Business Intelligence

The Impact Of Competition On Management Quality: Evidence From Public Hospitals

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Executive Summary

In this paper, the authors examine the causal impact of competition on management quality. They analyze the hospital sector where geographic proximity is a key determinant of competition, and English public hospitals where political competition can be used to construct instrumental variables for market structure. Since almost all major English hospitals are government run, closing hospitals in areas where the governing party has a small majority is rare due to fear of electoral punishment. They find that management quality - measured using a new survey tool - is strongly correlated with financial and clinical outcomes such as survival rates from emergency heart attack admissions (AMI).

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