Can competition improve hospital quality of care? A difference-in-differences approach to evaluate the effect of increasing quality transparency on hospital quality

Abstract Public reporting on the quality of care is intended to guide patients to the provider with the highest quality and to stimulate a fair competition on quality. We apply a difference-in-differences design to test whether hospital quality has improved more in markets that are more competitive...

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Bibliographic Details
Published in:The European journal of health economics 2022-09, Vol.23 (7), p.1229-1242
Main Authors: Strumann, Christoph, Geissler, Alexander, Busse, Reinhard, Pross, Christoph
Format: Article
Language:English
Subjects:
Competition
Difference-in-differences
Economic Policy
Health Care Management
Health Economics
Hospital competition
Hospital quality of care
Hospitals
Industrialized nations
Market shares
Medicine
Medicine & Public Health
Mortality
Mortality risk
Original Paper
Patients
Pharmacoeconomics and Health Outcomes
Profits
Public Finance
Public Health
Public reporting
Quality improvement
Quality of care
Roles
Specialization
Stroke
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Summary:Abstract Public reporting on the quality of care is intended to guide patients to the provider with the highest quality and to stimulate a fair competition on quality. We apply a difference-in-differences design to test whether hospital quality has improved more in markets that are more competitive after the first public release of performance data in Germany in 2008. Panel data from 947 hospitals from 2006 to 2010 are used. Due to the high complexity of the treatment of stroke patients, we approximate general hospital quality by the 30-day risk-adjusted mortality rate for stroke treatment. Market structure is measured (comparatively) by the Herfindahl–Hirschman index (HHI) and by the number of hospitals in the relevant market. Predicted market shares based on exogenous variables only are used to compute the HHI to allow a causal interpretation of the reform effect. A homogenous positive effect of competition on quality of care is found. This effect is mainly driven by the response of non-profit hospitals that have a narrow range of services and private for-profit hospitals with a medium range of services. The results highlight the relevance of outcome transparency to enhance hospital quality competition.
ISSN:1618-7601
1618-7598
1618-7601
DOI:10.1007/s10198-021-01423-9