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Does competition improve public hospitals’ efficiency?: evidence from a quasi-experiment in the English National Health Service

Cooper, Zack, Gibbons, Stephen, Jones, Simon and McGuire, Alistair (2012) Does competition improve public hospitals’ efficiency?: evidence from a quasi-experiment in the English National Health Service. CEPDP, 1125. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Abstract

This paper uses a difference-in-difference style estimation strategy to test separately the impact of competition from public sector and private sector hospitals on the efficiency of public hospitals. Our identification strategy takes advantage of the phased introduction of a recent set of substantive reforms introduced in the English NHS from 2006 onwards. These reforms forced public sector health care providers to compete with other public hospitals and eventually to face competition from existing private sector providers for care delivered to publicly funded patients. In this study, we measure efficiency using hospitals’ average length of stay (LOS) for patients undergoing elective surgery. For a more nuanced assessment of efficiency, we break LOS down into its two key components: the time from patients’ admission to the hospital until their surgery and the time from their surgery until their discharge. Here, pre-surgery LOS serves as a proxy for hospitals’ lean efficiency. Our results suggest that competition between public providers prompted public hospitals to improve their productivity by decreasing their pre-surgery, overall and post-surgery length of stay. In contrast, competition from private hospitals did not spur public providers to improve their performance and instead left incumbent public providers with a more costly case mix of patients and led to increases in postsurgical LOS.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/
Additional Information: © 2010 The Authors
Library of Congress subject classification: R Medicine > RA Public aspects of medicine
Journal of Economic Literature Classification System: C - Mathematical and Quantitative Methods > C2 - Econometric Methods: Single Equation Models; Single Variables > C21 - Cross-Sectional Models; Spatial Models; Treatment Effect Models
I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy; Regulation; Public Health
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance
R - Urban, Rural, and Regional Economics > R0 - General
Sets: Departments > Geography and Environment
Research centres and groups > Spatial Economics Research Centre
Departments > Social Policy
Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Research centres and groups > LSE Health
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 1125
Date Deposited: 28 Feb 2012 15:40
URL: http://eprints.lse.ac.uk/42057/

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