Hospital competition under patient inertia: do switching costs stimulate quality provision?

dc.contributor.authorSá, Luís Carlos Sousapor
dc.date.accessioned2019-12-06T16:16:43Z
dc.date.available2019-12-06T16:16:43Z
dc.date.issued2019
dc.description.abstractRecent empirical evidence establishes previous use as a strong predictor of patient choice of hospital and indicates that switching costs explain a significant share of inertia in the hospital industry. In a model of competition between two semi-altruistic and horizontally differentiated hospitals with inherited demand, I investigate the effect of lower switching costs on quality provision and show that it depends on the hospitals' production technology and degree of altruism. If cost substitutability (complementarity) between quality and output is sufficiently weak (strong) relative to altruism, lower switching costs reduce quality at the high-volume hospital, average quality, and patient welfare. While milder patient preferences increase the scope for an increase in quality at both hospitals, it can only occur if hospitals are semi-altruistic. Finally, I show that the distribution of patients between hospitals matters. Even if hospital-level quality and patient welfare increase, lower switching costs may lead to lower average quality.por
dc.description.sponsorshipThis paper is financed by National Funds of the FCT – Portuguese Foundation for Science and Technology within the project UID/ECO/03182/2019. I also thank FCT for the PhD Studentship SFRH/BD/129073/2017, financed by National Funds of the FCT and the European Social Fund (ESF).por
dc.distributioninternationalpor
dc.identifier.urihttps://hdl.handle.net/1822/62589
dc.language.isoengpor
dc.publisherUniversidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE)por
dc.relationinfo:eu-repo/grantAgreement/FCT/6817 - DCRRNI ID/UID%2FECO%2F03182%2F2019/PT
dc.relationinfo:eu-repo/grantAgreement/FCT/POR_NORTE/SFRH%2FBD%2F129073%2F2017/PT
dc.relation.publisherversionhttps://www.eeg.uminho.pt/pt/investigar/nipe/Paginas/publicacoes.aspxpor
dc.rightsopenAccesspor
dc.subjectHospital competitionpor
dc.subjectQualitypor
dc.subjectSwitching costspor
dc.subjectPatient choicepor
dc.subjectVolume-outcome effectspor
dc.subjectAltruismpor
dc.titleHospital competition under patient inertia: do switching costs stimulate quality provision?por
dc.typeworkingPaperpor
dspace.entity.typePublicationen
oaire.citationEndPage33por
oaire.citationIssueNIPE WP 16/2019por
oaire.citationStartPage1por

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Hospital Competition Under Patient Inertia: Do Switching Costs Stimulate Quality Provision?