IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_7661.html
   My bibliography  Save this paper

Dynamic hospital competition under rationing by waiting times

Author

Listed:
  • Luís Sá
  • Luigi Siciliani
  • Odd Rune Straume

Abstract

We develop a dynamic model of hospital competition where (i) waiting times increase if demand exceeds supply; (ii) patients choose a hospital based in part on waiting times; and (iii) hospitals incur waiting time penalties. We show that, whereas policies based on penalties will lead to lower waiting times, policies that promote patient choice will instead lead to higher waiting times. These results are robust to different game-theoretic solution concepts, designs of the hospital penalty structure, and patient utility specifications. Furthermore, waiting time penalties are likely to be more effective in reducing waiting times if they are designed with a linear penalty structure, but the counterproductive effect of patient choice policies is smaller when penalties are convex. These conclusions are partly derived by calibration of our model based on waiting times and elasticities observed in the English NHS for a common treatment (cataract surgery).

Suggested Citation

  • Luís Sá & Luigi Siciliani & Odd Rune Straume, 2019. "Dynamic hospital competition under rationing by waiting times," CESifo Working Paper Series 7661, CESifo.
  • Handle: RePEc:ces:ceswps:_7661
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp7661.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    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. Hoel, Michael & Saether, Erik Magnus, 2003. "Public health care with waiting time: the role of supplementary private health care," Journal of Health Economics, Elsevier, vol. 22(4), pages 599-616, July.
    4. Gravelle, Hugh & Siciliani, Luigi, 2008. "Optimal quality, waits and charges in health insurance," Journal of Health Economics, Elsevier, vol. 27(3), pages 663-674, May.
    5. Gravelle, Hugh & Siciliani, Luigi, 2008. "Ramsey waits: Allocating public health service resources when there is rationing by waiting," Journal of Health Economics, Elsevier, vol. 27(5), pages 1143-1154, September.
    6. Olena Stavrunova & Oleg Yerokhin, 2011. "An Equilibrium Model of Waiting Times for Elective Surgery in NSW Public Hospitals," The Economic Record, The Economic Society of Australia, vol. 87(278), pages 384-398, September.
    7. Brekke, Kurt R. & Siciliani, Luigi & Straume, Odd Rune, 2008. "Competition and waiting times in hospital markets," Journal of Public Economics, Elsevier, vol. 92(7), pages 1607-1628, July.
    8. 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.
    9. Siciliani, Luigi & Moran, Valerie & Borowitz, Michael, 2014. "Measuring and comparing health care waiting times in OECD countries," Health Policy, Elsevier, vol. 118(3), pages 292-303.
    10. Propper Carol & Sutton Matt & Whitnall Carolyn & Windmeijer Frank, 2008. "Did 'Targets and Terror' Reduce Waiting Times in England for Hospital Care?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(2), pages 1-27, January.
    11. Siciliani, Luigi & Rune Straume, Odd & Cellini, Roberto, 2013. "Quality competition with motivated providers and sluggish demand," Journal of Economic Dynamics and Control, Elsevier, vol. 37(10), pages 2041-2061.
    12. MARCHAND, Maurice & SCHROYEN, Fred, 2005. "Can a mixed health care system be desirable on equity grounds?," CORE Discussion Papers RP 1765, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    13. Propper, Carol & Sutton, Matt & Whitnall, Carolyn & Windmeijer, Frank, 2010. "Incentives and targets in hospital care: Evidence from a natural experiment," Journal of Public Economics, Elsevier, vol. 94(3-4), pages 318-335, April.
    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. Peter Sivey, 2012. "The effect of waiting time and distance on hospital choice for English cataract patients," Health Economics, John Wiley & Sons, Ltd., vol. 21(4), pages 444-456, April.
    16. Siciliani, Luigi & Chalkley, Martin & Gravelle, Hugh, 2017. "Policies towards hospital and GP competition in five European countries," Health Policy, Elsevier, vol. 121(2), pages 103-110.
    17. Simões, J. & Augusto, G.F. & Fronteira, I., 2017. "Introduction of freedom of choice for hospital outpatient care in Portugal: Implications and results of the 2016 reform," Health Policy, Elsevier, vol. 121(12), pages 1203-1207.
    18. 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.
    19. Iversen, Tor, 1993. "A theory of hospital waiting lists," Journal of Health Economics, Elsevier, vol. 12(1), pages 55-71, April.
    20. 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.
    21. Brekke, Kurt R. & Cellini, Roberto & Siciliani, Luigi & Straume, Odd Rune, 2010. "Competition and quality in health care markets: A differential-game approach," Journal of Health Economics, Elsevier, vol. 29(4), pages 508-523, July.
    22. Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, number 9780521637329, August.
    23. 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.
    24. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2007. "Competition and Waiting Times in Hospital Markets," CESifo Working Paper Series 2124, CESifo.
    25. Siciliani, Luigi, 2006. "A dynamic model of supply of elective surgery in the presence of waiting times and waiting lists," Journal of Health Economics, Elsevier, vol. 25(5), pages 891-907, September.
    26. Kurt R. Brekke & Roberto Cellini & Luigi Siciliani & Odd Rune Straume, 2012. "Competition in Regulated Markets with Sluggish Beliefs about Quality," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(1), pages 131-178, March.
    27. Maurice March & Fred Schroyen, 2005. "Can a Mixed Health Care System be Desirable on Equity Grounds?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(1), pages 1-23, March.
    28. Lindsay, Cotton M & Feigenbaum, Bernard, 1984. "Rationing by Waiting Lists," American Economic Review, American Economic Association, vol. 74(3), pages 404-417, June.
    29. Hugh Gravelle & Luigi Siciliani, 2008. "Is waiting‐time prioritisation welfare improving?," Health Economics, John Wiley & Sons, Ltd., vol. 17(2), pages 167-184, February.
    30. Yijuan Chen & Juergen Meinecke & Peter Sivey, 2016. "A Theory of Waiting Time Reporting and Quality Signaling," Health Economics, John Wiley & Sons, Ltd., vol. 25(11), pages 1355-1371, November.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    hospital competition; waiting times; patient choice; differential games;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

    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:ces:ceswps:_7661. 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: (Klaus Wohlrabe). General contact details of provider: http://edirc.repec.org/data/cesifde.html .

    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.