Vortragssitzung

Wettbewerb und Regulierung

Vorträge

A double-edged sword? The economic impact of regulation on performance in the Swiss medtech industry
Kosta Shatrov, Kompetenzzentrum für Public Management, Universität Bern

Einleitung

In May 2017, the European Commission adopted the Medical Device Regulation (MDR, EU Regulation 2017/745) to update the regulation of medical devices. Ever since, Switzerland has been adapting its national regulation to the MDR to maintain the access of its medtech industry to the EU market. Notoriously, regulation may often be a double-edged sword: while the more stringent safety requirements of the MDR aim to reduce the number of incidents and adverse events, the additional administrative burden it imposes on firms may distort competition or reduce the availability of devices. The study focuses on the introductory phase of the MDR to examine its economic impact on the example of the Swiss medtech industry.

Methode

I apply structural equation modelling (SEM) to explore the link between the organizational change capacity (OCC) and organizational performance of medtech firms in the context of major regulatory change. OCC and performance are measured with the scales of Judge and Douglas (2009) and Powell (1995) respectively. Top managers and decision makers from all Swiss regions participated in an online survey with a 5 point Likert scale design.

Ergebnisse

Out of 1’365 questionnaires sent, 185 were completed after three reminders. Although the final response rate of 13.6% may seem low, it is not uncommon for online studies with top executives (e.g., Judge and Douglas 2009). I find a strong positive association between OCC and performance (p<.01), meaning that firms that are able to adapt better to change tend to outperform their peers. Small and medium-sized enterprises (SME) show higher OCC (p<.01) and lower performance levels (p<.01) than large firms. Somewhat surprisingly, firms situated inside of medtech clusters do show higher performance levels (p<.05).

Zusammenfassung

In line with previous research, I find that smaller firms have difficulties to implement major regulatory changes. The potential market withdrawal of SME could reduce the availability of devices or lead to a higher concentration of market power. SME, however, are able to eliminate a substantial part of the performance gap to large firms due to their higher change capacity. To foster organizational change, managers should communicate their vision about the future of the firm more clearly, and better explain to employees how change initiatives can improve performance. Although policy makers regard the formation of business clusters as a key success factor in high-tech industries, I did not find any significant cluster effect. Possible explanations are the small area of Switzerland and its highly developed transport infrastructure that both prevent well-pronounced clusters from emerging. Moreover, Swiss firms are highly interconnected with each other and can access information regardless of their physical location.


Authors
Kosta Shatrov, Kompetenzzentrum für Public Management, Universität Bern
Ambulatory Care Quality Disclosure and Competition
Maximilian Lückemann, Institute of Health Economics Hannover (IHE)

Einleitung

In Germany, the number of people who require professional support in everyday life is increasing. Today, we observe approximately 14,000 ambulatory long-term care services across Germany. Due to the lack of regulatory specifications concerning competition, we observe large variation of ambulatory care supply expected to depend on regional characteristics. Coming from an industrial organization perspective, we are interested in the ambulatory long-term care market and its competition structure. Making use of quality data reported by the medical review board of the statutory health insurance and further geographic information from 2011 to 2019, we analyse the effect of ambulatory long-term care competition on the quality of delivered care. To cope with biases due to a simultaneity of competition and quality, we apply an IV-approach. In a second step, we look at prices and nursing staff shortage as potential channels through which competition might have an impact on long-term care quality.

Methode

We conduct OLS regressions with repeated cross sections with data from 2011 to 2019. To include regional characteristics, which could have an effect on competition, we add socioeconomic controls on county level. We created three competition indicators on municipality level since regulatory specifications prescribe a radius of action of 20 km for each ambulatory care service respectively: the Herfindahl-Hirschman Index, the largest four-firm concentration ratio and the number of ambulatory care facilities. We use quality data of report cards collected by the Medical Review Board (MRB) of the German Statutory Health Insurance. Since these quality measures face large critique, we generate own quality index on individual facility level including a subsample of relevant quality items. Beyond that, we apply an instrumental variable approach to meet endogeneity problems, such as simultaneity of quality and competition in the ambulatory long-term care market. As instruments, we use the corresponding competition indicators for stationary nursing homes or related regional variables providing information about socio economic status within a region.

