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Does hospital competition improve efficiency? An analysis of the recent market-based reforms to the English NHS

Cooper, Zack, Gibbons, Stephen, Jones, Simon and McGuire, Alistair (2010) Does hospital competition improve efficiency? An analysis of the recent market-based reforms to the English NHS. CEP discussion papers (988). Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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This paper uses a difference-in-difference estimator to test whether the introduction of patient choice and hospital competition in the English NHS in January 2006 has prompted hospitals to become more efficient. Efficiency was measured using hospitals’ average length of stay (LOS) for patients undergoing elective hip replacement. LOS was broken down into its two key components: the time from a patient’s admission until their surgery and the time from their surgery until their discharge. Our results illustrate that hospitals exposed to competition after a wave of market-based reforms took steps to shorten the time patients were in the hospital prior to their surgery, which resulted in a decrease in overall LOS. We find that hospitals shortened patients’ LOS without compromising patient outcomes or by operating on healthier, wealthier or younger patients. Our results suggest that hospital competition within markets with fixed prices can increase hospital efficiency.

Item Type: Monograph (Discussion Paper)
Official URL:
Additional Information: © 2010 The Authors
Divisions: Social Policy
LSE Health
Centre for Economic Performance
Geography & Environment
Subjects: H Social Sciences > HB Economic Theory
R Medicine > RA Public aspects of medicine
JEL classification: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance
R - Urban, Rural, and Regional Economics > R0 - General
I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy; Regulation; Public Health
C - Mathematical and Quantitative Methods > C2 - Econometric Methods: Single Equation Models; Single Variables > C21 - Cross-Sectional Models; Spatial Models; Treatment Effect Models
Sets: Departments > Social Policy
Research centres and groups > LSE Health
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Geography and Environment
Collections > Economists Online
Date Deposited: 13 Jul 2010 14:21
Last Modified: 26 Apr 2021 11:59

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