The European Journal of Health Economics

, Volume 14, Issue 3, pp 415–429

Effects of competition on hospital quality: an examination using hospital administrative data

Original Paper

DOI: 10.1007/s10198-012-0386-7

Cite this article as:
Palangkaraya, A. & Yong, J. Eur J Health Econ (2013) 14: 415. doi:10.1007/s10198-012-0386-7


This paper investigates the effects of competition on hospital quality using hospital administration data from the State of Victoria, Australia. Hospital quality is measured by 30-day mortality rates and 30-day unplanned readmission rates. Competition is measured by Herfindahl–Hirschman index and the numbers of competing public and private hospitals. The paper finds that hospitals facing higher competition have lower unplanned admission rates. However, competition is related negatively to hospital quality when measured by mortality, albeit the effects are weak and barely statistically significant. The paper also finds that the positive effect of competition on quality as measured by unplanned readmission differs greatly depending on whether the hospital is publicly or privately owned.


Hospital competitionHospital qualityHospital markets

JEL Classification


Copyright information

© Springer-Verlag 2012

Authors and Affiliations

  1. 1.Melbourne Institute of Applied Economic and Social ResearchThe University of MelbourneParkvilleAustralia