IDEAS home Printed from https://ideas.repec.org/p/chy/respap/144cherp.html
   My bibliography  Save this paper

Do hospitals respond to rivals’ quality and efficiency? a spatial econometrics approach

Author

Listed:
  • Francesco Longo

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

  • Luigi Siciliani

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

  • Hugh Gravelle

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

  • Rita Santos

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

Abstract

We investigate whether hospitals in the English National Health Service increase their quality (mortality, emergency readmissions, patient reported outcome, and patient satisfaction) or efficiency (bed occupancy rate, cancelled operations, and cost indicators) in response to an increase in quality or efficiency of neighbouring hospitals. We estimate spatial cross-sectional and panel data models, including spatial cross-sectional instrumental variables. Hospitals generally do not respond to neighbours’ quality and efficiency. This suggests the absence of spillovers across hospitals in quality and efficiency dimensions and has policy implications, for example, in relation to allowing hospital mergers.

Suggested Citation

  • Francesco Longo & Luigi Siciliani & Hugh Gravelle & Rita Santos, 2017. "Do hospitals respond to rivals’ quality and efficiency? a spatial econometrics approach," Working Papers 144cherp, Centre for Health Economics, University of York.
    • Handle: RePEc:chy:respap:144cherp
    as

    Download full text from publisher

    File URL: https://www.york.ac.uk/media/che/documents/papers/researchpapers/CHERP144_hospital_quality_efficiency_spatial_econometrics.pdf
    File Function: First version, 2017
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kelejian, Harry H & Prucha, Ingmar R, 1999. "A Generalized Moments Estimator for the Autoregressive Parameter in a Spatial Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(2), pages 509-533, May.
    2. Martin Gaynor & Rodrigo Moreno-Serra & Carol Propper, 2013. "Death by Market Power: Reform, Competition, and Patient Outcomes in the National Health Service," American Economic Journal: Economic Policy, American Economic Association, vol. 5(4), pages 134-166, November.
    3. Gaynor, Martin & Laudicella, Mauro & Propper, Carol, 2012. "Can governments do it better? Merger mania and hospital outcomes in the English NHS," Journal of Health Economics, Elsevier, vol. 31(3), pages 528-543.
    4. Carol Propper & Simon Burgess & Denise Gossage, 2008. "Competition and Quality: Evidence from the NHS Internal Market 1991–9," Economic Journal, Royal Economic Society, vol. 118(525), pages 138-170, January.
    5. Nicholas Bloom & Carol Propper & Stephan Seiler & John Van Reenen, 2015. "The Impact of Competition on Management Quality: Evidence from Public Hospitals," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(2), pages 457-489.
    6. Charles F. Manski, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(3), pages 531-542.
    7. Daniel P. Kessler & Jeffrey J. Geppert, 2005. "The Effects of Competition on Variation in the Quality and Cost of Medical Care," NBER Working Papers 11226, National Bureau of Economic Research, Inc.
    8. Kelejian, Harry H & Prucha, Ingmar R, 1998. "A Generalized Spatial Two-Stage Least Squares Procedure for Estimating a Spatial Autoregressive Model with Autoregressive Disturbances," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 99-121, July.
    9. Rumbold, Benedict E. & Smith, Judith A. & Hurst, Jeremy & Charlesworth, Anita & Clarke, Aileen, 2015. "Improving productive efficiency in hospitals: findings from a review of the international evidence," Health Economics, Policy and Law, Cambridge University Press, vol. 10(1), pages 21-43, January.
    10. Daniel P. Kessler & Jeffrey J. Geppert, 2005. "The Effects of Competition on Variation in the Quality and Cost of Medical Care," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(3), pages 575-589, September.
