The effects of competition on medical service provision

Abstract

We explore how competition between physicians affects medical service provision. Previous research has shown that, without competition, physicians deviate from patient-optimal treatment under payment systems like capitation and fee-for-service. Although competition might reduce these distortions, physicians usually interact with each other repeatedly over time and only a fraction of patients switches providers at all. Both patterns might prevent competition to work in the desired direction. To analyze the behavioral effects of competition, we develop a theoretical benchmark that is then tested in a controlled laboratory experiment. Experimental conditions vary physician payment and patient characteristics. Real patients benefit from provision decisions made in the experiment. Our results reveal that, in line with the theoretical prediction, introducing competition can reduce overprovision and underprovision, respectively. The observed effects depend on patient characteristics and the payment system, though. Tacit collusion is observed and particularly pronounced with fee-for-service payment, but it appears to be less frequent than in related experimental research on price competition.

A third-party investigation of inpatient satisfaction with a tertiary hospital in People’s Republic of China

“…Hospitals are facing doctor–patient conflicts that have intensified the need for the assessment of patient satisfaction, as improved patient satisfaction could effectively alleviate the conflicts between doctors and patients. 6 Medical services are different from general market services, 7 with information asymmetry, high risk, high expectations of patients and other characteristics. The cognition of patients, their psychological and emotion state, the prevalence of stress and the current tension in the doctor–patient relationship will have an irrational impact on evaluation of the medical services received.…”

Factors Affecting Fee-Setting for Dental Services in Iran’s Private Sector: Dentists’ Perspective

“…This can increase the competition between dentists to attract more patients. As an example for the importance of competition among medical service providers, Brosig-Koch et al indicated that depending on patient characteristics and the payment method, competition can reduce over-provision and under-provision of services (26).…”

Quality competition and hospital mergers—An experiment

“…Although there are some experimental studies investigating mergers (e.g., Fonseca & Normann, ; Huck, Konrad, Müller, & Normann, ) or quality competition (e.g., Henze, Schuett, & Sluijs, ), in a nonhealth context, they do not account for both quality competition and mergers, nor do they account for the particularities of hospital markets such as altruistic providers. There also are various health economic experiments investigating the role of altruism or professional norms for medical provision behaviour on an individual level (Brosig‐Koch, Hehenkamp, & Kokot, ; Brosig‐Koch, Hennig‐Schmidt, Kairies‐Schwarz, & Wiesen, ; Brosig‐Koch, Hennig‐Schmidt, Kairies‐Schwarz, & Wiesen, ; Godager & Wiesen, ; Hennig‐Schmidt, Selten, & Wiesen, ; Kesternich, Schumacher, & Winter, ). Brosig‐Koch, Hehenkamp, et al () investigate quantity competition between two physicians.…”

“…There also are various health economic experiments investigating the role of altruism or professional norms for medical provision behaviour on an individual level (Brosig‐Koch, Hehenkamp, & Kokot, ; Brosig‐Koch, Hennig‐Schmidt, Kairies‐Schwarz, & Wiesen, ; Brosig‐Koch, Hennig‐Schmidt, Kairies‐Schwarz, & Wiesen, ; Godager & Wiesen, ; Hennig‐Schmidt, Selten, & Wiesen, ; Kesternich, Schumacher, & Winter, ). Brosig‐Koch, Hehenkamp, et al () investigate quantity competition between two physicians. Yet they do not investigate quality competition and mergers or team decisions, which might affect altruistic behaviour in a hospital setting.…”

“…To create a more realistic decision situation, which allows for altruism towards patients, we implemented a transfer of the monetary equivalent of quality choices similar to Eckel and Grossman (), Hennig‐Schmidt et al (), Brosig‐Koch, Hennig‐Schmidt, et al (), Brosig‐Koch, Hehenkamp, et al (), and Brosig‐Koch et al, (). Participants in the experiment knew that the higher the level of quality provided, the more money would go to a charity granting uninsured patients in Germany, who would otherwise not be treated or have access to health care.…”