Death by Market Power: Reform, Competition and Patient Outcomes in the National Health Service

54 Pages Posted: 13 Jul 2010 Last revised: 5 Sep 2010

See all articles by Martin Gaynor

Martin Gaynor

Carnegie Mellon University; National Bureau of Economic Research (NBER); Leverhulme Centre for Market and Public Organisation

Carol Propper

Imperial College London Business School; Centre for Economic Policy Research (CEPR); University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO)

Rodrigo Moreno-Serra

University of York - Department of Economics & Centre for Health Economics

Multiple version iconThere are 3 versions of this paper

Date Written: July 2010

Abstract

The effect of competition on the quality of health care remains a contested issue. Most empirical estimates rely on inference from non experimental data. In contrast, this paper exploits a pro-competitive policy reform to provide estimates of the impact of competition on hospital outcomes. The English government introduced a policy in 2006 to promote competition between hospitals. Patients were given choice of location for hospital care and provided information on the quality and timeliness of care. Prices, previously negotiated between buyer and seller, were set centrally under a DRG type system. Using this policy to implement a difference-in-differences research design we estimate the impact of the introduction of competition on not only clinical outcomes but also productivity and expenditure. Our data set is large, containing information on approximately 68,000 discharges per year per hospital from 162 hospitals. We find that the effect of competition is to save lives without raising costs. Patients discharged from hospitals located in markets where competition was more feasible were less likely to die, had shorter length of stay and were treated at the same cost.

Suggested Citation

Gaynor, Martin and Propper, Carol and Moreno-Serra, Rodrigo, Death by Market Power: Reform, Competition and Patient Outcomes in the National Health Service (July 2010). NBER Working Paper No. w16164. Available at SSRN: https://ssrn.com/abstract=1639314

Martin Gaynor (Contact Author)

Carnegie Mellon University ( email )

H. John Heinz III School of Public Policy
and Management
Pittsburgh, PA 15213-3890
United States
412-268-7933 (Phone)
412-268-5338 (Fax)

National Bureau of Economic Research (NBER)

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Leverhulme Centre for Market and Public Organisation

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Carol Propper

Imperial College London Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO) ( email )

12 Priory Road
Bristol BS8 1TN
United Kingdom

HOME PAGE: http://www.bris.ac.uk/Depts/Economics/department/profiles/propper.htm

Rodrigo Moreno-Serra

University of York - Department of Economics & Centre for Health Economics ( email )

York YO10 5DD
United Kingdom
+44 1904 321 411 (Phone)

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