Hospital Competition

SummaryWe study the effect of competition on adverse hospital health outcomes in a context in which information about hospital quality is not publicly available. We use data on patients who were admitted to hospitals in the Lombardy region of Italy. Although risk-adjusted hospital rankings are estimated yearly in this region, such rankings are provided to hospital managers only and are not available to general practitioners or citizens. Hence, patients may choose the hospital where to be admitted on the basis of different criteria such as their geographical closeness to the hospital, local network information and referrals by general practitioners. We first estimate a model of patient hospital choices and include among the determinants a variable capturing social interaction, which represents a proxy for the quality of hospitals perceived by patients. Using patient-predicted choice probabilities, we then construct a set of competition indices and measure their effect on a composite ...

Summary We study the influence of social interaction on patients’ choice of hospital and its relationship with the quality that is delivered by hospitals, using Italian data. We explore the effect on individual choices of a set of variables such as travel distance and individual- and hospital-specific characteristics, as well as a variable capturing the effect of the neighbourhood. The richness of our data allows us to disentangle the influence of sharing information (the network) on patients’ choices of hospital from contextual effects. Our empirical investigation suggests that past experience in the utilization of health services by the network plays a significant role in explaining current patients’ choices of hospital. Other relevant factors that influence patients’ decisions of being admitted in a particular hospital are prior use of health services in that hospital, patient-to-hospital distance and supply factors such as the number of beds and number of doctors. We then invest...

Summary We study the effect of competition on adverse hospital health outcomes in a context in which information about hospital quality is not publicly available. We use data on patients who were admitted to hospitals in the Lombardy region of Italy. Although risk-adjusted hospital rankings are estimated yearly in this region, such rankings are provided to hospital managers only and are not available to general practitioners or citizens. Hence, patients may choose the hospital where to be admitted on the basis of different criteria such as their geographical closeness to the hospital, local network information and referrals by general practitioners. We first estimate a model of patient hospital choices and include among the determinants a variable capturing social interaction, which represents a proxy for the quality of hospitals perceived by patients. Using patient-predicted choice probabilities, we then construct a set of competition indices and measure their effect on a composite...

Non-profit hospital competition under public insurance, budget envelopes and non-contractible effort are considered. As the envelope necessarily depends on quantity served the cost and quality implications are investigated for small and large market areas. Where public insurees face no price at all, demand for medical care depends on quality that, under public systems, is typically a combination of care in procedures and the time-price. Whereas in small market areas inducing quality scale economies through monopoly, there is no tension between quality and cost, large areas potentially exhibit a tradeoff between quality and cost. Competition in large areas may induce cost efficiency but its effect on quality is ambiguous because of the conflicting effects of competition and scale. However, the “Centers of Excellence ” (hospitals specializing in particular procedures) that might emerge as a result of competition or fiat internalize the effect of scale on quality for a given procedure....

Non-profit hospital competition under public insurance, budget envelopes and non-contractible effort are considered. As the envelope necessarily depends on quantity served the cost and quality implications are investigated for small and large market areas. Where public insurees face no price at all, demand for medical care depends on quality that, under public systems, is typically a combination of care in procedures and the time-price. Whereas in small market areas inducing quality scale economies through monopoly, there is no tension between quality and cost, large areas potentially exhibit a tradeoff between quality and cost. Competition in large areas may induce cost efficiency but its effect on quality is ambiguous because of the conflicting effects of competition and scale. However, the “Centers of Excellence ” (hospitals specializing in particular procedures) that might emerge as a result of competition or fiat internalize the effect of scale on quality for a given procedure....