Abstract
We study the impact of exposing hospitals in a National Health Service (NHS) to non-price competition by exploiting a patient choice reform in Norway in 2001. The reform facilitates a difference-in-difference research design due to geographical variation in the scope for competition. Using rich administrative data covering the universe of NHS hospital admissions from 1998 to 2005, we find that hospitals in more competitive areas have a sharper reduction in AMI mortality, readmissions, and length of stay than hospitals in less competitive areas. These results indicate that competition improves patient health outcomes and hospital cost efficiency, even in the Norwegian NHS with large distances, low fixed treatment prices, and mainly public hospitals.
Highlights
Health care is one of the most important sectors in the economy
Our empirical analysis exploits a policy reform that implemented nationwide patient choice in the Norwegian National Health Service (NHS) in 2001, replacing an administrative scheme where patients were allocated to the closest hospital within their county of residence
Using rich administrative data with quarterly information over eight years from 1998 to 2005, we estimate the e¤ects of exposing NHS hospitals in Norway to competition on hospital quality and cost e¢ ciency, controlling for time trends, patient population characteristics, and hospital and diagnosis related groups (DRG) ...xed e¤ects
Summary
Health care is one of the most important sectors in the economy. OECD countries spend on average 9 percent of their GDP on health care (OECD, 2017). A potential problem with this approach is that market structure is not exogenous, but possibly a¤ected by hospital performance along dimensions such as quality of care.[3] To address this issue, we follow the approach proposed by Cooper et al (2011) and Gaynor et al (2013), who study the impact of hospital competition by exploiting an exogenous policy reform introducing patient choice in the English NHS in 2006. These pro-competitive ...ndings on hospital quality are similar, in terms of magnitude, to the ...ndings by Cooper et al (2011) and Gaynor et al (2013) from the English NHS This is perhaps surprising, given that the Norwegian health care system is characterised by lower ...xed (DRG) prices due to partial block grant funding, publicly owned hospitals (which might imply less pro...t orientation) and generally longer travel distances, which in sum suggest a smaller scope for competition.
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