    11. Paul L. Joskow, 1980. "The Effects of Competition and Regulation on Hospital Bed Supply and the Reservation Quality of the Hospital," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 421-447, Autumn.
    12. Gaynor, Martin, 2007. "Competition and Quality in Health Care Markets," Foundations and Trends(R) in Microeconomics, now publishers, vol. 2(6), pages 441-508, February.
    13. Cooper, Zack & Gibbons, Stephen & Jones, Simon & McGuire, Alistair, 2012. "Does competition improve public hospitals’ efficiency?: evidence from a quasi-experiment in the English National Health Service," LSE Research Online Documents on Economics 42057, London School of Economics and Political Science, LSE Library.
    14. Zack Cooper & Stephen Gibbons & Simon Jones & Alistair McGuire, 2011. "Does Hospital Competition Save Lives? Evidence From The English NHS Patient Choice Reforms," Economic Journal, Royal Economic Society, vol. 121(554), pages 228-260, August.
    15. Lee Mobley & H. E. Frech & Luc Anselin, 2009. "Spatial Interaction, Spatial Multipliers and Hospital Competition," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 16(1), pages 1-17.
    16. Francesco Moscone & Elisa Tosetti & Martin Knapp, 2007. "Sur model with spatial effects: an application to mental health expenditure," Health Economics, John Wiley & Sons, Ltd., vol. 16(12), pages 1403-1408, December.
    17. Daniel P. Kessler & Mark B. McClellan, 2000. "Is Hospital Competition Socially Wasteful?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(2), pages 577-615.
    18. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    19. Zuckerman, Stephen & Hadley, Jack & Iezzoni, Lisa, 1994. "Measuring hospital efficiency with frontier cost functions," Journal of Health Economics, Elsevier, vol. 13(3), pages 255-280, October.
    20. Propper, Carol & Burgess, Simon & Green, Katherine, 2004. "Does competition between hospitals improve the quality of care?: Hospital death rates and the NHS internal market," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1247-1272, July.
    21. Hugh Gravelle & Giuseppe Moscelli & Rita Santos & Luigi Siciliani, 2014. "Patient choice and the effects of hospital market structure on mortality for AMI, hip fracture and stroke patients," Working Papers 106cherp, Centre for Health Economics, University of York.
    22. Anil Bamezai & Jack Zwanziger & Glenn A. Melnick & Joyce M. Mann, 1999. "Price competition and hospital cost growth in the United States (1989–1994)," Health Economics, John Wiley & Sons, Ltd., vol. 8(3), pages 233-243, May.
    23. Choné, P. & Coudin, É. & Pla, A., 2014. "Are physician fees responsive to competition?," Health, Econometrics and Data Group (HEDG) Working Papers 14/20, HEDG, c/o Department of Economics, University of York.
    24. James Gaughan & Hugh Gravelle & Luigi Siciliani, 2015. "Testing the Bed‐Blocking Hypothesis: Does Nursing and Care Home Supply Reduce Delayed Hospital Discharges?," Health Economics, John Wiley & Sons, Ltd., vol. 24(S1), pages 32-44, March.
    25. Mobley, Lee R., 2003. "Estimating hospital market pricing: an equilibrium approach using spatial econometrics," Regional Science and Urban Economics, Elsevier, vol. 33(4), pages 489-516, July.
    26. Federico Belotti & Gordon Hughes & Andrea Piano Mortari, 2013. "XSMLE: Stata module for spatial panel data models estimation," Statistical Software Components S457610, Boston College Department of Economics, revised 07 Jun 2017.
    27. Francesco Moscone & Elisa Tosetti & Martin Knapp, 2007. "Sur model with spatial effects: an application to mental health expenditure," Health Economics, John Wiley & Sons, Ltd., vol. 16(12), pages 1403-1408.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ghandour, Ziad & Siciliani, Luigi & Straume, Odd Rune, 2022. "Investment and quality competition in healthcare markets," Journal of Health Economics, Elsevier, vol. 82(C).
