IDEAS home Printed from https://ideas.repec.org/p/chy/respap/162cherp.html
   My bibliography  Save this paper

Effects of market structure and patient choice on hospital quality for planned patients

Author

Listed:
  • Giuseppe Moscelli

    (Economics of Social and Health Care Research Unit, Centre for Health Economics,University of York, UK and School of Economics, University of Surrey, Guildford, UK.)

  • Hugh Gravelle

    (Economics of Social and Health Care Research Unit, Centre for Health Economics, University of York, UK)

  • Luigi Siciliani

    (Economics of Social and Health Care Research Unit, Centre for Health Economics, University of York, UK and Department of Economics and Related Studies, University of York, York, UK)

Abstract

We investigate the change in the effect of market structure on planned hospital quality for three high-volume treatments, using a quasi difference in differences approach based on the relaxation of patient constraints on hospital choice in England. We employ control functions to allow for timevarying endogeneity from unobserved patient characteristics. We find that the choice reforms reduced quality for hip and knee replacement but not for coronary bypass. This is likely due to hospitals making a larger loss on hip and knee replacements, since robustness checks rule out changes in length of stay, new competitors’ entry and hospital-level mortality as possible confounders.

Suggested Citation

  • Giuseppe Moscelli & Hugh Gravelle & Luigi Siciliani, 2019. "Effects of market structure and patient choice on hospital quality for planned patients," Working Papers 162cherp, Centre for Health Economics, University of York.
    • Handle: RePEc:chy:respap:162cherp
    as

