The Impact Of Hospital Competition On Hospitals’ Health Payment And Service Quality

This study investigate the effect of hospital competition on hospitals’ performance based on the hospital data in Sichuan province during 2005-2014.It is noteworthy that we use the shock of opening the highway in the county as natural experiment.After opening the highway,the travel cost for patients has been reduced,patients in the county with highway might leave the residence and search medical service in other areas.Hence,opening the highway can be regarded as a policy shock which increases the competition among hospitals.We use the Difference-inDifference approach,and compare the trend of health payment and emergency mortality of hospitals in the counties with highway(denoted as highway hospital)with hospitals in the counties without highway(denoted as non-highway hospitals).Our results suggest that compared to non-highway hospitals,highway hospitals experience a 7.61%decrease in health payment and a 6.18% decrease in emergency mortality after opening the highway.Moreover,we find that highway hospitals are faced with the loss of patients in the areas other than Chengdu,the hospitals in Chengdu adsorb patients from highway hospitals in other counties after opening the highway.This phenomena is more obvious among non-Tertiary hospitals.And compared to non-highway hospitals,highway hospitals that are losing patients experience a 11.7% decrease in outpatient payment,a 8.76% decrease in inpatient payment and a 4.72% decrease in emergency mortality.This evidence indicate that after losing patients,highway hospitals reduce the health payment and improve the health service quality to detain the patients.We can draw the conclusion that after opening the highway,patients tend to search for medical service in Chengdu,highway hospitals in the counties other than Chengdu are faced with the loss of patients.To detain patients,those highway hospitals reduce the health payment and improve the health service quality,hence,the increasing competition encourage hospitals to have e better performace.