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Giving greater financial independence to hospitals-does it make a difference? The case of English NHS Trusts

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Author Info

  • Giorgia Marini

    (Centre for Health Economics, University of York, York, UK)

  • Marisa Miraldo

    (Centre for Health Economics, University of York, York, UK)

  • Rowena Jacobs

    (Centre for Health Economics, University of York, York, UK)

  • Maria Goddard

    (Centre for Health Economics, University of York, York, UK)

Abstract

In 2003 a new type of provider organisation, the Foundation Trust (FT), was introduced in England, and the best performing NHS hospitals were able to apply for 'Foundation status'. FTs enjoy greater financial flexibility and are subject to less central monitoring and control. The phased introduction of FTs represents an opportunity to examine whether the new financial structures facing FTs have produced any differences in financial performance compared with non-FTs. We use difference in difference methods to examine whether Foundation status had a significant effect on financial management. We find that Foundation status has had a limited impact in terms of acting as an instrument to signal strong financial management of FTs. This result may reflect the relatively early stage of the FT process or may be due to the fact that all types of Trusts are experiencing a challenging financial environment, including the introduction of a prospective payment system. However, we explore the nature of the trends emerging over time and discuss the implications of our findings for policy. Copyright © 2007 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.1292
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Bibliographic Info

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

Volume (Year): 17 (2008)
Issue (Month): 6 ()
Pages: 751-775

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Handle: RePEc:wly:hlthec:v:17:y:2008:i:6:p:751-775

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

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  1. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," NBER Working Papers 6699, National Bureau of Economic Research, Inc.
  2. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November.
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  4. Jeffrey Smith & Petra Todd, 2003. "Does Matching Overcome Lalonde's Critique of Nonexperimental Estimators?," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20035, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  5. Croxson, B. & Propper, C. & Perkins, A., 2001. "Do doctors respond to financial incentives? UK family doctors and the GP fundholder scheme," Journal of Public Economics, Elsevier, vol. 79(2), pages 375-398, February.
  6. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  7. Richard Blundell & Mónica Costa Dias, 2008. "Alternative Approaches to Evaluation in Empirical Microeconomics," CEF.UP Working Papers 0805, Universidade do Porto, Faculdade de Economia do Porto.
  8. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
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Cited by:
  1. Brekke, Kurt R. & Siciliani, Luigi & Straume, Odd Rune, 2012. "Quality competition with profit constraints," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 642-659.
  2. Rossella Verzulli & Rowena Jacobs & Maria Goddard, 2011. "Do hospitals respond to greater autonomy? Evidence from the English NHS," Working Papers 064cherp, Centre for Health Economics, University of York.

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