Working Paper: NBER ID: w18574
Authors: Martin Gaynor; Carol Propper; Stephan Seiler
Abstract: The impacts of choice in public services are controversial. We exploit a reform in the English National Health Service to assess the impact of relaxing constraints on patient choice. We estimate a demand model to evaluate whether increased choice increased demand elasticity faced by hospitals with regard to clinical quality and waiting time for an important surgical procedure. We find substantial impacts of the removal of restrictions. Patients became more responsive to clinical quality. Sicker patients and better informed patients were more affected. We leverage our model to calculate potential benefits. We find increased demand responsiveness led to a significant reduction in mortality and an increase in patient welfare. The elasticity of demand faced by hospitals increased post-reform, giving hospitals potentially large incentives to improve their quality of care and find suggestive evidence that hospitals responded strongly to the enhanced incentives due to increased demand elasticity. The results suggests greater choice can enhance quality.
Keywords: patient choice; demand elasticity; health care quality; NHS reform; mortality rates
JEL Codes: D12; I11; I18; L13; L30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Introduction of patient choice (I11) | Increased elasticity of demand faced by hospitals with respect to clinical quality (I11) |
| Increased elasticity of demand faced by hospitals with respect to clinical quality (I11) | Patients became more responsive to quality (I11) |
| Patients became more responsive to quality (I11) | Significant reduction in mortality rates (I14) |
| Introduction of patient choice (I11) | Significant reduction in mortality rates (I14) |
| Enhanced incentives created by the reform (H29) | Strong response from hospitals (I11) |
| Enhanced competition (L13) | Enhanced hospital quality (I19) |