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Does competition from private surgical centres improve public hospitals’ performance? Evidence from the English National Health Service

Cooper, Zack, Gibbons, Stephen and Skellern, Matthew (2018) Does competition from private surgical centres improve public hospitals’ performance? Evidence from the English National Health Service. Journal of Public Economics, 166. pp. 63-80. ISSN 0047-2727

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Identification Number: 10.1016/j.jpubeco.2018.08.002

Abstract

This paper examines the impact of a government programme which facilitated the entry of for-profit surgical centres to compete against incumbent National Health Service hospitals in England. We examine the impact of competition from these surgical centres on the efficiency – measured by pre-surgery length of stay for hip and knee replacement patients – and case mix of incumbent public hospitals. We exploit the fact that the government chose the broad locations where these surgical centres (Independent Sector Treatment Centres or ISTCs) would be built based on local patient waiting times – not length of stay or clinical quality – to construct treatment and control groups that are comparable with respect to key outcome variables of interest. Using a difference-in-difference estimation strategy, we find that the entry of surgical centres led to shorter pre-surgery length of stay at nearby public hospitals. However, these new entrants took on healthier patients and left incumbent hospitals treating patients who were sicker. This paper highlights a potential trade-off that policymakers face when they promote competition from private, for-profit firms in markets for the provision of public services.

Item Type: Article
Official URL: https://www.journals.elsevier.com/journal-of-publi...
Additional Information: © 2018 The Authors © CC BY 4.0
Divisions: Geography & Environment
Centre for Economic Performance
Subjects: H Social Sciences > HB Economic Theory
R Medicine > RA Public aspects of medicine > RA0421 Public health. Hygiene. Preventive Medicine
JEL classification: C - Mathematical and Quantitative Methods > C2 - Econometric Methods: Single Equation Models; Single Variables > C23 - Models with Panel Data
H - Public Economics > H5 - National Government Expenditures and Related Policies > H57 - Procurement
I - Health, Education, and Welfare > I1 - Health > I11 - Analysis of Health Care Markets
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance
L - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise > L32 - Public Enterprises
L - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise > L33 - Comparison of Public and Private Enterprises; Privatization; Contracting Out
R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade
Sets: Departments > Geography and Environment
Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 24 Aug 2018 09:01
Last Modified: 20 Nov 2019 05:43
Projects: ES/M010341/1
Funders: Economic and Social Research Council
URI: http://eprints.lse.ac.uk/id/eprint/90094

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