Provider competition and healthcare quality: More bang for the buck?

Public and private entities around the world are trying to induce the provision of higher-quality health care by adopting institutional arrangements intended to promote competition among care providers. I selectively survey and supplement the literature to show that an increase in competition—modele...

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Bibliographic Details
Published inInternational journal of industrial organization Vol. 31; no. 5; pp. 612 - 625
Main Author Katz, Michael L.
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.09.2013
Elsevier Sequoia S.A
Subjects
Competition
Health care industry
Healthcare
Hospitals
Information
Insurance
Organization theory
Quality
Quality of care
Studies
Competition
L15
Hospitals
Quality
Insurance
I11
Healthcare
Information
L13
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Summary:Public and private entities around the world are trying to induce the provision of higher-quality health care by adopting institutional arrangements intended to promote competition among care providers. I selectively survey and supplement the literature to show that an increase in competition—modeled either as a larger number of care providers or greater precision of signals available to consumers regarding provider quality—may result in lower equilibrium quality, holding prices fixed. These findings are an indication that considerable opportunities exist for industrial organization theorists to contribute to our understanding of healthcare markets. ► Studies healthcare providers facing administered prices and competing on quality. ► An increase in the number of firms can reduce equilibrium quality. ► Improved information can reduce equilibrium quality. ► Care providers can be substitutes for consumers while complements for insurers. ► Policy implications are discussed.
ISSN:0167-7187
1873-7986
DOI:10.1016/j.ijindorg.2013.02.001