 Does Competition Have an Effect on Price and Quality in Physiotherapy?Piia Pekola, Ismo Linnosmaa and Hennamari Mikkola Health Economics, 2017, vol. 26, issue 10, 1278-1290 Abstract: We estimate the effect of competition on quality and prices in physiotherapy organised and financed by the Social Insurance Institution of Finland for disabled individuals. Within the physiotherapy market, firms participate in competitive bidding, prices are determined by the market, services are free at the point of use and firms are allowed to react to patient choice only by enhancing quality. Firm‐level data (n = 854) regarding quality and price were analysed. Using 2SLS estimation techniques, we analysed the relationship between quality and competition, and price and competition. Our study found that competition has a negative (yet weak) effect on quality. Prices on the other hand are not affected by competition. The result is likely caused by imperfect information, because it seems that the Social Insurance Institution of Finland has provided too little information for patients to make adequate choices about proper service providers. We argue that by publishing quality information, it is possible to ease the decision‐making of patients and influence the quality strategies of firms active in the physiotherapy market. Moreover, we found that competition appeared as an exogenous variable in this study. Copyright © 2016 John Wiley & Sons, Ltd. Date: 2017 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:wly:hlthec:v:26:y:2017:i:10:p:1278-1290 Access Statistics for this article Health Economics is currently edited by Alan Maynard, John Hutton and Andrew Jones More articles in Health Economics from John Wiley & Sons, Ltd. |
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