Session: Impact of Hospital Competition
Room: Upson B17
Time: Mon 10:15-11:45

Presenter: Zack Cooper (London School of Economics. LSE Health)

Discussant: Rebecca PopeUniversity of Tennessee Health Science Center

Abstract

This paper examines whether or not hospital competition in a market with fixed reimbursement prices can prompt improvements in clinical quality. In January 2006, the British government introduced a major extension of their market-based reforms to the English National Health Service. From January 2006 onwards, every patient in England could choose their hospital for secondary care, and hospitals had to compete with each other to attract patients to secure their revenue. In order to estimate the impact of hospital competition, we exploit the fact that choice-based reforms will have had more ‘bite’ in places where choice is geographically feasible. We use a modified difference-in-difference estimator to analyze whether quality improved more quickly in more competitive markets after the government introduced its new wave of market-based reforms. Using AMI mortality as a quality indicator, we find that mortality fell more quickly (i.e. quality improved) for patients living in more competitive markets after the introduction of hospital competition in January 2006. Our results suggest that hospital competition in markets with fixed prices can lead to improvements in clinical quality.

Key Terms

Health Care, Quality, Competition, Choice, Incentives, Reimbursement

Authors:

Zack Cooper (London School of Economics. LSE Health and the Department of Social Policy) , Stephen Gibbons (London School of Economics. Department of Geography and Environment) , Simon Jones (London School of Economics. LSE Health) and Alistair McGuire (London School of Economics. LSE Health and the Department of Social Policy)