Kessler D & Geppert J, (2003)

‘The Effects of Hospital Competition on Variation in Utilization and Quality of Care’

presented at the Agency for Healthcare Research and Quality/Federal Trade Commission
Provider Competition and Quality Conference, May 28, 2003

• An investigation of the effects of hospital competition, on the variation in medical treatment and quality of care experienced by elderly Medicare beneficiaries with AMI.
• Estimates the extent to which concentration has different effects on patients with prior year hospital utilisation (“sick” patients) and those without it (“healthy” patients).

Key results:

• Healthy patients from concentrated markets receive more intensive treatment than such patients from less concentrated markets, though without significant health benefits.
• In contrast, sick patients from concentrated markets receive less intensive treatment than such patients from unconcentrated markets, and have significantly worse health outcomes.
• Since this dispersion-induced increase in intensity is, on net, expenditure-reducing but outcome improving, they conclude that it is welfare-improving.
• The authors’ results support strict antitrust enforcement in hospital markets. They find no evidence of a welfare downside to competition through increased wasteful treatment variation, as some theoretical models suggest.

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