Healthy competition? Market structure and the quality of clinical care given to standardised patients in Tanzania

The private health care sector in many low- and middle-income countries is rapidly expanding. Private sector advocates have long argued that market competition drives private providers to become more efficient and responsive to patients but empirical studies are limited to mostly high-income settings. We examine whether the number of competing health facilities in close proximity is associated with quality and prices, in a sample of 228 private for-profit and faith-based facilities in Tanzania. Primary data collection took place in the health facilities between February and June 2018. By exploiting data on the quality of clinical care given to unannounced standardised patients, we are able to compare quality across providers without confounding due to patient characteristics. We find that more local competition is associated with poorer clinical quality. The former is driven by an increase in unnecessary care rather than a reduction in appropriate care. Policymakers in such settings should be cautious in assuming that market competition will drive up quality of care.