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Free to Choose? Reform and Demand Response in the English National Health Service

Martin Gaynor (), Carol Propper and Stephan Seiler

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: The impacts of choice in public services are controversial. We exploit a reform in the English National Health Service to assess the impact of relaxing constraints on patient choice. We estimate a demand model to evaluate whether increased choice increased demand elasticity faced by hospitals with regard to clinical quality and waiting time for an important surgical procedure. We find substantial impacts of the removal of restrictions. Patients became more responsive to clinical quality. Sicker patients and better informed patients were more affected. We leverage our model to calculate potential benefits. We find increased demand responsiveness led to a significant reduction in mortality and an increase in patient welfare. The elasticity of demand faced by hospitals increased post-reform, giving hospitals potentially large incentives to improve their quality of care and find suggestive evidence that hospitals responded strongly to the enhanced incentives due to increased demand elasticity. The results suggests greater choice can enhance quality.

Keywords: Demand estimation; non-price competition; health economics; patient choice; health care reform (search for similar items in EconPapers)
JEL-codes: D12 I11 I18 L13 L30 (search for similar items in EconPapers)
Date: 2012-11
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Working Paper: Free to Choose? Reform and Demand Response in the English National Health Service (2012) Downloads
Working Paper: Free to Choose? Reform and Demand Response in the English National Health Service (2012) Downloads
Working Paper: Free to choose?: reform and demand response in the English National Health Service (2012) Downloads
Working Paper: Free to Choose? Reform and Demand Response in the English National Health Service (2012) Downloads
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