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Dynamic Hospital Competition Under Rationing by Waiting Times

Author

Listed:
  • Luís Sá

    (University of Minho, Department of Economics/NIPE)

  • Luigi Siciliani

    (University of York, Department of Economics and Related Studies)

  • Odd Rune Straume

    (University of Minho, Department of Economics/NIPE)

Abstract
We develop a dynamic model of hospital competition where (i) waiting times increase if demand exceeds supply; (ii) patients differ in their evaluation of health benefits and choose a hospital based on waiting times; and (iii) there are penalties for providers with long waits. We show that, if penalties are linear in waiting times, a more competitive dynamic environment does not affect waiting times. If penalties are instead non-linear, we find that waiting times are longer under the more competitive environment. The latter result is derived by calibrating the model with waiting times and elasticities observed in the English NHS for a common treatment (cataract surgery), which also shows that the difference between waiting times under the two solution concepts is quantitatively small. Policies that facilitate patient choice, an alternative measure of competition, also lead to higher steady-state waiting times, and tougher penalties exacerbate the negative effect of choice policies.

Suggested Citation

  • Luís Sá & Luigi Siciliani & Odd Rune Straume, 2018. "Dynamic Hospital Competition Under Rationing by Waiting Times," NIPE Working Papers 20/2018, NIPE - Universidade do Minho.
    • Handle: RePEc:nip:nipewp:20/2018
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    References listed on IDEAS

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    Cited by:

    1. Vanessa Cirulli & Giorgia Marini & Marco A. Marini & Odd Rune Straume, 2023. "Do hospital mergers reduce waiting times? Theory and evidence from the english NHS," NIPE Working Papers 07/2023, NIPE - Universidade do Minho.
    2. Brekke, Kurt R. & Canta, Chiara & Siciliani, Luigi & Straume, Odd Rune, 2021. "Hospital competition in a national health service: Evidence from a patient choice reform," Journal of Health Economics, Elsevier, vol. 79(C).
    3. Xinyu Li & Christian Waibel, 2021. "Patients' free choice of physicians is not always good," Health Economics, John Wiley & Sons, Ltd., vol. 30(11), pages 2751-2765, November.
    4. Richards-Shubik, Seth & Roberts, Mark S. & Donohue, Julie M., 2022. "Measuring quality effects in equilibrium," Journal of Health Economics, Elsevier, vol. 83(C).
    5. Domenico Lisi & Giacomo Pignataro, 2021. "A note on the trade‐off between waiting times and quality in a constrained hospital market," Health Economics, John Wiley & Sons, Ltd., vol. 30(1), pages 180-185, January.
    6. Pedro Pita Barros, 2022. "Quality decreases from introducing patient choice in a National Health Service," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 21(3), pages 351-381, September.
    7. Wende, Danny & Kopetsch, Thomas & Richter, Wolfram F., 2021. "A Demand-Oriented Approach to Health Care Capacity Planning," IZA Discussion Papers 14860, Institute of Labor Economics (IZA).
    8. Giuseppe Moscelli & Hugh Gravelle & Luigi Siciliani, 2021. "Hospital competition and quality for non‐emergency patients in the English NHS," RAND Journal of Economics, RAND Corporation, vol. 52(2), pages 382-414, June.
    9. Bisceglia, Michele & Padilla, Jorge & Piccolo, Salvatore & Sääskilahti, Pekka, 2023. "On the bright side of market concentration in a mixed-oligopoly healthcare industry," Journal of Health Economics, Elsevier, vol. 90(C).
    10. Kortelainen, Mika & Laine, Liisa T. & Lavaste, Konsta & Saxell, Tanja & Siciliani, Luigi, 2023. "Improving Performance Through Allocation and Competition: Evidence from a Patient Choice Reform," Working Papers 156, VATT Institute for Economic Research.

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    More about this item

    Keywords

    Hospital competition; waiting times; differential games.;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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