    2. Wuckel, Christiane, 2022. "The impact of structural and strategic competition on hospital quality," Ruhr Economic Papers 959, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    3. Meilin Möllenkamp & Benedetta Pongiglione & Stefan Rabbe & Aleksandra Torbica & Jonas Schreyögg, 2022. "Spillover effects and other determinants of medical device uptake in the presence of a medical guideline: An analysis of drug‐eluting stents in Germany and Italy," Health Economics, John Wiley & Sons, Ltd., vol. 31(S1), pages 157-178, September.
    4. Vidoli, Francesco & Pignataro, Giacomo & Benedetti, Roberto, 2022. "Identification of spatial regimes of the production function of Italian hospitals through spatially constrained cluster-wise regression," Socio-Economic Planning Sciences, Elsevier, vol. 82(PA).
    5. Matteo Lippi Bruni & Irene Mammi, 2017. "Spatial effects in hospital expenditures: A district level analysis," Health Economics, John Wiley & Sons, Ltd., vol. 26(S2), pages 63-77, September.
    6. Lisi, D.; Moscone, F.; Tosetti, E.; Vinciotti, V.;, 2017. "Hospital interdependence in a competitive institutional environment: Evidence from Italy," Health, Econometrics and Data Group (HEDG) Working Papers 17/07, HEDG, c/o Department of Economics, University of York.
    7. Laia Bosque-Mercader & Luigi Siciliani, 2023. "The association between bed occupancy rates and hospital quality in the English National Health Service," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 24(2), pages 209-236, March.
    8. Lisi, Domenico & Moscone, Francesco & Tosetti, Elisa & Vinciotti, Veronica, 2021. "Hospital quality interdependence in a competitive institutional environment: Evidence from Italy," Regional Science and Urban Economics, Elsevier, vol. 89(C).
    9. Benjamin Montmartin & Marcos Herrera-Gomez, 2022. "Imitative Pricing: The Importance of Neighborhood Effects in Physicians' Consultation Prices," GREDEG Working Papers 2022-02, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    10. Laura Botega & Mônica Viegas Andrade & Gilvan Ramalho Guedes, 2020. "Brazilian hospitals’ performance: an assessment of the unified health system (SUS)," Health Care Management Science, Springer, vol. 23(3), pages 443-452, September.
    11. Montmartin, Benjamin & Herrera-Gómez, Marcos, 2023. "Spatial dependence in physicians’ prices and additional fees: Evidence from France," Journal of Health Economics, Elsevier, vol. 88(C).
    12. Cavalieri, M.; Di Caro, P.; Guccio, C.; Lisi, D.;, 2017. "Does neighbour’s grass matter? Exploring spatial dependent heterogeneity in technical efficiency of Italian hospitals," Health, Econometrics and Data Group (HEDG) Working Papers 17/13, HEDG, c/o Department of Economics, University of York.
    13. Roberto Cellini & Tiziana Cuccia & Domenico Lisi, 2020. "Spatial dependence in museum services: an analysis of the Italian case," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 44(4), pages 535-562, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Francesco Longo & Luigi Siciliani & Hugh Gravelle & Rita Santos, 2017. "Do hospitals respond to rivals' quality and efficiency? A spatial panel econometric analysis," Health Economics, John Wiley & Sons, Ltd., vol. 26(S2), pages 38-62, September.
    2. Zack Cooper & Stephen Gibbons & Simon Jones & Alistair McGuire, 2011. "Does Hospital Competition Save Lives? Evidence From The English NHS Patient Choice Reforms," Economic Journal, Royal Economic Society, vol. 121(554), pages 228-260, August.
    3. Francesco Longo & Luigi Siciliani & Giuseppe Moscelli & Hugh Gravelle, 2019. "Does hospital competition improve efficiency? The effect of the patient choice reform in England," Health Economics, John Wiley & Sons, Ltd., vol. 28(5), pages 618-640, May.
    4. Gravelle, Hugh & Santos, Rita & Siciliani, Luigi, 2014. "Does a hospital's quality depend on the quality of other hospitals? A spatial econometrics approach," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 203-216.
    5. Anne-Fleur Roos & Eddy van Doorslaer & Owen O'Donnell & Erik Schut & Marco Varkevisser, 2018. "Does price competition damage healthcare quality?," Tinbergen Institute Discussion Papers 18-040/V, Tinbergen Institute.
