Luigi Siciliani

Hospital Competition and Quality with Regulated Prices

We analyse the effect of competition on quality in hospital markets with regulated prices, considering both the effect of (i) introducing competition (monopoly versus competition) and (ii) increasing competition through lower transportation costs (increased substitutability) or a higher number of hospitals. With semi-altruistic providers and a fairly general cost structure, we show that the relationship between competition and quality is generally ambiguous. In contrast to the received theoretical literature, this is consistent with, and potentially explains, the mixed empirical evidence.

Explaining Waiting Times Variations for Elective Surgery Across OECD Countries

Waiting times for publicly-funded elective surgery are a major health policy concern in many OECD countries (like Australia, Canada, Denmark, Finland, Ireland, Italy, the Netherlands, New Zealand, Norway, Spain, Sweden, and the United Kingdom), but are not a concern in others (like Austria, Belgium, France, Germany, Japan, Luxembourg, Switzerland, and the United States). This paper contains a comparative analysis of these two groups of countries. It is found...

Waiting times and socioeconomic status among elderly Europeans: evidence from SHARE

Waiting times for specialist consultation and non-emergency surgery are often considered an equitable rationing mechanism in the public healthcare sector, because access to care is not based on socioeconomic status. This study tests empirically this claim using data from the Survey of Health, Ageing and Retirement in Europe (SHARE). The sample includes nine European countries: Austria, Denmark, France, Germany, Greece, Italy, the Netherlands, Spain and Sweden. For specialist consultation, we find that individuals with high education experience a reduction in waiting times of 68% in Spain, 67% in Italy and 34% in France (compared with individuals with low education). Individuals with intermediate education report a waiting-time reduction of 74% in Greece (compared with individuals with low education). There is also evidence of a negative and significant association between education and waiting times for non-emergency surgery in Denmark, the Netherlands and Sweden. High education reduces waits by 66, 32 and 48%, respectively. We also find income effects, although generally modest. An increase in income of 10 000 Euro reduces waiting times for specialist consultation by 8% in Germany and waiting times for non-emergency surgery by 26% in Greece. Surprisingly, an increase in income of 10 000 Euro increases waits by 11% in Sweden.

Measuring and Comparing Health Care Waiting Times in OECD Countries

Waiting times for elective treatments are a key health-policy concern in several OECD countries. This study describes common measures of waiting times from administrative data across OECD countries. It focuses on common elective procedures, such as hip and knee replacement, and cataract surgery, where waiting times are notoriously long. It provides comparative data on waiting times across 12 OECD countries and presents trends in waiting times over the last decade. Waiting times appear to be low in the Netherlands and Denmark. In the last decade the United Kingdom (in particular England), Finland and the Netherlands have witnessed large reductions in waiting times which can be attributed to a range of policy initiatives, including higher spending, waiting-times target schemes and incentive mechanisms, which reward higher levels of activity. The negative trend in these countries has, however, halted or reversed in recent years. The analysis also emphasizes systematic differences across different waiting-time measures, in particular between the distribution of waiting times of patients treated versus that of patients on the list. Mean waiting times are systematically higher than median waiting times and the difference can be quantitatively large.

Quality Competition with Profit Constraints: Do Non-Profit Firms Provide Higher Quality than For-Profit Firms?

In many markets, such as education, health care and public utilities, firms are often profit-constrained either due to regulation or because they have non-profit status. At the same time such firms might have altruistic concerns towards consumers. In this paper we study semi-altruistic firms’ incentives to invest in quality and cost-reducing effort when facing constraints on the distribution of profits. Using a spatial competition framework, we derive the equilibrium outcomes under both quality competition with regulated prices and quality-price competition. Profit constraints always lead to lower cost-efficiency, whereas the effects on quality and price are ambiguous. If altruism is high (low), profit-constrained firms offer higher (lower) quality and lower (higher) prices than firms that are not profit-constrained. Compared with the first-best outcome, the cost-efficiency of profit-constrained firms is too low, while quality might be over- or underprovided. Profit constraints may improve welfare and be a complement or substitute to a higher regulated price, depending on the degree of altruism.

Competition and quality in regulated markets: a differential-game approach

We investigate the effect of competition on quality in health care markets with regulated prices taking a differential game approach, in which quality is a stock variable. Using a Hotelling framework, we derive the open-loop solution (health care providers set the optimal investment plan at the initial period) and the feedback closed-loop solution (providers move investments in response to the dynamics of the states). Under the closed-loop solution competition is more intense in the sense that providers observe quality in each period and base their investment on this information. If the marginal provision cost is constant, the open-loop and closed-loop solutions coincide, and the results are similar to the ones obtained by static models. If the marginal provision cost is increasing, investment and quality are lower in the closed-loop solution (when competition is more intense). In this case, static models tend to exaggerate the positive effect of competition on quality.

Hospital Competition with Soft Budgets

We study the incentives for hospitals to provide quality and expend cost-reducing effort when their budgets are soft, i.e., the payer may cover deficits or confiscate surpluses. The basic set up is a Hotelling model with two hospitals that differ in location and face demand uncertainty, where the hospitals run deficits (surpluses) in the high (low) demand state. Softer budgets reduce cost efficiency, while the effect on quality is ambiguous. For given cost efficiency, softer budgets increase quality since parts of the expenditures may be covered by the payer. However, softer budgets reduce cost-reducing effort and the profit margin, which in turn weakens quality incentives. We also find that profit confiscation reduces quality and cost-reducing effort. First best is achieved by a strict no-bailout and no-profit-confiscation policy when the regulated price is optimally set. However, for suboptimal prices a more lenient bailout policy can be welfare improving.

THE EFFECTS OF TAXING SUGAR-SWEETENED BEVERAGES ACROSS DIFFERENT INCOME GROUPS

This paper investigates the impact of sugar-sweetened beverages (SSB) taxes on consumption, bodyweight and tax burden for low-income, middle-income and high-income groups using an Almost Ideal Demand System and 2011 Household level scanner data. A significant contribution of our paper is that we compare two types of SSB taxes recently advocated by policy makers: A 20% flat rate sales (valoric) tax and a 20 cent/L volumetric tax. Censored demand is accounted for using a two-step procedure. We find that the volumetric tax would result in a greater per capita weight loss than the valoric tax (0.41 kg vs. 0.29 kg). The difference between the change in weight is substantial for the target group of heavy purchasers of SSBs in low-income households, with a weight reduction of up to 3.20 kg for the volumetric and 2.06 kg for the valoric tax. The average yearly per capita tax burden on low-income households is

Multi‐tasking, quality and pay for performance

17.87 (0.21% of income) compared with

Horizontal Mergers and Product Quality

15.17 for high-income households (0.07% of income) for the valoric tax, and