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Competition and Hospital Quality: Evidence from a French Natural Experiment

Listed author(s):
  • Gobillon, Laurent

    ()

    (Paris School of Economics)

  • Milcent, Carine

    ()

    (Paris School of Economics)

We evaluate the effect of a pro-competition reform gradually introduced in France over the 2004-2008 period on hospital quality measured with the mortality of heart-attack patients. Our analysis distinguishes between hospitals depending on their status: public (university or non-teaching), non-profit or for-profit. These hospitals differ in their degree of managerial and financial autonomy as well as their reimbursement systems and incentives for competition before the reform, but they are all under a DRG-based payment system after the reform. For each hospital status, we assess the benefits of local competition in terms of decrease in mortality after the reform. We estimate a duration model for mortality stratified at the hospital level to take into account hospital unobserved heterogeneity and censorship in the duration of stays in a flexible way. Estimations are conducted using an exhaustive dataset at the patient level over the 1999-2011 period. We find that non-profit hospitals, which have managerial autonomy and no incentive for competition before the reform, enjoyed larger declines in mortality in places where there is greater competition than in less competitive markets.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10476.

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Length: 45 pages
Date of creation: Jan 2017
Handle: RePEc:iza:izadps:dp10476
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  1. 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.
  2. 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.
  3. Chou, Shin-Yi & Deily, Mary E. & Li, Suhui & Lu, Yi, 2014. "Competition and the impact of online hospital report cards," Journal of Health Economics, Elsevier, vol. 34(C), pages 42-58.
  4. Laurent Gobillon & Carine Milcent, 2013. "Spatial disparities in hospital performance," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-00879787, HAL.
  5. Nicholas Bloom & Carol Propper & Stephan Seiler & John van Reenan, 2010. "The Impact of Competition on Management Quality: Evidence from Public Hospitals," The Centre for Market and Public Organisation 10/237, Department of Economics, University of Bristol, UK.
  6. 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.
  7. repec:hal:journl:halshs-00879787 is not listed on IDEAS
  8. 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, 09.
  9. 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.
  10. Gobillon, Laurent & Milcent, Carine, 2013. "Evaluating the effect of ownership status on hospital quality: the key role of innovative procedures," CEPR Discussion Papers 9272, C.E.P.R. Discussion Papers.
  11. Richard Cookson & Mauro Laudicella & Paolo Li Donni, 2011. "Does hospital competition harm equity? Evidence from the English National Health Service," Working Papers 066cherp, Centre for Health Economics, University of York.
  12. 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.
  13. Zack Cooper & Stephen Gibbons & Simon Jones & Alistair McGuire, 2011. "Does hospital competition save lives? Evidence from the English NHS patient choice reforms," LSE Research Online Documents on Economics 45167, London School of Economics and Political Science, LSE Library.
  14. Mark McClellan & Douglas Staiger, 1999. "The Quality of Health Care Providers," NBER Working Papers 7327, National Bureau of Economic Research, Inc.
  15. Zack Cooper & Stephen Gibbons & Matthew Skellern, 2016. "Does competition from private surgical centres improve public hospitals’ performance? Evidence from the English National Health Service," LSE Research Online Documents on Economics 67662, London School of Economics and Political Science, LSE Library.
  16. Zack Cooper & Stephen Gibbons & Matthew Skellern, 2016. "Does Competition from Private Surgical Centres Improve Public Hospitals' Performance? Evidence from the English National Health Service," CEP Discussion Papers dp1434, Centre for Economic Performance, LSE.
  17. Sauter, W. & Canoy, M.F.M., 2009. "Hospital mergers and the public interest : Recent developments in the Netherlands," Discussion Paper 2009/35, Tilburg University, Tilburg Law and Economic Center.
  18. Ridder, Geert & Tunali, Insan, 1999. "Stratified partial likelihood estimation," Journal of Econometrics, Elsevier, vol. 92(2), pages 193-232, October.
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