Exploring the determinants of private healthcare providers’ market power: A performance-based perspective

Abstract

This research focuses on market power in the private healthcare sector. This topic has been poorly explored by the extant literature and the reasons mainly rely on the peculiarities of the sector and the specific market. In fact, health providers’ market power is influenced by multiple factors and by the fact that prices are often regulated by national or regional public authorities. To fill this gap, the article explores the relationship between performance characteristics and health providers’ market power, measured through the Lerner index. The research is based on the analysis of panel data for 437 Italian private healthcare providers over the period 2012–2020. To explore the determinants of health providers’ market power, this research employs System-generalized method of moments (SYS-GMM) estimation models. The results highlight a significant and non-linear relationship between market power and process performance, as well as with gender diversity. Intangible assets are another input variable that has a significant and positive relationship with market power. The study contributes to the identification of the performance characteristics driving health providers’ market power.