Improving Performance Through Allocation and Competition: Evidence from a Patient Choice Reform

Mika Kortelainen, Liisa Laine, Konsta Lavaste, Tanja Saxell and Luigi Siciliani

No 156, Working Papers from VATT Institute for Economic Research

Abstract: We study the allocative effects of enhancing consumer choice and non-price competition in markets with heterogeneous producers. We use comprehensive administrative data and a difference-in-differences design based on the introduction of a regional patient choice reform for planned surgeries in Finland. We find that large teaching hospitals attracted more patients and concentration increased in their markets. Waiting times decreased in hospitals exposed to the reform and more patients were treated, with little effect on clinical quality or average surgical expenditure after the reform. Our results suggest that increased choice can reallocate patients towards large producers and improve public hospital performance.

Keywords: Reallocation; Heterogeneous Producers; Performance; Competition; Concentration; Patient Choice; Market Structure; Local public finance and provision of public services; I11; L11; I18; L32; L38; fi=Elinkeinopolitiikka|sv=Näringspolitik|en=Industrial and economic policy|; fi=Kunnat ja hyvinvointialueet|sv=Kommuner och välfärdsområden|en=Municipalities and wellbeing services counties|; fi=Terveyspalvelut|sv=Hälsovårdstjänster|en=Healthcare services| (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-com, nep-dcm, nep-eur, nep-hea and nep-ind
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