IDEAS home Printed from https://ideas.repec.org/p/cep/cepdps/dp0988.html
   My bibliography  Save this paper

Does Hospital Competition Improve Efficiency? An Analysis of the Recent Market-Based Reforms to the English NHS

Author

Listed:
  • Zack Cooper
  • Steve Gibbons
  • Simon Jones
  • Alistair McGuire

Abstract

This 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.

Suggested Citation

  • Zack Cooper & Steve Gibbons & Simon Jones & Alistair McGuire, 2010. "Does Hospital Competition Improve Efficiency? An Analysis of the Recent Market-Based Reforms to the English NHS," CEP Discussion Papers dp0988, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp0988
    as

    Download full text from publisher

    File URL: http://cep.lse.ac.uk/pubs/download/dp0988.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Dixon, Jennifer, 2009. "Invisible hand? More like post-modern mush," Health Economics, Policy and Law, Cambridge University Press, vol. 4(4), pages 503-508, October.
    2. 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.
    3. Street, Andrew & Maynard, Alan, 2007. "Activity based financing in England: the need for continual refinement of payment by results," Health Economics, Policy and Law, Cambridge University Press, vol. 2(4), pages 419-427, October.
    4. 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.
    5. Chalkley, Martin & Malcomson, James M, 1998. "Contracting for Health Services with Unmonitored Quality," Economic Journal, Royal Economic Society, vol. 108(449), pages 1093-1110, July.
    6. Daniel P. Kessler & Mark B. McClellan, 2000. "Is Hospital Competition Socially Wasteful?," The Quarterly Journal of Economics, Oxford University Press, vol. 115(2), pages 577-615.
    7. Burgess, Simon & Propper, Carol & Wilson, Deborah, 2005. "Extending Choice In English Health Care: The implications of the economic evidence," CEPR Discussion Papers 5328, C.E.P.R. Discussion Papers.
    8. repec:fth:prinin:300 is not listed on IDEAS
    9. Fenn, Paul & Davies, Philip, 1990. "Variations in length of stay : A conditional likelihood approach," Journal of Health Economics, Elsevier, vol. 9(2), pages 223-234, September.
    10. Le Grand, Julian, 2009. "Choice and competition in publicly funded health care," Health Economics, Policy and Law, Cambridge University Press, vol. 4(4), pages 479-488, October.
    11. Martin, Stephen & Smith, Peter, 1996. "Explaining variations in inpatient length of stay in the National Health Service," Journal of Health Economics, Elsevier, vol. 15(3), pages 279-304, June.
    12. Hunter, David J., 2009. "The case against choice and competition," Health Economics, Policy and Law, Cambridge University Press, vol. 4(4), pages 489-501, October.
    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. Simon Jones & Jessica Wardlaw & Susan Crouch & Michelle Carolan, 2011. "Modelling catchment areas for secondary care providers: a case study," Health Care Management Science, Springer, vol. 14(3), pages 253-261, 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. Michiel Bijlsma & Pierre Koning & Victoria Shestalova & Ali Aouragh, 2010. "The effect of competition on process and outcome quality of hospital care: An empirical analysis for the Netherlands," CPB Discussion Paper 157, CPB Netherlands Bureau for Economic Policy Analysis.
    4. Helmut Herwartz & Christoph Strumann, 2014. "Hospital efficiency under prospective reimbursement schemes: an empirical assessment for the case of Germany," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(2), pages 175-186, March.
    5. MORIKAWA Masayuki, 2010. "Economies of Scale and Hospital Productivity: An empirical analysis of medical area level panel data," Discussion papers 10050, Research Institute of Economy, Trade and Industry (RIETI).
    6. Corry, Dan & Valero, Anna & Van Reenen, John, 2011. "UK economic performance since 1997: growth, productivity and jobs," LSE Research Online Documents on Economics 47521, London School of Economics and Political Science, LSE Library.
    7. Charlotte Davies & Paula Lorgelly, 2013. "Hospital Procurement with Concentrated Sellers: A Case Study of Hip Prostheses," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2013-13, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    8. Hacer Özgen Narcı & Yasar A. Ozcan & İsmet Şahin & Menderes Tarcan & Mustafa Narcı, 2015. "An examination of competition and efficiency for hospital industry in Turkey," Health Care Management Science, Springer, vol. 18(4), pages 407-418, December.
    9. Stephen W. Davies & Peter L. Ormosi, 2012. "A Comparative Assessment Of Methodologies Used To Evaluate Competition Policy," Journal of Competition Law and Economics, Oxford University Press, vol. 8(4), pages 769-803.

    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. 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.
    2. Zack Cooper & Stephen Gibbons & Simon Jones & Alistair McGuire, 2012. "Does Competition Improve Public Hospitals' Efficiency? Evidence from a Quasi-Experiment in the English National Health Service," CEP Discussion Papers dp1125, Centre for Economic Performance, LSE.
    3. 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.
    4. 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.
    5. Cooper, Zack & Gibbons, Stephen & Skellern, Matthew, 2018. "Does competition from private surgical centres improve public hospitals' performance? Evidence from the English National Health Service," Journal of Public Economics, Elsevier, vol. 166(C), pages 63-80.
    6. Domenico Lisi & Luigi Siciliani & Odd Rune Straume, 2020. "Hospital competition under pay‐for‐performance: Quality, mortality, and readmissions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(2), pages 289-314, April.
    7. Cookson, Richard & Laudicella, Mauro & Donni, Paolo Li, 2013. "Does hospital competition harm equity? Evidence from the English National Health Service," Journal of Health Economics, Elsevier, vol. 32(2), pages 410-422.
    8. 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.
    9. 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.
    10. 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.
    11. Kurt R. Brekke & Chiara Canta & Luigi Siciliani & Odd Rune Straume, 2018. "Hospital Competition in the National Health Service: Evidence from a Patient Choice Reform," NIPE Working Papers 19/2018, NIPE - Universidade do Minho.
    12. 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.
    13. 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.
    14. Ziad R. Ghandour, 2019. "Public-Private Competition in Regulated Markets," NIPE Working Papers 02/2019, NIPE - Universidade do Minho.
    15. Siciliani, Luigi & Stanciole, Anderson & Jacobs, Rowena, 2009. "Do waiting times reduce hospital costs?," Journal of Health Economics, Elsevier, vol. 28(4), pages 771-780, July.
    16. Laurent Gobillon & Carine Milcent, 2013. "Spatial disparities in hospital performance," Journal of Economic Geography, Oxford University Press, vol. 13(6), pages 1013-1040, November.
    17. De Luca, Giacomo & Lisi, Domenico & Martorana, Marco & Siciliani, Luigi, 2021. "Does higher Institutional Quality improve the Appropriateness of Healthcare Provision?," Journal of Public Economics, Elsevier, vol. 194(C).
    18. Rosella Levaggi & Marcello Montefiori, 2013. "Patient selection in a mixed oligopoly market for health care: the role of the soft budget constraint," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 60(1), pages 49-70, March.
    19. 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.
    20. Clark, Andrew E. & Milcent, Carine, 2018. "Ownership and hospital behaviour: Employment and local unemployment," Social Science & Medicine, Elsevier, vol. 202(C), pages 151-161.

    More about this item

    Keywords

    Hospital Competition; Market Structure; Prospective Payment; Incentive Structure;
    All these keywords.

    JEL classification:

    • 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

    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:cep:cepdps:dp0988. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.