MARKET-STRUCTURE AND HOSPITAL EFFICIENCY - EVALUATING POTENTIAL EFFECTS OF DEREGULATION IN A NATIONAL-HEALTH-SERVICE

In this article we examine the potential effect of market structure on hospital technical efficiency as a measure of performance controlled by ownership and regulation. This study is relevant to provide an eval uation of the potential effects of recommended and initiated deregulat ion policies in order to promote market reforms in the context of a Eu ropean National Health Service. Our goal was reached through three mai n empirical stages. Firstly, using patient origin data from hospitals in the region of Catalonia in 1990, we estimated geographic hospital m arkets through the Elzinga-Hogarty approach, based on patient flows. T hen we measured the market level of concentration using the Herfindahl -Hirschman index. Secondly, technical and scale efficiency scores for each hospital was obtained specifying a Data Envelopment Analysis. Acc ording to the data nearly two-thirds of the hospitals operate under th e production frontier with an average efficiency score of 0.841. Final ly, the determinants of the efficiency scores were investigated using a censored regression model. Special attention was paid to test the hy pothesis that there is an efficiency improvement in more competitive m arkets. The results suggest that the number of competitors in the mark et contributes positively to technical efficiency and there is some ev idence that the differences in efficiency scores are attributed to sev eral environmental factors such as ownership, market structure and reg ulation effects.