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Hospital multi-dimensional quality competition with medical malpractice

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  • Bell-Aldeghi, Rosalind
  • Chopard, Bertrand

Abstract

In this paper, we study the effect of competition on the plural dimensions of hospital quality in a market with regulated prices. Our results are obtained with the standard model of hospital competition where a distinction can now be made between two different dimensions of quality while using fair general demand and cost structure. In our setting, hospitals can choose to invest either in the quality of health care services which reduces exposition to the risk of medical error, or in another dimension of quality which is independent to the risk of medical malpractice (appropriateness, patient-centeredness, amenities, etc.). We derive the conditions under which an intensified competition can not only raise or decrease hospital quality, but can also lead to a substitution between the two dimensions of quality. We also investigate how hospital competition and tort law may interact to help improve quality of care by deterring negligent behaviors of providers of care. Lastly, we use a model of strategic pretrial negotiation under asymmetric information to examine the effect of hospital competition on the resolution of medical disputes through its effect on quality.

Suggested Citation

  • Bell-Aldeghi, Rosalind & Chopard, Bertrand, 2021. "Hospital multi-dimensional quality competition with medical malpractice," International Review of Law and Economics, Elsevier, vol. 68(C).
    • Handle: RePEc:eee:irlaec:v:68:y:2021:i:c:s0144818821000491
    DOI: 10.1016/j.irle.2021.106025
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    References listed on IDEAS

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    More about this item

    Keywords

    Hospital competition; Quality; Medical malpractice; Litigation;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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