Hospital Competition, Technical Efficiency and Quality

This paper studies the link between competition and technical efficiency of public hospitals in the state of Victoria, Australia. It finds a positive relationship between efficiency and competition as measured by the Hirschman–Herfindahl Index (HHI) and a negative relationship when the number of competing private hospitals is used instead of HHI. It also finds that whether or not quality is treated as an endogenous output variable influences the statistical estimates of the link between efficiency and competition. The findings point to possibly undesirable resource allocation effects when public hospitals are made to compete with a large number of private hospitals.

[1]  J. Puig,et al.  Market structure and hospital efficiency: Evaluating potential effects of deregulation in a national health service , 1997 .

[2]  B. Hollingsworth.  Non-Parametric and Parametric Applications Measuring Efficiency in Health Care , 2003, Health care management science.

[3]  Lukas Steinmann,et al.  The Sisyphus Syndrome in Health Revisited , 2005, International Journal of Health Care Finance and Economics.

[4]  V. Valdmanis,et al.  Hospital quality, efficiency, and input slack differentials. , 2008, Health services research.

[5]  Jane Hall,et al.  The role of the private sector in the Australian healthcare system , 2005 .

[6]  S. Rhoades.  Market share inequality, the HHI, and other measures of the firm-composition of a market , 1995 .

[7]  V. Valdmanis,et al.  East-west: does it make a difference to hospital efficiencies in Ukraine? , 2006, Health economics.

[8]  Chunliu Zhan,et al.  Do Different Measures of Hospital Competition Matter in Empirical Investigations of Hospital Behavior , 2005 .

[9]  S. Duckett.  Hospital payment arrangements to encourage efficiency: the case of Victoria, Australia. , 1995, Health policy.

[10]  J W Thomas,et al.  Accuracy of risk-adjusted mortality rate as a measure of hospital quality of care. , 1999, Medical care.

[11]  T. Hogarty,et al.  The Problem of Geographic Market Delineation in Antimerger Suits , 1973, The Antitrust Bulletin.

[12]  Miika Linna,et al.  Measuring the productive efficiency and clinical quality of institutional long-term care for the elderly. , 2005, Health economics.

[13]  P. W. Wilson,et al.  Sensitivity Analysis of Efficiency Scores: How to Bootstrap in Nonparametric Frontier Models , 1998 .

[14]  G. Pink,et al.  Scale and scope efficiencies through hospital consolidations. , 2006, Journal of health economics.

[15]  E Thanassoulis,et al.  The impact of the internal market on hospital efficiency, productivity and service quality , 1999, Health care management science.

[16]  Alfons Palangkaraya,et al.  Population ageing and its implications on aggregate health care demand: empirical evidence from 22 OECD countries , 2009, International Journal of Health Care Finance and Economics.

[17]  P. J. Green,et al.  Density Estimation for Statistics and Data Analysis , 1987 .

[18]  C M Ashton,et al.  Predicting readmission in veterans with chronic disease. Development and validation of discharge criteria. , 1987, Medical care.

[19]  M. Farrell.  The Measurement of Productive Efficiency , 1957 .

[20]  Andrew Street,et al.  How much confidence should we place in efficiency estimates? , 2003, Health economics.

[21]  Steven Johnson,et al.  Comparing Techniques for Measuring the Efficiency and Productivity of Australian Private Hospitals , 1998 .

[22]  M. O'Loughlin.  Conflicting interests in private hospital care. , 2002, Australian health review : a publication of the Australian Hospital Association.

[23]  R. Färe,et al.  Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries , 1994 .

[24]  Karen Yong.  Efficiency of Hospitals in Victoria under Casemix Funding : A Stochastic Frontier Approach , 2000 .

[25]  M. Linna,et al.  Measuring hospital cost efficiency with panel data models. , 1998, Health economics.

[26]  David Dranove,et al.  Recent Theory and Evidence on Competition in Hospital Markets , 1994 .

[27]  R. Jacobs,et al.  Alternative Methods to Examine Hospital Efficiency: Data Envelopment Analysis and Stochastic Frontier Analysis , 2001, Health care management science.

