The effect of competition on the practice of outpatient services for diabetes patients at different levels of hospitals in Taiwan

Ya-Ming Liu and Jean Kinsey

Applied Economics, 2005, vol. 37, issue 12, 1411-1422

Abstract: This paper empirically analyses hospital non-price competition in a market characterized by a government accreditation system in Taiwan. Outpatient services for diabetes patients were used to measure the quality of patient care in outpatient departments in three types of hospitals. The hypothesis that an increase in the number of highest accredited hospitals - medical centres - would improve the quality of care in other types of hospitals is rejected. However, after carefully controlling endogeneity and measurement error of the hospital competition index by using instrumental variables, empirical findings based on the National Health Insurance Research Database from 1997 to 1999 show that different types of hospitals may respond to competitive pressure from the various levels of hospitals differently. Positive spillover effects were found from competition from regional and district hospitals. These findings may deserve serious consideration when forming policy to allocate medical resources to different levels of hospitals.

Date: 2005
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DOI: 10.1080/00036840500118697

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