Competition and quality in a physiotherapy market with fixed prices

Piia Pekola (), Ismo Linnosmaa () and Hennamari Mikkola ()
Additional contact information
Piia Pekola: Social Insurance Institution of Finland
Ismo Linnosmaa: National Institute for Health and Welfare
Hennamari Mikkola: Social Insurance Institution of Finland

The European Journal of Health Economics, 2017, vol. 18, issue 1, No 9, 97-117

Abstract: Abstract Our study focuses on competition and quality in physiotherapy organized and regulated by the Social Insurance Institution of Finland (Kela). We first derive a hypothesis with a theoretical model and then perform empirical analyses of the data. Within the physiotherapy market, prices are regulated by Kela, and after registration eligible firms are accepted to join a pool of firms from which patients choose service providers based on their individual preferences. By using 2SLS estimation techniques, we analyzed the relationship among quality, competition and regulated price. According to the results, competition has a statistically significant (yet weak) negative effect (p = 0.019) on quality. The outcome for quality is likely caused by imperfect information. It seems that Kela has provided too little information for patients about the quality of the service.

Keywords: Competition; Imperfect information; Physiotherapy; Price regulation; Quality; I11; I18; L15; L51 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10198-016-0792-3

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