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Does competition from private surgical centres improve public hospitals' performance? Evidence from the English National Health Service

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  • Zack Cooper
  • Stephen Gibbons
  • Matthew Skellern

Abstract

This paper examines the impact of competition from government-facilitated entry of private, specialty surgical centres on the efficiency and case mix of incumbent public hospitals within the English NHS. We exploit the fact that the government chose the location of these surgical centres (Independent Sector Treatment Centres or ISTCs) based on nearby public hospitals' waiting times - not length of stay or clinical quality - to construct treatment and control groups that are comparable with respect to key outcome variables of interest. Using a difference-in-difference estimation strategy, we find that ISTC entry led to greater efficiency - measured by pre-surgery length of stay for hip and knee replacements - at nearby public hospitals. However, these new entrants took on healthier patients and left incumbent hospitals treating patients who were sicker, and who stayed in hospital longer after surgery.

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  • Zack Cooper & Stephen Gibbons & Matthew Skellern, 2016. "Does competition from private surgical centres improve public hospitals' performance? Evidence from the English National Health Service," CEP Discussion Papers dp1434, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1434
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    More about this item

    Keywords

    Hospital Competition; Public-Private Competition; Market Entry; Market Structure; Outsourcing; Hospital Efficiency; Risk Selection; Cherry Picking;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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