    6. Brekke, Kurt R. & Canta, Chiara & Siciliani, Luigi & Straume, Odd Rune, 2021. "Hospital competition in a national health service: Evidence from a patient choice reform," Journal of Health Economics, Elsevier, vol. 79(C).
    7. Roos, Anne-Fleur & O’Donnell, Owen & Schut, Frederik T. & Van Doorslaer, Eddy & Van Gestel, Raf & Varkevisser, Marco, 2020. "Does price deregulation in a competitive hospital market damage quality?," Journal of Health Economics, Elsevier, vol. 72(C).
    8. Jens Dietrichson & Lina Maria Ellegård & Gustav Kjellsson, 2020. "Patient choice, entry, and the quality of primary care: Evidence from Swedish reforms," Health Economics, John Wiley & Sons, Ltd., vol. 29(6), pages 716-730, June.
    9. Pan, Jay & Qin, Xuezheng & Li, Qian & Messina, Joseph P. & Delamater, Paul L., 2015. "Does hospital competition improve health care delivery in China?," China Economic Review, Elsevier, vol. 33(C), pages 179-199.
    10. Piia Pekola & Ismo Linnosmaa & Hennamari Mikkola, 2017. "Competition and quality in a physiotherapy market with fixed prices," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(1), pages 97-117, January.
    11. Giuseppe Moscelli & Hugh Gravelle & Luigi Siciliani, 2016. "Market structure, patient choice and hospital quality for elective patients," Working Papers 139cherp, Centre for Health Economics, University of York.
    12. Giuseppe Moscelli & Hugh Gravelle & Luigi Siciliani, 2018. "Effects of Market Structure and Patient Choice on Hospital Quality for Planned Patients," School of Economics Discussion Papers 1118, School of Economics, University of Surrey.
    13. Moscelli, Giuseppe & Gravelle, Hugh & Siciliani, Luigi & Santos, Rita, 2018. "Heterogeneous effects of patient choice and hospital competition on mortality," Social Science & Medicine, Elsevier, vol. 216(C), pages 50-58.
    14. Abe Dunn & Adam Hale Shapiro, 2018. "Physician Competition and the Provision of Care: Evidence from Heart Attacks," American Journal of Health Economics, MIT Press, vol. 4(2), pages 226-261, Spring.
    15. Hugh Gravelle & Giuseppe Moscelli & Rita Santos & Luigi Siciliani, 2014. "Patient choice and the effects of hospital market structure on mortality for AMI, hip fracture and stroke patients," Working Papers 106cherp, Centre for Health Economics, University of York.
    16. Paolo Berta & Gianmaria Martini & Francesco Moscone & Giorgio Vittadini, 2016. "The association between asymmetric information, hospital competition and quality of healthcare: evidence from Italy," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 179(4), pages 907-926, October.
    17. Wuckel, Christiane, 2022. "The impact of structural and strategic competition on hospital quality," Ruhr Economic Papers 959, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    18. Guccio, C. & Lisi, D. & Martorana, M.F. & Pignataro, G., 2020. "Incorporating quality in the efficiency assessment of hospitals using a generalized directional distance function approach," Health, Econometrics and Data Group (HEDG) Working Papers 20/17, HEDG, c/o Department of Economics, University of York.
    19. Bergman, Mats A. & Johansson, Per & Lundberg, Sofia & Spagnolo, Giancarlo, 2016. "Privatization and quality: Evidence from elderly care in Sweden," Journal of Health Economics, Elsevier, vol. 49(C), pages 109-119.
    20. Martin Gaynor & Rodrigo Moreno-Serra & Carol Propper, 2013. "Death by Market Power: Reform, Competition, and Patient Outcomes in the National Health Service," American Economic Journal: Economic Policy, American Economic Association, vol. 5(4), pages 134-166, November.

    More about this item

    Keywords

    quality; efficiency; hospitals; competition; spatial econometrics;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:chy:respap:144cherp. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gill Forder (email available below). General contact details of provider: https://edirc.repec.org/data/chyoruk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.