Competition in health care: Lessons from the English experience

The use of competition and the associated increase in choice in health care is a popular reform model, adopted by many governments across the world. Yet it is also a hotly contested model, with opponents seeing it, at best, as a diversion of energy or a luxury and, at worst, as leading to health care inequality and waste. This paper subjects the use of competition in health care to scrutiny. It begins by examining the theoretical case and then argues that only by looking at evidence can we understand what works and when. The body of the paper examines the evidence for England. For 25 years the United Kingdom has been subject to a series of policy changes which exogenously introduced and then downplayed the use of competition in health care. This makes England a very useful test bed. The paper presents the UK reforms and then discusses the evidence of their impact, examining changes in outcomes, including quality, productivity and the effect on the distribution of health care resources across socio-economic groups. The final section reflects on what can be learnt from these findings

Smarter task assignment or greater effort: the impact of incentives on team performance

We use an experiment to study the impact of team-based incentives, exploiting rich data from personnel records and management information systems. Using a triple difference design, we show that the incentive scheme had an impact on team performance, even with quite large teams. We examine whether this effect was due to increased effort from workers or strategic task reallocation. We find that the provision of financial incentives did raise individual performance but that managers also disproportionately reallocated efficient workers to the incentivised tasks. We show that this reallocation was the more important contributor to the overall outcome

Teacher pay and school productivity: exploiting wage regulation

The impact of teacher pay on school productivity is a central concern for governments worldwide, yet evidence is mixed. In this paper we exploit a feature of teacher labour markets to determine the impact of teacher wages. Teacher wages are commonly set in a manner that results in flat wages across heterogeneous labour markets. This creates an exogenous gap between the outside labour market and inside (regulated) wage for teachers. We use the centralized wage regulation of teachers in England to examine the effect of pay on school performance. We use data on over 3000 schools containing around 200,000 teachers who educate around half a million children per year. We find that teachers respond to pay. A ten percent shock to the wage gap between local labour market and teacher wages results in an average loss of around 2 percent in average school performance in the key exams taken at the end of compulsory schooling in England

Management Practices: Are Not For Profits Different?

Recent studies have demonstrated the importance of good management for firm performance. Here, we focus on management in not-for-profits (NFPs). We present a model predicting that management quality will be lower in NFPs compared to for-profits (FPs), but that outputs may not be worse if managers are altruistic. Using a tried and tested survey of management practices, we find that NFPs score lower than FPs but also that, while the relationship between management scores and outputs holds for FPs, the same is not true for NFPs. One implication is that management practices that work for FPs may be less effective in driving performance in NFPs

Herding Cats? Management and University Performance

Using a tried and tested measure of management practices that has been shown to predict firm performance, we survey nearly 250 departments across 100+ UK universities. We find large differences in management scores across universities and that departments in older, research-intensive universities score higher than departments in newer, more teaching-oriented universities. We also find that management matters in universities. The scores, particularly with respect to provision of incentives for staff recruitment, retention and promotion are correlated with both teaching and research performance conditional on resources and past performance. Moreover, this relationship holds for all universities, not just research-intensive ones

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

Working Pape

Does quality affect patients’ choice of Doctor? Evidence from England

Reforms giving users of public services choice of provider aim to improve quality. But such reforms will work only if quality affects choice of provider. We test this crucial prerequisite in the English health care market by examining the choice of 3.4 million individuals of family doctor. Family doctor practices provide primary care and control access to non-emergency hospital care, the quality of their clinical care is measured and published and care is free. In this setting, clinical quality should affect choice. We find that a 1 standard deviation increase in clinical quality would increase practice size by around 17%

Child mental health and educational attainment: multiple observers and the measurement error problem

We examine the effect of survey measurement error on the empirical relationship between child mental health and personal and family characteristics, and between child mental health and educational progress. Our contribution is to use unique UK survey data that contain (potentially biased) assessments of each child's mental state from three observers (parent, teacher and child), together with expert (quasi-)diagnoses, using an assumption of optimal diagnostic behaviour to adjust for reporting bias. We use three alternative restrictions to identify the effect of mental disorders on educational progress. Maternal education and mental health, family income and major adverse life events are all significant in explaining child mental health, and child mental health is found to have a large influence on educational progress. Our preferred estimate is that a one-standard-deviation reduction in ?true? latent child mental health leads to a 2- to 5-month loss in educational progress. We also find a strong tendency for observers to understate the problems of older children and adolescents compared to expert diagnosi

Public service markets: their economics, institutional oversight and regulation

Public services in the UK have been transformed over the past 25 years with the introduction of market oriented solutions into their provision. This has been characterised by a shift away from state provision to independent providers, and by the introduction of competition and choice. This shift was partly ideologically motivated and partly driven by budget cutting considerations following the financial crisis. As such it has been lacking a comprehensive economic justification or method of analysis. It is now commonly accepted that the language of economic markets is essential to frame arguments about how effectively public services are achieving their intended outcomes. Using market language and concepts may not always be comfortable for those from a traditional policy-making background. It can nevertheless be very useful when designing investigations into the effectiveness and value for money in the mechanisms of delivery of such services, whenever these services entail a degree of user choice as is currently the case in large parts of health, social care and education (referred to as competition in the market). Our paper wants to provide a conceptual basis on the way of thinking in these terms. We provide a description of the current state and then comment on the desirability of this quasi market approach. Uniquely in the literature, we analyse the expected and desired developments by distinguishing between choice and compulsory merit goods. In choice merit goods markets many users are unable to choose effectively because of the existence of a number of demand side or supply side market failures. Moreover, conflicts may exist between how service users actually make choices, and policy objectives such as universality or equity which may not be achieved simply by ‘leaving it to the market’. The users of compulsory merit goods are typically a minority and unable to internalise the full social benefits of their actions; hence it may be welfare-enhancing for society to coerce them ‘consume’ these services. As choice cannot be an objective, the commissioning (competition for the market) or direct provision by the state of such goods may meet public policy objectives more effectively than the market mechanism alone. Building on these foundations the paper discusses when public service markets are likely to be an effective method of achieving public policy objectives, and when they may not be. Our paper analyses the implications for the institutional and legal framework, funding oversight and regulation of public service markets as a result of their transformation into quasi-markets. The paper concludes with some suggestions for those charged with overseeing public service markets in practice based on this analysis