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Death by Market Power: Reform, Competition, and Patient Outcomes in the National Health Service

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  • Martin Gaynor
  • Rodrigo Moreno-Serra
  • Carol Propper

Abstract

The effect of competition on the quality of health care remains a contested issue. Most empirical estimates rely on inference from nonexperimental data. In contrast, this paper exploits a procompetitive policy reform to provide estimates of the impact of competition on hospital outcomes. The English government introduced a policy in 2006 to promote competition between hospitals. Using this policy to implement a difference-in-differences research design, we estimate the impact of the introduction of competition on not only clinical outcomes but also productivity and expenditure. We find that the effect of competition is to save lives without raising costs.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

Volume (Year): 5 (2013)
Issue (Month): 4 (November)
Pages: 134-66

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Handle: RePEc:aea:aejpol:v:5:y:2013:i:4:p:134-66

Note: DOI: 10.1257/pol.5.4.134
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References

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  1. Lawrence J. White, 1972. "Quality Variation When Prices Are Regulated," Bell Journal of Economics, The RAND Corporation, vol. 3(2), pages 425-436, Autumn.
  2. Held, Philip J. & Pauly, Mark V., 1983. "Competition and efficiency in the end stage renal disease program," Journal of Health Economics, Elsevier, vol. 2(2), pages 95-118, August.
  3. Propper, Carol & Sutton, Matt & Whitnall, Carolyn & Windmeijer, Frank, 2010. "Incentives and targets in hospital care: Evidence from a natural experiment," Journal of Public Economics, Elsevier, vol. 94(3-4), pages 318-335, April.
  4. Emma Hall & Carol Propper & John Van Reenen, 2008. "Can Pay Regulation Kill? Panel Data Evidence on the Effect of Labor Markets on Hospital Performance," CEP Discussion Papers dp0843, Centre for Economic Performance, LSE.
  5. Tay, Abigail, 2003. " Assessing Competition in Hospital Care Markets: The Importance of Accounting for Quality Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 34(4), pages 786-814, Winter.
  6. Jesse Rothstein, 2007. "Does Competition Among Public Schools Benefit Students and Taxpayers? Comment," American Economic Review, American Economic Association, vol. 97(5), pages 2026-2037, December.
  7. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
  8. Jacob Dahl Rendtorff & Jan Mattsson, 2009. "Editorial," The Service Industries Journal, Taylor & Francis Journals, vol. 29(1), pages 1-7, January.
  9. Dennis Epple & David Figlio & Richard Romano, 2000. "Competition Between Private and Public Schools: Testing Stratification and Pricing Predictions," NBER Working Papers 7956, National Bureau of Economic Research, Inc.
  10. Patrick Bayer & Robert McMillan, 2005. "Choice and Competition in Local Education Markets," NBER Working Papers 11802, National Bureau of Economic Research, Inc.
  11. Pope, Gregory C., 1989. "Hospital nonprice competition and medicare reimbursement policy," Journal of Health Economics, Elsevier, vol. 8(2), pages 147-172, June.
  12. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
  13. Ellis, Randall P. & McGuire, Thomas G., 1986. "Provider behavior under prospective reimbursement : Cost sharing and supply," Journal of Health Economics, Elsevier, vol. 5(2), pages 129-151, June.
  14. Shen, Yu-Chu, 2003. "The effect of financial pressure on the quality of care in hospitals," Journal of Health Economics, Elsevier, vol. 22(2), pages 243-269, March.
  15. Christopher Ruhm, 2007. "A healthy economy can break your heart," Demography, Springer, vol. 44(4), pages 829-848, November.
  16. Richard Schmalensee, 1977. "Comparative Static Properties of Regulated Airline Oligopolies," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 565-576, Autumn.
  17. Martin Gaynor & Harald Seider & William B. Vogt, 2005. "The Volume–Outcome Effect, Scale Economies, and Learning-by-Doing," American Economic Review, American Economic Association, vol. 95(2), pages 243-247, May.
  18. Street, Andrew & Maynard, Alan, 2007. "Activity based financing in England: the need for continual refinement of payment by results," Health Economics, Policy and Law, Cambridge University Press, vol. 2(04), pages 419-427, October.
  19. Nazmi Sari, 2002. "Do competition and managed care improve quality?," Health Economics, John Wiley & Sons, Ltd., vol. 11(7), pages 571-584.
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  1. #HEJC papers for August 2013
    by academichealtheconomists in The Academic Health Economists' Blog on 2013-07-31 23:00:48
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