Hospital Competition In The Nhs Saves Lives

Hospital competition in the National Health Service (NHS) in England lowers death rates, according to research by Dr Zack Cooper and colleagues, published in the August 2011 issue of the Economic Journal.

The study by researchers at the London School of Economics (LSE) looks at the impact of patient choice and hospital competition in the English NHS between 2002 and 2008.

The paper concludes that hospital competition in a market with fixed prices can lead to lower hospital death rates and improvements in patient outcomes. According to Dr Cooper:

''Everyone wants to see higher quality care in the NHS. Our study suggests that creating incentives for hospitals by introducing competition alongside providing patients with publicly available information can improve patient outcomes and save lives.

''This research isn''t about public versus private; it''s about illustrating that financial incentives can have a profound impact on hospital performance.''

Key results:

  • Hospital competition lowered relative death rates from heart attacks by approximately 7%.
  • The reforms led to over 900 fewer deaths from heart attacks during the three-year period after the choice and competition reforms were introduced.
  • The work provides evidence that increasing patient choice, publishing more information on hospital performance and allowing hospitals to compete can improve patient outcomes.

The paper looks at hospitals in England before and after competition was introduced into the NHS. The LSE research team looked at over 400,000 patient observations from 2002 to 2008. They were able to control for patients'' health status, age and socio-economic status. The core of their research strategy was to compare more and less competitive hospital markets before and after competition was introduced in 2006.

Cooper and his colleagues find that mortality rates fell more quickly in more competitive areas of the country after the reforms took force in 2006. The impact of the reforms was substantial. Each year after the reforms were introduced, a one standard deviation increase in competition (the equivalent of moving from a market with two hospitals to a market with four hospitals) led to a 0.33 percentage point reduction in heart attack death rates off of a baseline mortality rate of approximately 14%. Thus, they estimate that the reforms led to approximately a 7% relative reduction in heart attack deaths in the English NHS between 2006 and 2008 and led to 900 fewer deaths.

Cooper comments:

''Incentives cannot be a dirty word in the NHS. Creating financial incentives can save the NHS money and improve clinical quality.

''We find that competition between hospitals in a market with fixed prices led to very strong improvements in patient outcomes. Going forward, if the NHS is going to be successful, it can''t shy away from competition.''

He adds:

''In this research, we measured quality using mortality rates for heart attacks even though there was actually competition in the market for elective care. We looked at heart attack death rates because if we looked at outcomes for elective care, there is a risk that better hospitals will appear to be operating in less competitive markets if they manage to attract all their local patients. But with heart attack deaths, patients don''t have a great deal of choice, so the measure captures elements of overall hospital performance but do not influence the market for elective care''.

''Does Hospital Competition Save Lives? Evidence from the English NHS Patient Choice Reforms'' by authored by Zack Cooper, Stephen Gibbons, Simon Jones and Alistair McGuire is published in the August 2011 issue of the Economic Journal.