Does more choice reduce waiting times?
This paper develops a model of the supply of elective treatments within a duopolistic market structure where patients can be referred to the hospital with the lowest waiting times. We investigate the effect of a higher degree of substitutability among the two hospitals on equilibrium supply, waiting time and the size of the waiting list. The degree of substitutability is interpreted as the degree of choice or the extent to which patients can switch from one hospital to the other. We show that the greater the degree of substitutability among hospitals, the lower is the supply and the higher the waiting time. The effect on waiting list size is ambiguous. This result holds either when the hospital is remunerated with a fixed budget or with activity-based funding. However, the reduction in supply and the increase in waiting time generated by higher substitutability are higher when hospitals are remunerated with fixed budgets. The main implication of the model is that, under certain assumptions, policies aimed at increasing provider choice may fail to reduce waiting times. Copyright © 2004 John Wiley & Sons, Ltd.
Volume (Year): 14 (2005)
Issue (Month): 1 ()
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References listed on IDEAS
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- Iversen, Tor, 1997. "The effect of a private sector on the waiting time in a national health service," Journal of Health Economics, Elsevier, vol. 16(4), pages 381-396, August.
- repec:rus:hseeco:122140 is not listed on IDEAS
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- Martin, Stephen & Smith, Peter C., 1999. "Rationing by waiting lists: an empirical investigation," Journal of Public Economics, Elsevier, vol. 71(1), pages 141-164, January.
- Diane Dawson, 1994. "Costs and prices in the internal market: markets vs the NHS Management Executive Guidelines," Working Papers 115chedp, Centre for Health Economics, University of York.
- Iversen, Tor, 1993. "A theory of hospital waiting lists," Journal of Health Economics, Elsevier, vol. 12(1), pages 55-71, April.
- Cullis, John G. & Jones, Philip R. & Propper, Carol, 2000. "Waiting lists and medical treatment: Analysis and policies," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 23, pages 1201-1249 Elsevier.
- Hugh Gravelle & Peter Smith & Ana Xavier, 2003. "Performance signals in the public sector: the case of health care," Oxford Economic Papers, Oxford University Press, vol. 55(1), pages 81-103, January.
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