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Competition in the NHS internal market: an overview of its effects on hospital prices and costs

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Author Info

  • Carol Propper

    (Department of Economics and School for Policy Studies, University of Bristol, UK)

  • Neil Söderlund

    (Centre for Health Policy, University of Witwatersrand, Johannesburg, South Africa)

Abstract

The 1989 reforms of the UK National Health Service (NHS) introduced competition in the supply of hospital services. This paper synthesizes both the theory underlying the introduction of competition into the NHS, and the limited existing evidence on whether competition affects the prices posted by sellers of medical services, and the costs of producing these services. The results indicate high levels of price variability, widespread disregard for average cost pricing rules and some indication that competition had some effect on prices. It appears that lower prices may be offered to smaller purchasers, such as General Practice Fund Holders (GPFH). This effect of competition on price was mirrored, with a delay, in hospital costs. © 1998 John Wiley & Sons, Ltd.

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Bibliographic Info

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

Volume (Year): 7 (1998)
Issue (Month): 3 ()
Pages: 187-197

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Handle: RePEc:wly:hlthec:v:7:y:1998:i:3:p:187-197

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

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Cited by:
  1. 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.
  2. Jostein Grytten & Rune S�rensen, 2000. "Competition and dental services," Health Economics, John Wiley & Sons, Ltd., vol. 9(5), pages 447-461.
  3. Carol Propper, 2012. "Competition, incentives and the English NHS," Health Economics, John Wiley & Sons, Ltd., vol. 21(1), pages 33-40, 01.
  4. Cutler, David M. & Mas, Nuria, 2003. "Comparing non-fatal health across countries: Is the US medical system better?," IESE Research Papers D/525, IESE Business School.
  5. Richard Cookson & Mauro Laudicella & Paolo Li Donni, 2011. "Does hospital competition harm equity? Evidence from the English National Health Service," Working Papers 066cherp, Centre for Health Economics, University of York.
  6. Catherine Goodman & S. Patrick Kachur & Salim Abdulla & Peter Bloland & Anne Mills, 2009. "Concentration and drug prices in the retail market for malaria treatment in rural Tanzania," Health Economics, John Wiley & Sons, Ltd., vol. 18(6), pages 727-742.
  7. Antonio Nicita, 2004. "Il pendolo delle riforme nei sistemi sanitari europei," Working Papers 05-2004, Competitività Regole Mecati (CERM).
  8. Whynes, David K. & Baines, Darrin L., 2002. "Primary care physicians' attitudes to health care reform in England," Health Policy, Elsevier, vol. 60(2), pages 111-132, May.

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