Rethinking Reallocations: Conceptual Limits of the Market Activity Index as a Measure of Competition and Purchasing Comment on "Measuring Active Purchasing in Healthcare: Analyzing Reallocations of Funds Between Providers to Evaluate Purchasing Systems Performance in the Netherlands"
Year: 2025
Type: article
Abstract: Stadhouders et al1 introduce the Market Activity Index (MAI) to assess the performance of healthcare systems, concluding that low budget reallocations in the hospital sector cast doubt on the effectiveness of managed competition and purchasing. We argue that while the MAI is a valuable descriptive tool, its interpretation as a proxy for competition is conceptually problematic. The index captures realized revenue flows, which may result from patient mobility, exogenous shocks, or administrative changes, rather than insurer behavior. Furthermore, selective contracting may be used for objectives such as risk selection rather than provider efficiency, particularly in segments of the market with low utilization. Without a normative benchmark or ability to disentangle strategic from structural effects, the MAI risks conflating system dynamics with market failure. We conclude that the MAI is best viewed as a measure of budgetary volatility, not a standalone indicator of competitive intensity or purchaser effectiveness.
DOI: 10.34172/ijhpm.9322
Author: Misja C. Mikkers
Institution: University of Twente
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7108468570
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