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Competition and Waiting Times in Hospital Markets

This paper studies the impact of hospital competition on waiting times. We use a Salop-type model, with hospitals that differ in (geographical) location and, potentially, waiting time, and two types of patients; high benefit patients who choose between neighbouring hospitals (competitive segment), and low-benefit patients who decide whether or not to demand treatment from the closest hospital (monopoly segment). Compared with a benchmark case of regulated monopolies, we find that hospital competition leads to longer waiting times in equilibrium if the competitive segment is sufficiently large. Given a policy regime of hospital competition, the effect of incresed competition depends on the parameter of measurement: Lower travelling costs increase waiting times, higher hospital density redices waiting times, while the effect of a larger competitive segment is ambiguous. We also show that, if the competitive segment is large, hospital competition is socially preferrable to regulated monopolies only if the (regulated) treatment price is sufficiently higher.

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File URL: http://www3.eeg.uminho.pt/economia/nipe/docs/2007/NIPE_WP_9_2007.PDF
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Paper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number 9/2007.

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Date of creation: 2007
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Handle: RePEc:nip:nipewp:9/2007
Contact details of provider: Postal: Núcleo de Investigação em Políticas Económicas, Escola de Economia e Gestão, Universidade do Minho, P-4710-057 Braga, Portugal
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  1. Kurt R. Brekke & Lars S�rgard, 2007. "Public versus private health care in a national health service," Health Economics, John Wiley & Sons, Ltd., vol. 16(6), pages 579-601.
  2. Barros, Pedro Luis Pita, 2000. "Waiting Lists and Patient Selection," CEPR Discussion Papers 2519, C.E.P.R. Discussion Papers.
  3. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
  4. Ellis, Randall P. & McGuire, Thomas G., 1986. "Provider behavior under prospective reimbursement : Cost sharing and supply," Journal of Health Economics, Elsevier, vol. 5(2), pages 129-151, June.
  5. Farnworth, Michael G., 2003. "A game theoretic model of the relationship between prices and waiting times," Journal of Health Economics, Elsevier, vol. 22(1), pages 47-60, January.
  6. Billy Jack, 2001. "Purchasing Health Care Services from Providers with Unknown Altruism," Working Papers gueconwpa~03-03-13, Georgetown University, Department of Economics.
  7. Michael Hoel & Erik Magnus Sæther, 2001. "Public Health Care with Waiting Time: The Role of Supplementary Private Health Care," CESifo Working Paper Series 562, CESifo Group Munich.
  8. Tim Besley & John Hall & Ian Preston, 1996. "The demand for private health insurance: do waiting lists matter?," IFS Working Papers W96/07, Institute for Fiscal Studies.
  9. Chalkley, M. & Malcomson, J.M., 1995. "Contracting for health services when patient demand does not reflect quality," Discussion Paper Series In Economics And Econometrics 9514, Economics Division, School of Social Sciences, University of Southampton.
  10. Martin, Stephen & Rice, Nigel & Jacobs, Rowena & Smith, Peter, 2007. "The market for elective surgery: Joint estimation of supply and demand," Journal of Health Economics, Elsevier, vol. 26(2), pages 263-285, March.
  11. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2007. "Competition and Waiting Times in Hospital Markets," CESifo Working Paper Series 2124, CESifo Group Munich.
  12. Hugh Gravelle & Luigi Siciliani, 2008. "Is waiting-time prioritisation welfare improving?," Health Economics, John Wiley & Sons, Ltd., vol. 17(2), pages 167-184.
  13. Lindsay, Cotton M & Feigenbaum, Bernard, 1984. "Rationing by Waiting Lists," American Economic Review, American Economic Association, vol. 74(3), pages 404-17, June.
  14. Iversen, Tor, 1993. "A theory of hospital waiting lists," Journal of Health Economics, Elsevier, vol. 12(1), pages 55-71, April.
  15. Jeremy Hurst & Luigi Siciliani, 2003. "Tackling Excessive Waiting Times for Elective Surgery: A Comparison of Policies in Twelve OECD Countries," OECD Health Working Papers 6, OECD Publishing.
  16. Olivella, Pau, 2003. "Shifting public-health-sector waiting lists to the private sector," European Journal of Political Economy, Elsevier, vol. 19(1), pages 103-132, March.
  17. Luigi Siciliani & Jeremy Hurst, 2003. "Explaining Waiting Times Variations for Elective Surgery Across OECD Countries," OECD Health Working Papers 7, OECD Publishing.
  18. Diane Dawson & Hugh Gravelle & Rowena Jacobs & Stephen Martin & Peter C. Smith, 2007. "The effects of expanding patient choice of provider on waiting times: evidence from a policy experiment," Health Economics, John Wiley & Sons, Ltd., vol. 16(2), pages 113-128.
  19. Daniel P. Kessler & Mark B. McClellan, 2000. "Is Hospital Competition Socially Wasteful?," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 577-615, May.
  20. Luigi Siciliani, 2008. "A note on the dynamic interaction between waiting times and waiting lists," Health Economics, John Wiley & Sons, Ltd., vol. 17(5), pages 639-647.
  21. Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-77, June.
  22. Luigi Siciliani, 2005. "Does more choice reduce waiting times?," Health Economics, John Wiley & Sons, Ltd., vol. 14(1), pages 17-23.
  23. 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.
  24. 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.
  25. repec:rus:hseeco:122140 is not listed on IDEAS
  26. Luigi Siciliani & Steve Martin, 2007. "An empirical analysis of the impact of choice on waiting times," Health Economics, John Wiley & Sons, Ltd., vol. 16(8), pages 763-779.
  27. 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.
  28. Hugh Gravelle & Peter Smith & Ana Xavier, 2003. "Performance signals in the public sector: the case of health care," Oxford Economic Papers, Oxford University Press, vol. 55(1), pages 81-103, January.
  29. Cullis, John G. & Jones, Philip R. & Propper, Carol, 2000. "Waiting lists and medical treatment: Analysis and policies," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 23, pages 1201-1249 Elsevier.
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