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Free to Choose? Reform and Demand Response in the English National Health Service

  • Gaynor, Martin
  • Propper, Carol
  • Seiler, Stephan

The impacts of choice in public services are controversial. We exploit a reform in the English National Health Service to assess the impact of relaxing constraints on patient choice. We estimate a demand model to evaluate whether increased choice increased demand elasticity faced by hospitals with regard to clinical quality and waiting time for an important surgical procedure. We nd substantial impacts of the removal of restrictions. Patients became more responsive to clinical quality. Sicker patients and better informed patients were more a ected. We leverage our model to calculate potential bene ts. We nd increased demand responsiveness led to a signi cant reduction in mortality and an increase in patient welfare. The elasticity of demand faced by hospitals increased post-reform, giving hospitals potentially large incentives to improve their quality of care and nd suggestive evidence that hospitals responded strongly to the enhanced incentives due to increased demand elasticity. The results suggests greater choice can enhance quality.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9250.

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Date of creation: Dec 2012
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Handle: RePEc:cpr:ceprdp:9250
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  1. Martin Gaynor & William Vogt, 2002. "Competition Among Hospitals," GSIA Working Papers 2003-E20, Carnegie Mellon University, Tepper School of Business.
  2. Carol Propper & Matt Sutton & Carolyn Whitnall & Frank Windmeijer, 2007. "Did 'Targets and Terror' Reduce Waiting times in England for Hospital Care?," The Centre for Market and Public Organisation 07/179, Department of Economics, University of Bristol, UK.
  3. Tim Besley & Maitreesh Ghatak, 2003. "Incentives, choice and accountability in the provision of public services," IFS Working Papers W03/08, Institute for Fiscal Studies.
  4. Caroline M. Hoxby, 2003. "The Economics of School Choice," NBER Books, National Bureau of Economic Research, Inc, number hox03-1, October.
  5. Martin Gaynor & Rodrigo Moreno-Serra & Carol Propper, 2010. "Death by Market Power. Reform, Competition and Patient Outcomes in the National Health Service," The Centre for Market and Public Organisation 10/242, Department of Economics, University of Bristol, UK.
  6. Le Grand, Julian, 2003. "Motivation, Agency, and Public Policy: Of Knights and Knaves, Pawns and Queens," OUP Catalogue, Oxford University Press, number 9780199266999, March.
  7. Caroline Minter Hoxby, 2003. "Introduction to "The Economics of School Choice"," NBER Chapters, in: The Economics of School Choice, pages 1-22 National Bureau of Economic Research, Inc.
  8. Varkevisser, Marco & van der Geest, Stéphanie A. & Schut, Frederik T., 2012. "Do patients choose hospitals with high quality ratings? Empirical evidence from the market for angioplasty in the Netherlands," Journal of Health Economics, Elsevier, vol. 31(2), pages 371-378.
  9. John Geweke & Gautam Gowrisankaran & Robert J. Town, 2001. "Bayesian Inference for Hospital Quality in a Selection Model," NBER Working Papers 8497, National Bureau of Economic Research, Inc.
  10. 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.
  11. F. Moscone & E. Tosetti & G. Vittadini, 2012. "Social interaction in patients’ hospital choice: evidence from Italy," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 175(2), pages 453-472, 04.
  12. Zack Cooper & Stephen Gibbons & Simon Jones & Alistair McGuire, 2010. "Does hospital competition save lives?: evidence from the English NHS patient choice reforms," LSE Research Online Documents on Economics 28584, London School of Economics and Political Science, LSE Library.
  13. Walter Beckert & Mette Christensen & Kate Collyer, 2012. "Choice of NHS‐funded Hospital Services in England," Economic Journal, Royal Economic Society, vol. 122(560), pages 400-417, 05.
  14. Austan Goolsbee & Amil Petrin, 2004. "The Consumer Gains from Direct Broadcast Satellites and the Competition with Cable TV," Econometrica, Econometric Society, vol. 72(2), pages 351-381, 03.
  15. Tay, Abigail, 2003. " Assessing Competition in Hospital Care Markets: The Importance of Accounting for Quality Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 34(4), pages 786-814, Winter.
  16. Capps, Cory & Dranove, David & Satterthwaite, Mark, 2003. " Competition and Market Power in Option Demand Markets," RAND Journal of Economics, The RAND Corporation, vol. 34(4), pages 737-63, Winter.
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