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Competition and waiting times in hospital markets

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  • Brekke, Kurt R.
  • Siciliani, Luigi
  • Straume, Odd Rune

Abstract

This paper studies the impact of hospital competition on waiting times. We use a Salop-type model, with hospitals that differ in (geographical) location and, potentially, waiting time, and two types of patients: high-benefit patients who choose between neighbouring hospitals (competitive segment), and low-benefit patients who decide whether or not to demand treatment from the closest hospital (monopoly segment). Compared with a benchmark case of monopoly, we find that hospital competition leads to longer waiting times in equilibrium if the competitive segment is sufficiently large. Given a policy regime of hospital competition, the effect of increased competition depends on the parameter of measurement: Lower travelling costs increase waiting times, higher hospital density reduces waiting times, while the effect of a larger competitive segment is ambiguous. We also show that, if the competitive segment is large, hospital competition is socially preferable to monopoly only if the (regulated) treatment price is sufficiently high.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 92 (2008)
Issue (Month): 7 (July)
Pages: 1607-1628

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Handle: RePEc:eee:pubeco:v:92:y:2008:i:7:p:1607-1628

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Web page: http://www.elsevier.com/locate/inca/505578

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  1. 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.
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  3. Luigi Siciliani, 2005. "Does more choice reduce waiting times?," Health Economics, John Wiley & Sons, Ltd., vol. 14(1), pages 17-23.
  4. Hoel, Michael & Saether, Erik Magnus, 2003. "Public health care with waiting time: the role of supplementary private health care," Journal of Health Economics, Elsevier, vol. 22(4), pages 599-616, July.
  5. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2007. "Competition and Waiting Times in Hospital Markets," NIPE Working Papers 9/2007, NIPE - Universidade do Minho.
  6. Farnworth, Michael G., 2003. "A game theoretic model of the relationship between prices and waiting times," Journal of Health Economics, Elsevier, vol. 22(1), pages 47-60, January.
  7. Iversen, Tor, 1993. "A theory of hospital waiting lists," Journal of Health Economics, Elsevier, vol. 12(1), pages 55-71, April.
  8. Jeremy Hurst & Luigi Siciliani, 2003. "Tackling Excessive Waiting Times for Elective Surgery: A Comparison of Policies in Twelve OECD Countries," OECD Health Working Papers 6, OECD Publishing.
  9. Chalkley, M. & Malcomson, J.M., 1995. "Contracting for health services when patient demand does not reflect quality," Discussion Paper Series In Economics And Econometrics 9514, Economics Division, School of Social Sciences, University of Southampton.
  10. 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.
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  12. Jack, William, 2005. "Purchasing health care services from providers with unknown altruism," Journal of Health Economics, Elsevier, vol. 24(1), pages 73-93, January.
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  15. Luigi Siciliani & Jeremy Hurst, 2003. "Explaining Waiting Times Variations for Elective Surgery Across OECD Countries," OECD Health Working Papers 7, OECD Publishing.
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  18. Olivella, Pau, 2003. "Shifting public-health-sector waiting lists to the private sector," European Journal of Political Economy, Elsevier, vol. 19(1), pages 103-132, March.
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  21. Daniel P. Kessler & Mark B. McClellan, 2000. "Is Hospital Competition Socially Wasteful?," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 577-615, May.
  22. Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-77, June.
  23. Hugh Gravelle & Luigi Siciliani, 2006. "Is Waiting-time Prioritisation Welfare Improving?," Discussion Papers 06/13, Department of Economics, University of York.
  24. Luigi Siciliani & Steve Martin, 2007. "An empirical analysis of the impact of choice on waiting times," Health Economics, John Wiley & Sons, Ltd., vol. 16(8), pages 763-779.
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  28. repec:rus:hseeco:122140 is not listed on IDEAS
  29. Luigi Siciliani, 2008. "A note on the dynamic interaction between waiting times and waiting lists," Health Economics, John Wiley & Sons, Ltd., vol. 17(5), pages 639-647.
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