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

Research output: Working paperDiscussion paper



Publication details

DatePublished - Jan 2013
PublisherCentre for Health Economics, University of York
Place of PublicationYork, UK
Number of pages33
Original languageEnglish

Publication series

NameCHE Research Paper
PublisherCente for Health Economics, University of York


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%

    Research areas

  • Quality, regulated prices, hospitals, competition, spatial econometrics

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