Does a hospital’s quality depend on the quality of other Hospitals? A spatial econometrics approach to investigating hospital quality competition

Hugh Stanley Emrys Gravelle; Rita Santos; Luigi Siciliani

Does a hospital’s quality depend on the quality of other Hospitals? A spatial econometrics approach to investigating hospital quality competition

Hugh Stanley Emrys Gravelle, Rita Santos, Luigi Siciliani

Research output: Working paper › Discussion paper

Abstract

We examine whether a hospital’s quality is affected by the quality provided by other
hospitals in the same market. We first set out a theoretical model with regulated
prices which specifies conditions on demand and cost functions which determine
whether a hospital will have higher quality when its rivals have higher quality. We
then apply spatial econometric methods to a sample of English hospitals in 2009-10 and a set of 16 quality measures including mortality rates, readmission, revision and redo rates and three patient reported indicators to examine to examine the relationship between the quality of hospitals. We find that a hospital’s quality is positively associated with the quality of its rivals for seven out of the sixteen quality measures and that in no case is there a negative association. In those cases where there is a positive association, an increase in rivals’ quality by 10% increases a hospital’s quality by 1.7% to 2.9%

Original language	English
Place of Publication	York, UK
Publisher	Centre for Health Economics, University of York
Number of pages	33
Publication status	Published - Jan 2013

Publication series

Name	CHE Research Paper
Publisher	Cente for Health Economics, University of York
No.	82

Keywords

Quality
regulated prices
hospitals
competition
spatial econometrics

Access to Document

CHERP82_Hospital_competition_quality_spatial_econometricsFinal published version, 624 KB

https://www.york.ac.uk/media/che/documents/papers/researchpapers/CHERP82_Hospital_competition_quality_spatial_econometrics.pdf

Cite this

Gravelle, H. S. E., Santos, R., & Siciliani, L. (2013). Does a hospital’s quality depend on the quality of other Hospitals? A spatial econometrics approach to investigating hospital quality competition. (CHE Research Paper; No. 82). Centre for Health Economics, University of York. https://www.york.ac.uk/media/che/documents/papers/researchpapers/CHERP82_Hospital_competition_quality_spatial_econometrics.pdf

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Gravelle, HSE , Santos, R & Siciliani, L 2013 'Does a hospital’s quality depend on the quality of other Hospitals? A spatial econometrics approach to investigating hospital quality competition' CHE Research Paper, no. 82, Centre for Health Economics, University of York, York, UK. <https://www.york.ac.uk/media/che/documents/papers/researchpapers/CHERP82_Hospital_competition_quality_spatial_econometrics.pdf>

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N2 - We examine whether a hospital’s quality is affected by the quality provided by otherhospitals in the same market. We first set out a theoretical model with regulatedprices which specifies conditions on demand and cost functions which determinewhether a hospital will have higher quality when its rivals have higher quality. Wethen apply spatial econometric methods to a sample of English hospitals in 2009-10 and a set of 16 quality measures including mortality rates, readmission, revision and redo rates and three patient reported indicators to examine to examine the relationship between the quality of hospitals. We find that a hospital’s quality is positively associated with the quality of its rivals for seven out of the sixteen quality measures and that in no case is there a negative association. In those cases where there is a positive association, an increase in rivals’ quality by 10% increases a hospital’s quality by 1.7% to 2.9%

AB - We examine whether a hospital’s quality is affected by the quality provided by otherhospitals in the same market. We first set out a theoretical model with regulatedprices which specifies conditions on demand and cost functions which determinewhether a hospital will have higher quality when its rivals have higher quality. Wethen apply spatial econometric methods to a sample of English hospitals in 2009-10 and a set of 16 quality measures including mortality rates, readmission, revision and redo rates and three patient reported indicators to examine to examine the relationship between the quality of hospitals. We find that a hospital’s quality is positively associated with the quality of its rivals for seven out of the sixteen quality measures and that in no case is there a negative association. In those cases where there is a positive association, an increase in rivals’ quality by 10% increases a hospital’s quality by 1.7% to 2.9%

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