Duke 2008 | ASHE | Equity and Efficiency in Health and Healthcare

Objectives An extensive empirical literature has examined the impact of hospital competition on quality of health care. However, findings provided inconclusive ambiguous evidence. The majority of studies have applied professional quality indicators, such as mortality or readmission. Competition may improve provider's sensitivity to patient, based on the assumption that patients are responsive to quality in their choice of the hospitals. Yet, patients usually have insufficient information about the professional quality indicators or cannot understand the meaning of indicators. The present study aims to examine the effects of market competition on perceived quality of care and readmission, with the hypothesis that hospital competition exerts stronger effects on patient's perceived quality of care than professional-defined quality.

Method This study employed data from 2 nationwide hospital discharged patient surveys; the universal health insurance claim data of the interviewed patients were also obtained for analysis. The survey included patients with one of the following major diagnoses: diabetes mellitus, stroke, asthma or pneumonia. Perceived quality of care was composed of two sub-scale measures: interpersonal skills and technical skills of the healthcare services. There were 6 question items included in each sub-scale; a higher score meant better perceived quality. We also calculated hospital readmission within 30 days as the professional quality indicator in the analysis.

The market area was essentially defined based on geopolitical boundary approach. The market competition was measured by Hirschman-Herfindahl Index. We used instrumental variables as well as pre-determined competition index to minimize possible measurement errors or endogenous bias. In addition, we applied patient-flow information to construct market areas for each of the hospitals which might better capture the degree of competition for individual hospitals. We fitted a mixed effects model with a random intercept for each hospital, taking into account the effects of clustering patients within the same hospital.

Results A total of 8,470 patients discharged from 104 hospitals were included in this study. The preliminary analysis showed that a unit increase of adjusted HHI was statistically significantly associated with a decrease of perceived interpersonal score by 1.13. That is, the higher the market competition, the better the interpersonal skills. A similar association was found for the perceived clinical competence with a coefficient of -1.17. However, we found no significance association between market competition and the possibility of hospital readmission.

Conclusion Our study is the first one using patient perceived quality of care as an outcome measure to assess the effect of market competition. The results suggest that quality of care from patient's perspective is quite sensitive to the degree of competition and could be a valid measure for investigations on this topic.