Does price competition damage healthcare quality?

Arbeitspapier

One of the reasons why regulators are hesitant about permitting price competition in healthcare markets is that it may damage quality when information is poor. Evidence on whether this fear is well-founded is scarce. We provide evidence using a reform that permitted Dutch health insurers and hospitals to freely negotiate prices for elective procedures. Unlike previous research that has relied on indicators of the quality of urgent treatments, we take advantage of the plausible absence of selection bias in our setting to identify the effect on quality of non-acute hip replacements. Using administrative data on all admissions to Dutch hospitals, we find no evidence that increased exposure to price competition reduces quality measured by readmission rates, despite the lack of publicly available information on this outcome. In fact, there is evidence of a temporary, positive impact on quality. Our estimated null effect over the full post-liberalization period is robust.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. TI 2018-040/V

Classification and Topics

• Classification: Wirtschaft ; Analysis of Health Care Markets ; Transactional Relationships; Contracts and Reputation; Networks ; Information and Product Quality; Standardization and Compatibility
• Subject: Healthcare ; hospital ; competition ; quality ; contracting

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Roos, Anne-Fleur ; van Doorslaer, Eddy ; O'Donnell, Owen ; Schutt, Erik ; Varkevisser, Marco
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/185559
• Last update: 10.03.2025, 11:43 AM CET