Does Hospital Competition Improve Efficiency? An Analysis of the Recent Market-Based Reforms to the English NHS

Zack Cooper, Stephen Gibbons, Simon Jones and Alistair McGuire

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper uses a difference-in-difference estimator to test whether the introduction of patient choice and hospital competition in the English NHS in January 2006 has prompted hospitals to become more efficient. Efficiency was measured using hospitals' average length of stay (LOS) for patients undergoing elective hip replacement. LOS was broken down into its two key components: the time from a patient's admission until their surgery and the time from their surgery until their discharge. Our results illustrate that hospitals exposed to competition after a wave of market-based reforms took steps to shorten the time patients were in the hospital prior to their surgery, which resulted in a decrease in overall LOS. We find that hospitals shortened patients' LOS without compromising patient outcomes or by operating on healthier, wealthier or younger patients. Our results suggest that hospital competition within markets with fixed prices can increase hospital efficiency.

Keywords: Hospital Competition; Market Structure; Prospective Payment; Incentive Structure (search for similar items in EconPapers)
JEL-codes: C21 I18 L1 R0 (search for similar items in EconPapers)
Date: 2010-06
New Economics Papers: this item is included in nep-com, nep-eur, nep-hea, nep-ind and nep-reg
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Citations: View citations in EconPapers (12)

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Working Paper: Does hospital competition improve efficiency? An analysis of the recent market-based reforms to the English NHS (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0988

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