Competition, prices and quality of residential aged care in Australia

Ou Yang (), Jongsay Yong (), Yuting Zhang () and Anthony Scott ()
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Ou Yang: Melbourne Institute: Applied Economic & Social Research, The University of Melbourne, https://findanexpert.unimelb.edu.au/profile/698324-ou-yang
Jongsay Yong: Melbourne Institute: Applied Economic & Social Research, The University of Melbourne, https://findanexpert.unimelb.edu.au/profile/9200-jongsay-yong
Yuting Zhang: Melbourne Institute: Applied Economic & Social Research, The University of Melbourne, https://findanexpert.unimelb.edu.au/profile/782676-yuting-zhang

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: We quantify competition in Australia's residential aged care sector and study how competition is associated with quality of care and prices in the sector. Competition is defined three ways: the number of competitors within a 10 km radius of a facility; the distance (in km) to the third closest competing facility; and Herfindahl-Hirschman index based on market share of facilities within 10 km. We further examine whether quality and price differ by ownership types (government owned, for profit, and not for profit), after controlling for competition. We find that more competition is not associated with better quality or lower prices. Governmentowned facilities, in comparison to for-profit and not-for-profit facilities, are found to provide higher quality in some domains but not in others, yet tend to charge lower prices than other ownership types. The results indicate the possibility of market failures in aged care. Two key sources of market failures, the lack of public reporting of quality of care and price transparency, should be addressed as policy priorities before competition can work in residential aged care markets.

Keywords: Nursing home competition; Aged care quality; Aged care prices; Australia (search for similar items in EconPapers)
JEL-codes: I11 I18 L80 (search for similar items in EconPapers)
Pages: 4pp
Date: 2021-01
New Economics Papers: this item is included in nep-age, nep-com, nep-hea and nep-reg
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:iae:iaewps:wp2021n02

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