Does hospital competition save lives? Evidence from the English NHS patient choice reforms

This paper examines whether or not hospital competition in a market with fixed reimbursement prices can prompt improvements in clinical quality. In January 2006, the British Government introduced a major extension of their market-based reforms to the English National Health Service. From January 2006 onwards, every patient in England could choose their hospital for secondary care and hospitals had to compete with each other to attract patients to secure their revenue. One of the central aims of this policy was to create financial incentives for providers to improve their clinical performance. This paper assesses whether this aim has been achieved and competition led to improvements in quality. For our estimation, we exploit the fact that choice-based reforms will create sharper financial incentives for hospitals in markets where choice is geographically feasible and that prior to 2006, in the absence of patient choice, hospitals had no direct financial incentive to improve performance in order to attract more patients. We use a modified difference-in-difference estimator to analyze whether quality improved more quickly in more competitive markets after the government introduced its new wave of market-based reforms. Using AMI mortality as a quality indicator, we find that mortality fell more quickly (i.e. quality improved) for patients living in more competitive markets after the introduction of hospital competition in January 2006. Our results suggest that hospital competition in markets with fixed prices can lead to improvements in clinical quality

Extending Choice In English Health Care: The implications of the economic evidence

Extending choice in health care is currently popular amongst English, and other, politicians. Those promoting choice make an appeal to a simple economic argument. Competitive pressure helps make private firms more efficient and consumer choice acts as a major driver for efficiency. Giving service users the ability to choose applies competitive pressure to health care providers and, analogously with private markets, they will raise their game to attract business. The paper subjects this assumption to the scrutiny provided by a review of the theoretical and empirical economic evidence on choice in health care. The review considers several interlocking aspects of the current English choice policy: competition between hospitals, the responsiveness of patients to greater choice, the provision of information and the use of fixed prices. The paper concludes that there is neither strong theoretical nor empirical support for competition, but that there are cases where competition has improved outcomes. The paper ends with a discussion of the implications of this literature for policies to promote competition in the English NHS.competition, choice, health care, English NHS reforms

Does hospital competition harm equity? Evidence from the English National Health Service

Increasing evidence shows that hospital competition under fixed prices can improve quality and reduce cost. Concerns remain, however, that competition may undermine socio-economic equity in the utilisation of care. We test this hypothesis in the context of the pro-competition reforms of the English National Health Service progressively introduced from 2004 to 2006. We use a panel of 32,482 English small areas followed from 2003 to 2008 and a difference in differences approach. The effect of competition on equity is identified by the interaction between market structure, small area income deprivation and year. We find a negative association between market dispersion and elective admissions in deprived areas. The effect of pro-competition reform was to reduce this negative association slightly, suggesting that competition did not undermine equity.

Back to the future in NHS reform

PURPOSE - In the mid 1990s the NHS ‘did’ competition, in the mid 2000s the NHS is ‘doing’ choice. This paper aims to cut through the rhetoric, highlight the differences and parallels between then and now and identify if these differences will have a different or the same impact on local services. DESIGN/METHODOLOGY/APPROACH – Following a review of literature from the 1990s, a qualitative research study is used to examine the impact of competition and markets in the 1990s. The discussion examines the implications of this study for current system reform. FINDINGS - Patient choice recreates many of the features of the internal market, but despite concerns at the time, the internal market did not have a significant impact on services. It is likely that patient choice will similarly have a limited impact. RESEARCH LIMITATIONS/IMPLICATIONS - The research is a case study confined to Day Surgery in one part of the North of England. ORIGINALITY/VALUE - The paper reminds academics and practitioners what happened last time the NHS attempted to introduce a market-based system

Reforming decentralized integrated health care systems: Theory and the case of the Norwegian reform

