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Does more choice reduce waiting times?

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  • Luigi Siciliani

    (Department of Economics and Related Studies, University of York, UK)

Abstract

This paper develops a model of the supply of elective treatments within a duopolistic market structure where patients can be referred to the hospital with the lowest waiting times. We investigate the effect of a higher degree of substitutability among the two hospitals on equilibrium supply, waiting time and the size of the waiting list. The degree of substitutability is interpreted as the degree of choice or the extent to which patients can switch from one hospital to the other. We show that the greater the degree of substitutability among hospitals, the lower is the supply and the higher the waiting time. The effect on waiting list size is ambiguous. This result holds either when the hospital is remunerated with a fixed budget or with activity-based funding. However, the reduction in supply and the increase in waiting time generated by higher substitutability are higher when hospitals are remunerated with fixed budgets. The main implication of the model is that, under certain assumptions, policies aimed at increasing provider choice may fail to reduce waiting times. Copyright © 2004 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.888
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 14 (2005)
Issue (Month): 1 ()
Pages: 17-23

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Handle: RePEc:wly:hlthec:v:14:y:2005:i:1:p:17-23

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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References

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  1. Martin, Stephen & Smith, Peter C., 1999. "Rationing by waiting lists: an empirical investigation," Journal of Public Economics, Elsevier, Elsevier, vol. 71(1), pages 141-164, January.
  2. repec:rus:hseeco:122140 is not listed on IDEAS
  3. Hugh Gravelle & Peter Smith & Ana Xavier, 2003. "Performance signals in the public sector: the case of health care," Oxford Economic Papers, Oxford University Press, vol. 55(1), pages 81-103, January.
  4. De Fraja, Giovanni, 1993. "Relaxing spatial competition through product line choice (or vice versa)," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 23(4), pages 461-486, September.
  5. Iversen, Tor, 1993. "A theory of hospital waiting lists," Journal of Health Economics, Elsevier, Elsevier, vol. 12(1), pages 55-71, April.
  6. 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.
  7. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
  8. Lindsay, Cotton M & Feigenbaum, Bernard, 1984. "Rationing by Waiting Lists," American Economic Review, American Economic Association, American Economic Association, vol. 74(3), pages 404-17, June.
  9. Vives, Xavier, 1985. "On the efficiency of Bertrand and Cournot equilibria with product differentation," Journal of Economic Theory, Elsevier, Elsevier, vol. 36(1), pages 166-175, June.
  10. Diane Dawson, 1994. "Costs and prices in the internal market: markets vs the NHS Management Executive Guidelines," Working Papers, Centre for Health Economics, University of York 115chedp, Centre for Health Economics, University of York.
  11. Cullis, John G. & Jones, Philip R. & Propper, Carol, 2000. "Waiting lists and medical treatment: Analysis and policies," Handbook of Health Economics, Elsevier, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 23, pages 1201-1249 Elsevier.
  12. Iversen, Tor, 1997. "The effect of a private sector on the waiting time in a national health service," Journal of Health Economics, Elsevier, Elsevier, vol. 16(4), pages 381-396, August.
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Citations

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Cited by:
  1. Luigi Siciliani, 2008. "A note on the dynamic interaction between waiting times and waiting lists," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 17(5), pages 639-647.
  2. Brekke, Kurt R. & Siciliani, Luigi & Straume, Odd Rune, 2008. "Competition and waiting times in hospital markets," Journal of Public Economics, Elsevier, Elsevier, vol. 92(7), pages 1607-1628, July.
  3. Fabrizio Iacone & Steve Martin & Luigi Siciliani & Peter C. Smith, 2012. "Modelling the dynamics of a public health care system: evidence from time-series data," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 44(23), pages 2955-2968, August.
  4. Merehau Cindy Mervin & Sukhan Jackson, 2009. "How can we improve waiting time for elective surgery in Australian public hospitals?," Discussion Papers Series 387, School of Economics, University of Queensland, Australia.
  5. Kurt R. Brekke & Lars S�rgard, 2007. "Public versus private health care in a national health service," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 16(6), pages 579-601.
  6. Hugh Gravelle & Luigi Siciliani, 2006. "Is Waiting-time Prioritisation Welfare Improving?," Discussion Papers, Department of Economics, University of York 06/13, Department of Economics, University of York.
  7. Jacqueline O'Reilly & Miriam M. Wiley, 2008. "How Local is Hospital Treatment? An Exploratory Analysis of Public/Private Variation in Location of Treatment in Irish Acute Public Hospitals," Papers, Economic and Social Research Institute (ESRI) WP237, Economic and Social Research Institute (ESRI).
  8. Andritsos, Dimitrios A. & Tang, Christopher S., 2014. "Introducing competition in healthcare services: The role of private care and increased patient mobility," European Journal of Operational Research, Elsevier, Elsevier, vol. 234(3), pages 898-909.
  9. Luigi Siciliani & Anderson Stanciole & Rowena Jacobs, 2008. "Do waiting times reduce hospital costs?," Discussion Papers, Department of Economics, University of York 08/02, Department of Economics, University of York.
  10. Hiroshi Aiura, 2013. "Inter-regional competition and quality in hospital care," The European Journal of Health Economics, Springer, Springer, vol. 14(3), pages 515-526, June.
  11. Dixon, Huw & Siciliani, Luigi, 2009. "Waiting-time targets in the healthcare sector: How long are we waiting?," Journal of Health Economics, Elsevier, Elsevier, vol. 28(6), pages 1081-1098, December.
  12. Andritsos, Dimitrios A. & Tang, Christopher S., 2013. "The impact of cross-border patient movement on the delivery of healthcare services," International Journal of Production Economics, Elsevier, Elsevier, vol. 145(2), pages 702-712.

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