    Download full text from publisher

    File URL: https://www.york.ac.uk/media/che/documents/papers/researchpapers/CHERP162_patient_choice_hospital_quality.pdf
    File Function: First version, 2019
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Paulo Guimarães & Octávio Figueirdo & Douglas Woodward, 2003. "A Tractable Approach to the Firm Location Decision Problem," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 201-204, February.
    2. David Card, 1992. "Using Regional Variation in Wages to Measure the Effects of the Federal Minimum Wage," Working Papers 680, Princeton University, Department of Economics, Industrial Relations Section..
    3. 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.
    4. Giorgia Marini & Marisa Miraldo & Rowena Jacobs & Maria Goddard, 2008. "Giving greater financial independence to hospitals—does it make a difference? The case of English NHS Trusts," Health Economics, John Wiley & Sons, Ltd., vol. 17(6), pages 751-775, June.
    5. 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.
    6. 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.
    7. 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.
    8. Jerry Hausman, 2001. "Mismeasured Variables in Econometric Analysis: Problems from the Right and Problems from the Left," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 57-67, Fall.
    9. 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.
    10. Richard Blundell & Monica Costa Dias, 2009. "Alternative Approaches to Evaluation in Empirical Microeconomics," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
    11. Moscelli, Giuseppe & Gravelle, Hugh & Siciliani, Luigi & Gutacker, Nils, 2018. "The effect of hospital ownership on quality of care: Evidence from England," Journal of Economic Behavior & Organization, Elsevier, vol. 153(C), pages 322-344.
    12. Alberto Abadie, 2005. "Semiparametric Difference-in-Differences Estimators," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(1), pages 1-19.
    13. Mark Dusheiko & Hugh Gravelle, 2015. "Choosing and booking – and attending? Impact of an electronic booking system on outpatient referrals and non-attendances," Working Papers 116cherp, Centre for Health Economics, University of York.
    14. Kurt R. Brekke & Hugh Gravelle & Luigi Siciliani & Odd Rune Straume, 2014. "Patient Choice, Mobility and Competition Among Health Care Providers," Developments in Health Economics and Public Policy, in: Rosella Levaggi & Marcello Montefiori (ed.), Health Care Provision and Patient Mobility, edition 127, pages 1-26, Springer.
    15. Martin Gaynor, "undated". "What Do We Know About Competition and Quality in Health Care Markets?," GSIA Working Papers 2006-E62, Carnegie Mellon University, Tepper School of Business.
    16. Moscelli, Giuseppe & Siciliani, Luigi & Gutacker, Nils & Cookson, Richard, 2018. "Socioeconomic inequality of access to healthcare: Does choice explain the gradient?," Journal of Health Economics, Elsevier, vol. 57(C), pages 290-314.
    17. Giuseppe Moscelli & Luigi Siciliani & Nils Gutacker & Hugh Gravelle, 2016. "Location, quality and choice of hospital: Evidence from England 2002/3 - 2012/13," Working Papers 123cherp, Centre for Health Economics, University of York.
    18. Murphy, Kevin M & Topel, Robert H, 2002. "Estimation and Inference in Two-Step Econometric Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 88-97, January.
    19. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 2-16, January.
    20. 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.
    21. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    22. Nathan E. Wilso, 2016. "Market Structure as a Determinant of Patient Care Quality," American Journal of Health Economics, University of Chicago Press, vol. 2(2), pages 241-271, Spring.
    23. Martin Gaynor & Carol Propper & Stephan Seiler, 2016. "Free to Choose? Reform, Choice, and Consideration Sets in the English National Health Service," American Economic Review, American Economic Association, vol. 106(11), pages 3521-3557, November.
    24. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, April.
    25. 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.
    26. 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.
    27. David Card, 1992. "Using Regional Variation in Wages to Measure the Effects of the Federal Minimum Wage," ILR Review, Cornell University, ILR School, vol. 46(1), pages 22-37, October.
    28. Terza, Joseph V. & Basu, Anirban & Rathouz, Paul J., 2008. "Two-stage residual inclusion estimation: Addressing endogeneity in health econometric modeling," Journal of Health Economics, Elsevier, vol. 27(3), pages 531-543, May.
    29. Moscelli, Giuseppe & Siciliani, Luigi & Gutacker, Nils & Gravelle, Hugh, 2016. "Location, quality and choice of hospital: Evidence from England 2002–2013," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 112-124.
    30. Gowrisankaran, Gautam & Town, Robert J., 1999. "Estimating the quality of care in hospitals using instrumental variables," Journal of Health Economics, Elsevier, vol. 18(6), pages 747-767, December.
    31. 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.
    32. repec:fth:prinin:300 is not listed on IDEAS
    33. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    34. Katja Grašič & Anne Mason & Andrew Street, 2015. "Paying for the quantity and quality of hospital care: the foundations and evolution of payment policy in England," Health Economics Review, Springer, vol. 5(1), pages 1-10, December.
    35. Rosella Levaggi & Marcello Montefiori (ed.), 2014. "Health Care Provision and Patient Mobility," Developments in Health Economics and Public Policy, Springer, edition 127, number 978-88-470-5480-6, April.
    36. 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.
    37. William Greene, 2004. "The behaviour of the maximum likelihood estimator of limited dependent variable models in the presence of fixed effects," Econometrics Journal, Royal Economic Society, vol. 7(1), pages 98-119, June.
    38. Carrie Colla & Julie Bynum & Andrea Austin & Jonathan Skinner, 2016. "Hospital Competition, Quality, and Expenditures in the U.S. Medicare Population," NBER Working Papers 22826, National Bureau of Economic Research, Inc.
    39. Manuel Gomes & Nils Gutacker & Chris Bojke & Andrew Street, 2016. "Addressing Missing Data in Patient‐Reported Outcome Measures (PROMS): Implications for the Use of PROMS for Comparing Provider Performance," Health Economics, John Wiley & Sons, Ltd., vol. 25(5), pages 515-528, May.
    40. Meyer, Bruce D, 1995. "Natural and Quasi-experiments in Economics," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 151-161, April.
    41. 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.
    42. Matthew Skellern, 2017. "The hospital as a multi-product firm: the effect of hospital competition on value-added indicators of clinical quality," CEP Discussion Papers dp1484, Centre for Economic Performance, LSE.
    43. John Geweke & Gautam Gowrisankaran & Robert J. Town, 2003. "Bayesian Inference for Hospital Quality in a Selection Model," Econometrica, Econometric Society, vol. 71(4), pages 1215-1238, July.
    44. Søren Rud Kristensen, 2017. "Financial Penalties for Performance in Health Care," Health Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 143-148, February.
    45. Anirban Basu & Norma B. Coe & Cole G. Chapman, 2018. "2SLS versus 2SRI: Appropriate methods for rare outcomes and/or rare exposures," Health Economics, John Wiley & Sons, Ltd., vol. 27(6), pages 937-955, June.
    46. A. Colin Cameron & Douglas L. Miller, 2015. "A Practitioner’s Guide to Cluster-Robust Inference," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 317-372.
    47. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice: Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 27-28, January.
    48. Shen, Yu-Chu, 2003. "The effect of financial pressure on the quality of care in hospitals," Journal of Health Economics, Elsevier, vol. 22(2), pages 243-269, March.
    49. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-338, May.
    50. Hugh Gravelle & Rita Santos & Luigi Siciliani & Rosalind Goudie, 2012. "Hospital Quality Competition Under Fixed Prices," Working Papers 080cherp, Centre for Health Economics, University of York.
    51. Lancaster, Tony, 2000. "The incidental parameter problem since 1948," Journal of Econometrics, Elsevier, vol. 95(2), pages 391-413, April.
    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. Martini, Gianmaria & Levaggi, Rosella & Spinelli, Daniele, 2022. "Is there a bias in patient choices for hospital care? Evidence from three Italian regional health systems," Health Policy, Elsevier, vol. 126(7), pages 668-679.
    2. Sá, Luís & Siciliani, Luigi & Straume, Odd Rune, 2019. "Dynamic hospital competition under rationing by waiting times," Journal of Health Economics, Elsevier, vol. 66(C), pages 260-282.
    3. Gravelle, Hugh & Liu, Dan & Propper, Carol & Santos, Rita, 2019. "Spatial competition and quality: Evidence from the English family doctor market," Journal of Health Economics, Elsevier, vol. 68(C).
    4. Gaughan, James & Siciliani, Luigi & Gravelle, Hugh & Moscelli, Giuseppe, 2020. "Do small hospitals have lower quality? Evidence from the English NHS," Social Science & Medicine, Elsevier, vol. 265(C).
    5. 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.
    6. 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.
    7. Moscelli, Giuseppe & Gravelle, Hugh & Siciliani, Luigi, 2023. "The effect of hospital choice and competition on inequalities in waiting times," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 169-201.
    8. 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).
    9. Pedro Pita Barros, 2022. "Quality decreases from introducing patient choice in a National Health Service," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 21(3), pages 351-381, September.
    10. David G. Lugo‐Palacios & Jonathan M. Clarke & Søren Rud Kristensen, 2023. "Back to basics: A mediation analysis approach to addressing the fundamental questions of integrated care evaluations," Health Economics, John Wiley & Sons, Ltd., vol. 32(9), pages 2080-2097, September.

