterology exams is relatively low. In these regions, the state should promote public bids to stimulate new supply, exploring thereby the potential for setting lower prices and reducing access inequalities.
Highlights
The EKD4SFCA method provides a combined analysis of competition and access by incorporating the Herfindahl-Hirschman Index (HHI) and a market dominance identification technique in the Extended Kernel Density 2-Step Floating Catchment Area (EKD2SFCA) method (Polzin et al, 2014, 2016)
This paper presents an application of the EKD4SFCA method to identify priority districts for the promotion of new supply of gastroenterology exams by the state, in order to choose the appropriate way of contracting private supply, as determined by law, and to reduce existing access inequalities
If the HHI is over 2,000 and the geographic units are dominated, the identified geographic markets will have the highest risk of presenting competition problems, such that only in other regions it will be possible to explore competition with public bids
Summary
As far as competition analysis is concerned, an innovation of the EKD4SFCA method is the adaptation and extension of the HHI index and of the dominance identification method of Melnik et al (2008) for their application with small geographic units of analysis, a distance decay function and catchment areas. This way, fine-resolution results are obtained, which provide detailed information that can be useful for public policies in Portugal to manage financing of private health care provision in accordance with the legislation. Free adhesion contracts can be signed, which may facilitate entry of new providers into concentrated markets
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