Does Hospital Competition Improve Efficiency? An Analysis of the Recent Market-Based Reforms to the English NHS
AbstractThis paper uses a difference-in-difference estimator to test whether the introduction of patient choice and hospital competition in the English NHS in January 2006 has prompted hospitals to become more efficient. Efficiency was measured using hospitals' average length of stay (LOS) for patients undergoing elective hip replacement. LOS was broken down into its two key components: the time from a patient's admission until their surgery and the time from their surgery until their discharge. Our results illustrate that hospitals exposed to competition after a wave of market-based reforms took steps to shorten the time patients were in the hospital prior to their surgery, which resulted in a decrease in overall LOS. We find that hospitals shortened patients' LOS without compromising patient outcomes or by operating on healthier, wealthier or younger patients. Our results suggest that hospital competition within markets with fixed prices can increase hospital efficiency.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0988.
Date of creation: Jun 2010
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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP
Hospital Competition; Market Structure; Prospective Payment; Incentive Structure;
Other versions of this item:
- Zack Cooper & Stephen Gibbons & Simon Jones & Alistair McGuire, 2010. "Does hospital competition improve efficiency? An analysis of the recent market-based reforms to the English NHS," LSE Research Online Documents on Economics 28578, London School of Economics and Political Science, LSE Library.
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-10 (All new papers)
- NEP-COM-2010-07-10 (Industrial Competition)
- NEP-EUR-2010-07-10 (Microeconomic European Issues)
- NEP-HEA-2010-07-10 (Health Economics)
- NEP-IND-2010-07-10 (Industrial Organization)
- NEP-REG-2010-07-10 (Regulation)
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