Propper C, Burgess S and Green K, (2004)

‘Does Competition Between Hospitals Improve the Quality of Care? Hospital Death Rates and the NHS Internal Market’

Journal of Public Economics, 88 (7-8): 1247-1272

• Examines the impact of competition (as introduced by the NHS Internal Market reforms) on quality of care in NHS hospitals.
• Quality is measured using the death rate from acute myocardial infarction (AMI).
• Uses data from 1995-1998 to generate a cross-section dataset on AMI mortality, generating a single data point for each hospital using its weighted average death rate over the 3 year period in order to reduce the ‘noise’ in the data.
• A measure of competition is calculated which is based on potential rather than actual patient

Key results:

• The estimated effect of competition is small and negative.
• Hospitals in more competitive areas have higher death rates, controlling for hospital characteristics, actual and potential patient characteristics.
• This is taken by the authors to suggest that weak quality signals in the market have resulted in a weak cross-sectional association between higher competition and lower quality.

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