Relationship between Competition and Outcomes in the Hospital Market

Author Name SHOJI Keishi (Research Bureau, The House of Representatives, Japan) / IBUKA Yoko (Keio University)
Creation Date/NO. August 2019 19-J-047
Research Project Research on the Improvement in Resource Allocation and Productivity among the Healthcare and Education Service Industries
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The consequences of hospital competition is a long-standing issue but empirical analyses show mixed results. We empirically analyze the relationship between competition and three outcome measures, the length of hospital stay, health improvement, and mortality, in the hospital market using Japanese data. Adjusting for patient and hospital characteristics, we find that some of the outcomes tend to improve in more competitive areas, in both urban and rural settings. However, the analysis shows a non-linear relationship between competition and the outcomes, suggesting that competitiveness beyond a threshold may deteriorate the outcomes. These results suggest that while a certain degree of competition could improve these outcomes, excessive competition may not be desirable.