    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. Giuseppe Moscelli & Hugh Gravelle & Luigi Siciliani, 2021. "Hospital competition and quality for non‐emergency patients in the English NHS," RAND Journal of Economics, RAND Corporation, vol. 52(2), pages 382-414, June.
    2. 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.
    3. Moscelli, Giuseppe & Gravelle, Hugh & Siciliani, Luigi, 2023. "The effect of hospital choice and competition on inequalities in waiting times," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 169-201.
    4. 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.
    5. 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.
    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. 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.
    8. 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).
    9. 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.
    10. 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.
    11. 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.
    12. Lippi Bruni, Matteo & Ugolini, Cristina & Verzulli, Rossella, 2021. "Should I wait or should I go? Travelling versus waiting for better healthcare," Regional Science and Urban Economics, Elsevier, vol. 89(C).
    13. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, in: Mark V. Pauly & Thomas G. Mcguire & Pedro P. Barros (ed.), Handbook of Health Economics, volume 2, chapter 0, pages 499-637, Elsevier.
    14. Siciliani, Luigi & Straume, Odd Rune, 2019. "Competition and equity in health care markets," Journal of Health Economics, Elsevier, vol. 64(C), pages 1-14.
    15. 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.
    16. Rachet-Jacquet, Laurie & Gutacker, Nils & Siciliani, Luigi, 2021. "Scale economies in the health sector: The effect of hospital volume on health gains from hip replacement surgery," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 704-729.
    17. 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.
    18. 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.
    19. 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.
    20. Carine Milcent, 0. "Competition in French hospital: Does it impact the patient management in healthcare?," Journal of Economic Analysis, Anser Press, vol. 0(1), pages 1-1.

    More about this item

    Keywords

    competition; quality; hospital; choice; endogeneity; difference in difference; control function.;
    All these keywords.

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

    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:162cherp. 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.