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Can competition improve hospital quality of care? A difference-in-differences approach to evaluate the effect of increasing quality transparency on hospital quality

Author

Listed:
  • Christoph Strumann

    (University Hospital Schleswig-Holstein)

  • Alexander Geissler

    (University of St. Gallen)

  • Reinhard Busse

    (Berlin University of Technology)

  • Christoph Pross

    (Berlin University of Technology)

Abstract

Public reporting on the quality of care is intended to guide patients to the provider with the highest quality and to stimulate a fair competition on quality. We apply a difference-in-differences design to test whether hospital quality has improved more in markets that are more competitive after the first public release of performance data in Germany in 2008. Panel data from 947 hospitals from 2006 to 2010 are used. Due to the high complexity of the treatment of stroke patients, we approximate general hospital quality by the 30-day risk-adjusted mortality rate for stroke treatment. Market structure is measured (comparatively) by the Herfindahl–Hirschman index (HHI) and by the number of hospitals in the relevant market. Predicted market shares based on exogenous variables only are used to compute the HHI to allow a causal interpretation of the reform effect. A homogenous positive effect of competition on quality of care is found. This effect is mainly driven by the response of non-profit hospitals that have a narrow range of services and private for-profit hospitals with a medium range of services. The results highlight the relevance of outcome transparency to enhance hospital quality competition.

Suggested Citation

  • Christoph Strumann & Alexander Geissler & Reinhard Busse & Christoph Pross, 2022. "Can competition improve hospital quality of care? A difference-in-differences approach to evaluate the effect of increasing quality transparency on hospital quality," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 23(7), pages 1229-1242, September.
    • Handle: RePEc:spr:eujhec:v:23:y:2022:i:7:d:10.1007_s10198-021-01423-9
    DOI: 10.1007/s10198-021-01423-9
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    More about this item

    Keywords

    Hospital quality of care; Hospital competition; Public reporting; Difference-in-differences;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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