[28]  Zhong Zhao,et al.  Relative Efficiency, Scale Effect, and Scope Effect of Public Hospitals: Evidence from Australia , 2006, SSRN Electronic Journal.

[29]  Luigi Siciliani,et al.  Competition and Waiting Times in Hospital Markets , 2007, SSRN Electronic Journal.

[30]  Entry and Competition in Local Hospital Markets , 2007 .

[31]  Chew Lian Chua,et al.  A two-stage estimation of hospital quality using mortality outcome measures: an application using hospital administrative data. , 2010, Health economics.

[32]  Daniel P. Kessler,et al.  The Effects of Competition on Variation in the Quality and Cost of Medical Care , 2005 .

[33]  Kankana Mukherjee,et al.  Market Structure and Technical Efficiency in the Hospital Services Industry: A DEA Approach , 2006, Medical care research and review : MCRR.

[34]  Christopher H Schmid,et al.  Hospital ownership and quality of care: what explains the different results in the literature? , 2008, Health economics.

[35]  Martin Gaynor,et al.  Competition and Quality in Health Care Markets , 2007, Found. Trends Microeconomics.

[36]  Kurt R. Brekke,et al.  Hospital Competition and Quality with Regulated Prices , 2009, SSRN Electronic Journal.

[37]  Ilde Rizzo,et al.  Competition and Efficiency in Health Care: An Analysis of the Italian Case , 2000 .

[38]  E B Keeler,et al.  The changing effects of competition on non-profit and for-profit hospital pricing behavior. , 1999, Journal of health economics.

[39]  W. Lynk,et al.  Nonprofit Hospital Mergers and the Exercise of Market Power , 1995, The Journal of Law and Economics.

[40]  M. Gordon,et al.  Dividends, Earnings, and Stock Prices , 1959 .

[41]  Gary M. Fournier,et al.  Hospital Costs and Competition for Services: A Multiproduct Analysis , 1992 .

[42]  S. Felder,et al.  Ageing of population and health care expenditure: a red herring? , 1999, Health economics.

[43]  Vivian Valdmanis,et al.  Productivity efficiencies in Ukrainian polyclinics: lessons for health system transitions from differential responses to market changes , 2008 .

[44]  A. Ferrari.  The internal market and hospital efficiency: a stochastic distance function approach , 2006 .

[45]  G. Melnick,et al.  The effects of hospital competition and the Medicare PPS program on hospital cost behavior in California. , 1988, Journal of health economics.

[46]  Alfons Palangkaraya.  On Defining Hospital Markets and the Effect of Competition on Quality : An extension of Elzinga-Hogarty and an Application Using Hospital Administration Data , 2009 .

[47]  James C. Robinson,et al.  The impact of hospital market structure on patient volume, average length of stay, and the cost of care. , 1985, Journal of health economics.

[48]  P. W. Wilson,et al.  Estimation and inference in two-stage, semi-parametric models of production processes , 2007 .

[49]  P. Hersch.  Competition and the performance of hospital markets , 1984 .

[50]  S. Palmer.  Conflicting interests? , 1993, Nursing times.

[51]  Frontier analysis in healthcare , 2006 .

[52]  J. Escarce,et al.  Hospital Competition, Managed Care, and Mortality after Hospitalization for Medical Conditions: Evidence from Three States , 2006, Medical care research and review : MCRR.

[53]  G. Melnick,et al.  Measures of hospital market structure: a review of the alternatives and a proposed approach. , 1990, Socio-economic planning sciences.

[54]  Simon Burgess,et al.  Does competition between hospitals improve the quality of care?: Hospital death rates and the NHS internal market , 2004 .

[55]  William B. Vogt,et al.  Entry and Competition in Local Hospital Markets , 2005 .

[56]  G. Bazzoli,et al.  The effect of urban hospital closure on markets. , 2003, Journal of health economics.

[57]  C M Ashton,et al.  The association between the quality of inpatient care and early readmission: a meta-analysis of the evidence. , 1997, Medical care.

[58]  B. Hollingsworth,et al.  Efficiency measurement of health care: a review of non‐parametric methods and applications , 1999, Health care management science.

[59]  M. Adelman,et al.  Comment on the "H" Concentration Measure as a Numbers-Equivalent , 1969 .