Ergebnisse

Our results indicate a small but very robust quality deteriorating effect due to ambulatory long-term care competition. This leads to the question of the corresponding mechanism. Therefore, we analysed the channels through which competition might work. In a first step, we were interested in potential price competition between competitors and found evidence for declining prices, which lead to lower quality. Second, we examined the supply of trained nurses and found higher competition going hand in hand with a less qualified nursing staff mix.


Authors
Annika Herr, Institute of Health Economics Hannover (IHE)
Olena Izhak, Duesseldorf Institute of Health Economics (DICE)
Maximilian Lückemann, Institute of Health Economics Hannover (IHE)
The impact of structural and strategic competition on hospital quality
Christiane Wuckel, RWI - Leibniz-Institut für Wirtschaftsforschung

Einleitung

Many health care systems aim to enhance quality of hospital treatments by encouraging competition. For example, the German hospital market has undergone a series of reforms that aimed to introduce and increase competition among hospitals. One of the most significant changes was the shift from a payment system that is based on the length of stay to the introduction of the Diagnosis-Related Group payment scheme. There is evidence that this reform increased competition between hospitals significantly (e.g. Herwartz and Strumann (2012)). However, the relationship between competition is less clear. Theoretical analysis predicts a positive relationship between competition and quality in case of a market with regulated prices (e.g. Karlsson (2007)). However, empirical analyses find evidence for a positive as well as a negative relationship. Other studies find no impact at all. My contribution to this literature is two-fold. The ambiguous empirical results suggest that the relationship depends crucially on the specific setting of the analyzed hospital market. Analyzing the relationship between competition and quality for the German hospital market can give valuable insights about the nature of the relationship in a market with regulated prices that is characterized by a high number or hospitals and a diverse ownership structure. While most studies look at competition as market structure, I aim to distinguish effects of market structure from effects of strategic behavior by using a twofold analysis.

Methode

First, I examine the effects of market structures on quality using the Hirschman-Herfindahl-Index. Second, I apply a spatial approach to analyze if hospitals adapt their quality in response to quality changes in neighboring hospitals. My analysis is based on several essential quality measures including patient satisfaction, mortality, hospital complications. I use a factor analysis to extract latent quality indicators from those measures. Moreover, investigating the years 2014 to 2017 enables me to estimate cross sectional and panel data models.

Ergebnisse

I find evidence for a significant, non-linear relationship between market structure and quality. Hospitals in mildly competitive environments appear to offer better quality than monopolists as well as hospitals in highly competitive environments. Additionally, I find evidence for strategic behavior. Neighbors of high-quality hospitals are more likely to offer higher quality themselves.

Zusammenfassung

In conclusion, hospitals appear to be impacted by market structure as well as strategic behavior. Quality enhancing policies might therefore be likely to show positive spill-over effects.


Authors
Christiane Wuckel, RWI - Leibniz-Institut für Wirtschaftsforschung
The Design of External Reference Pricing Schemes and the Choice of Reference Countries and Pricing Rules
Laura Birg, Universität Bremen

Einleitung

A widely used instrument in pharmaceutical price regulation is external reference pricing, which imposes a price cap for drugs based on their prices in other countries. Almost all European countries apply external reference pricing1, with schemes varying in the number of reference countries and pricing rules.

Methode

This paper studies the design of external reference pricing schemes, i.e., the choice of reference countries and pricing rules, in a game theoretic model. The manufacturer of an innovative drug may sell its drug in three countries. Governments may regulate the drug price based on prices of the drug in other countries.

Ergebnisse

Given that the manufacturer sells to all three countries, the minimum-price rule yields the lowest drug price. If the referencing country is sufficiently large, the manufacturer may not export to reference countries under the minimum-price rule. Then the average-price rule may safeguard exports to reference countries and generate a lower drug price in the referencing country. External reference pricing may create the incentive for the reference countries also to adopt external reference pricing, thus resulting in regulatory convergence with a uniform price among all countries.


Authors
Laura Birg