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Does hospital competition save lives?: evidence from the English NHS patient choice reforms

Cooper, Zack, Gibbons, Stephen, Jones, Simon and McGuire, Alistair (2010) Does hospital competition save lives?: evidence from the English NHS patient choice reforms. LSE Health working papers, 16/2010. LSE Health, London School of Economics and Political Science, London, UK. ISBN 9780853280095

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Abstract

This paper examines whether or not hospital competition in a market with fixed reimbursement prices can prompt improvements in clinical quality. In January 2006, the British Government introduced a major extension of their market-based reforms to the English National Health Service. From January 2006 onwards, every patient in England could choose their hospital for secondary care and hospitals had to compete with each other to attract patients to secure their revenue. One of the central aims of this policy was to create financial incentives for providers to improve their clinical performance. This paper assesses whether this aim has been achieved and competition led to improvements in quality. For our estimation, we exploit the fact that choice-based reforms will create sharper financial incentives for hospitals in markets where choice is geographically feasible and that prior to 2006, in the absence of patient choice, hospitals had no direct financial incentive to improve performance in order to attract more patients. We use a modified difference-in-difference estimator to analyze whether quality improved more quickly in more competitive markets after the government introduced its new wave of market-based reforms. Using AMI mortality as a quality indicator, we find that mortality fell more quickly (i.e. quality improved) for patients living in more competitive markets after the introduction of hospital competition in January 2006. Our results suggest that hospital competition in markets with fixed prices can lead to improvements in clinical quality.

Item Type: Monograph (Working Paper)
Official URL: http://www2.lse.ac.uk/LSEHealthAndSocialCare/publi...
Additional Information: © 2010 The Authors
Library of Congress subject classification: H Social Sciences > HB Economic Theory
R Medicine > RA Public aspects of medicine
Journal of Economic Literature Classification System: 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
Sets: Departments > Geography and Environment
Departments > Social Policy
Collections > Economists Online
Research centres and groups > LSE Health
Collections > LSE Health Working Paper Series in Health Policy and Economics
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 16/2010
Date Deposited: 13 Jul 2010 14:28
URL: http://eprints.lse.ac.uk/28584/

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