Ricerc@Sapienza

During their lifetime individuals form rankings concerning the quality of healthcare services of hospitals located in their neighborhood as well as, especially when in need of specialized treatments, of those located nation-wise. Most of the recent theoretical models dealing with the quality of healthcare of competing hospitals use a horizontal differentiated setting à la Hotelling (1929) with regulated prices and fixed locations to explain their strategic decisions about quality of hospitals (see, for instance, Brekke et al., 2011 and the literature cited therein). However, often hospitals are vertically differentiated quality-wise, i.e. individuals naturally rank them unanimously vertically and not horizontally on the quality ladder. In addition, the transmission of information about the quality of local and national hospitals does not usually spread instantaneously among consumers. In reference to these conceptual points, the current project aims to firstly develop a model in which hospitals compete in quantities and qualities to provide vertically differentiated healthcare services and where individuals are not immediately aware of the quality of the existing hospitals, initially knowing only the quality of the hospitals located nearby. However, over time individuals meet other people and exchange information on the quality of existing hospitals, and this affects progressively their demands of healthcare services. As a second objective we plan to use an extensive panel data of NHS English hospitals elaborated by the research team covering the last twenty years to investigate the quality and quantity choices made by hospitals, with the aim to develop measures of the quality healthcare services.

References:

Hotelling, H. (1929) "Stability in Competition", Economic Journal, 39, 153, 41-57.
Brekke, K.R., Siciliani, L., Straume, O.R., 2011. Hospital competition and quality with regulated prices. Scandinavian Journal of Economics, 113, 444-469.