A Study on the Effect of Healthcare Provider Competitionon Intensity of Care Under a Fixed Price Structure

Abstract

The analysis of competition among healthcare providers is important in measuring the effects of competition mechanisms at the market level and national medical expenses and medical resource distribution at the national level. This study aims to provide both theoretical and empirical evidence of the effect of healthcare provider competition under the fixed price. This study investigates a theoretical model of healthcare provider competition using the circular city model (Salop, 1979). A proposition derived as a result is, the intensity of care increases with the number of providers. Empirical work examines the theoretical results of the theoretical framework. The impact of provider competition on the intensity of care is investigated by a panel random effect model using NHIS (National Health Insurance Service)-cohort 2.0 DB data based on National Health Insurance claims data. The estimated results show that the proposition is supported empirically as the intensity of care increased with the number of providers.