# 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"

## TL;DR

This paper critiques the Market Activity Index as a flawed measure of competition in healthcare purchasing, suggesting it better reflects budget volatility.

## Contribution

The paper identifies conceptual limitations in using the Market Activity Index to assess competition and purchasing effectiveness in healthcare.

## Key findings

- The Market Activity Index may reflect patient mobility or administrative changes, not insurer-driven competition.
- Selective contracting can serve purposes like risk selection, not necessarily provider efficiency.
- The MAI lacks a normative benchmark to distinguish strategic from structural effects.

## 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.