The impact of competition on management quality: evidence from public hospitals

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Title: The impact of competition on management quality: evidence from public hospitals
Authors: Bloom, N
Propper, C
Seiler, S
Van Reenen, J
Item Type: Journal Article
Abstract: We analyse the causal impact of competition on managerial quality and hospital performance. To address the endogeneity of market structure we analyse the English public hospital sector where entry and exit are controlled by the central government. Because closing hospitals in areas where the governing party is expecting a tight election race (“marginals”) is rare due to the fear of electoral defeat, we can use political marginality as an instrumental variable for the number of hospitals in a geographical area. We find that higher competition results in higher management quality, measured using a new survey tool, and improved hospital performance. Adding a rival hospital increases management quality by 0.4 standard deviations and increases survival rates from emergency heart attacks by 9.7%. We confirm the robustness of our IV strategy to “hidden policies” that could be used in marginal districts to improve hospital management and to changes in capacity that may follow from hospital closure.
Issue Date: Apr-2015
Date of Acceptance: 1-Sep-2014
URI: http://hdl.handle.net/10044/1/5915
Publisher Link: http://www3.imperial.ac.uk/business-school/research/publications/discussion_papers/propper%202010-09
DOI: 10.1093/restud/rdu045
10.25561/5915
ISSN: 0034-6527
Publisher: Oxford University Press (OUP)
Start Page: 457
End Page: 489
Journal / Book Title: The Review of Economic Studies
Volume: 82
Issue: 2
Copyright Statement: © The Authors
Sponsor/Funder: Economic & Social Research Council (ESRC)
Funder's Grant Number: ES/J023108/1
Keywords: Social Sciences
Economics
Business & Economics
Management
Hospitals
Competition
Productivity
PRODUCTIVITY
CHOICE
MARKETS
ENGLAND
POLICY
FIRMS
US
management
hospitals
competition
productivity
J45
F12
I18
J31
management
hospitals
competition
productivity
14 Economics
Economics
Publication Status: Published
Online Publication Date: 2015-01-24
Appears in Collections:Imperial College Business School