The Quality and Efficiency Between Public and Private Firms: Evidence from Ambulance Services

Daniel Knutsson and Björn Tyrefors

No 1365, Working Paper Series from Research Institute of Industrial Economics

Abstract: Economic theory predicts that outsourcing public services to private firms will reduce costs, but the effect on quality is ambiguous. We explore quality differences between publicly and privately owned ambulances in a setting where patients are as good as randomly assigned to ambulances with different ownership statuses. We find that privately owned ambulances perform better in response to contracted quality measures but perform worse in response to noncontracted measures such as mortality. In fact, a randomly allocated patient has a 1.4% higher risk of death within 3 years if a private ambulance is dispatched (in aggregate, 420 more deaths each year). We also present evidence of the mechanism at work, suggesting that private firms cut costs at the expense of ambulance staff quality.

Keywords: Public outsourcing; Pre-hospital care; Healthcare quality; Health (search for similar items in EconPapers)
JEL-codes: D22 D44 H44 I11 L33 P48 (search for similar items in EconPapers)
Pages: 79 pages
Date: 2020-10-10, Revised 2021-07-01
New Economics Papers: this item is included in nep-eff, nep-hea, nep-ind and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:1365

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