In this essay a conceptual and theoretical scheme for decentralized integrated health care systems of the northern European kind is developed. With small changes it is also applicable to other countries, e.g. Italy, Spain, and Portugal. Three ideas tie together the scheme: modified fiscal federalism, principalagent thinking and the analysis of discrete structural alternatives from new institutional economics. As a special case it encompasses the ideas of planned markets and public competition developed by von Otter and Saltman. The scheme can be used to analyse driving forces behind reforms and prediction of effects. To illustrate the thinking the recent Norwegian reform is put into context, not only geographically but also theoretically. The geographical context is that of Scandinavia and there is a summary of reforms in the Scandinavian countries over the past 20-30 years. The essay thus serves the double purpose of presenting and evaluating the Norwegian reform in a Scandinavian context and to take part in the neglected discipline of developing a theory of health care reform. The Norwegian January 2002 reform is described in some detail. It is a reversal of the Scandinavian model of decentralization and a move towards more centralism. The hospital system was transferred to the state that established five regions with independent (non-political) boards and each region has a number of daughters (hospitals) that have great autonomy with their own boards and are outside the legal restrictions of the public sector. Basically the idea is to mimic the corporate structure of large private companies. The reform is evaluated based on principal-agent thinking and the analysis of discrete structural alternatives. Overall there is no a priori reason to expect large improvements in efficiency – but on the other hand neither should one expect things to get worse. Many effects depend, however, crucially, on (a) the financing system that will be put in place late 2002 or early 2003, and (b) whether or not the political and management culture change as a result of the reform. In the concluding sections possible implications for Denmark and Sweden are discussed.Health care reform; Norway; principal-agents; discrete structural analysis

Does competition between hospitals improve clinical quality?: a review of evidence from two eras of competition in the English NHS

Gwyn Bevan and Matthew Skellern review evidence on the effects of hospital competition on quality of care within the English NHS and question whether they support government proposals to extend competition

Can Governments Do It Better? Merger Mania and Hospital Outcomes in the English NHS

The literature on mergers between private hospitals suggests that such mergers often produce little benefit. Despite this, the UK government has pursued an active policy of hospital merger. These mergers are initiated by a regulator, acting on behalf of the public, and justified on the grounds that merger will improve outcomes. We examine whether this promise is met. We exploit the fact that between 1997 and 2006 in England around half the short term general hospitals were involved in a merger, but that politics means that selection for a merger may be random with respect to future performance. We examine the impact of mergers on a large set of outcomes including financial performance, productivity, waiting times and clinical quality and find little evidence that mergers achieved gains other than a reduction in activity. In addition, mergers reduce the scope for competition between hospitals.

Physician-owned specialized facilities: focused factories or destructive competition?: a systematic review.

Multiple studies have investigated the business case of physician-owned specialized facilities (specialized hospitals and ambulatory surgery centers). However literature lacks integration. Building on the theoretical insights of disruptive innovation, a systematic review was conducted to assess the evidence base of these innovative delivery models. The Institute of Medicine’s quality framework (safe, effective, equitable, efficient, patient-centered and accessible care) was applied in order to evaluate the performance of such facilities. In addition the corresponding impact on full-service general hospitals was assessed. Database searches yielded 6,108 candidate articles of which 47 studies fulfilled the inclusion criteria. Overall the quality of the included studies was satisfactory. Our results show that little evidence exists in support of competitive advantages in favor of specialized facilities. Moreover even if competitive advantages exist, it is equally important to reflect on the corresponding impact on full service-general hospitals. The development of specialized facilities should therefore be monitored carefully

Back to the future in NHS reform

PURPOSE - In the mid 1990s the NHS ‘did’ competition, in the mid 2000s the NHS is ‘doing’ choice. This paper aims to cut through the rhetoric, highlight the differences and parallels between then and now and identify if these differences will have a different or the same impact on local services. DESIGN/METHODOLOGY/APPROACH – Following a review of literature from the 1990s, a qualitative research study is used to examine the impact of competition and markets in the 1990s. The discussion examines the implications of this study for current system reform. FINDINGS - Patient choice recreates many of the features of the internal market, but despite concerns at the time, the internal market did not have a significant impact on services. It is likely that patient choice will similarly have a limited impact. RESEARCH LIMITATIONS/IMPLICATIONS - The research is a case study confined to Day Surgery in one part of the North of England. ORIGINALITY/VALUE - The paper reminds academics and practitioners what happened last time the NHS attempted to introduce a market-based system.

Can governments do it better? Merger mania and hospital outcomes in the English NHS

The literature on mergers between private hospitals suggests that such mergers often produce little benefit. Despite this, the UK government has pursued an active policy of hospital mergers, arguing that such consolidations will bring improvements for patients. We examine whether this promise is met. We exploit the fact that between 1997 and 2006 in England around half the short term general hospitals were involved in a merger, but that politics means that selection for a merger may be random with respect to future performance. We examine the impact of mergers on a large set of outcomes including financial performance, productivity, waiting times and clinical quality and find little evidence that mergers achieved gains other than a reduction in activity. Given that mergers reduce the scope for competition between hospitals the findings suggest that further merger activity may not be the appropriate way of dealing with poorly performing hospitals.Hospital mergers, event study, quality, political influence.