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Do Pro-Competition Healthcare Reforms Always Bring Health Benefits? Evidence from China.

Zixuan Peng¹, Audrey Laporte², Xiaolin Wei²

¹School of Public Health, Southeast University, Nanjing, China.

Health Systems and Reform

|June 9, 2025

Summary

Hospital competition generally lowers inpatient care quality, increasing readmissions and length of stay. However, competition among private nonprofit hospitals improved care quality, suggesting tailored strategies are needed.

Keywords:

Competition reforms healthcare quality hospital competition

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Area of Science:

Health Services Research
Health Economics
Hospital Management

Background:

Mixed healthcare markets with competing facilities are common globally.
The impact of hospital competition on patient health outcomes remains understudied.

Purpose of the Study:

To assess the effects of aggregate and type-specific hospital competition on inpatient care quality.
To analyze how competition between similar (intra-type) and different (inter-type) hospital types influences patient outcomes.

Main Methods:

Utilized a dataset of 267,183 individuals from China.
Employed the Herfindahl-Hirschman index to measure hospital competition.
Used length of stay, readmission, and mortality as quality indicators, analyzed with Poisson and binomial logistic models and instrumental variables.

Main Results:

Aggregate hospital competition was associated with reduced inpatient care quality, indicated by increased readmission rates and longer lengths of stay.
Intra-type hospital competition generally had a more significant negative impact on care quality than inter-type competition.
An exception was observed where competition among private nonprofit hospitals led to improved inpatient care quality.

Conclusions:

Hospital competition is not universally beneficial for improving healthcare quality.
A nuanced, context-specific approach to healthcare competition policy is recommended over a one-size-fits-all strategy.
Policies should consider the specific types of hospitals and their competitive interactions to optimize patient outcomes.