A matter of life and death

No surprise, incentives matter, find economists Marty Gaynor, Carol Propper and Stephan Seiler.  Patients in the UK, given a choice, find their way to better hospitals and that gives hospitals motivation to improve their quality.

And the people have a Labour government to thank for it;

We look at the relationship between hospital quality, as measured by patient survival rates, and market shares separately for the time periods before and after the reform [of the early 2000s]. Interestingly, we find that market shares are not correlated with hospital quality pre-reform, however they show a significant correlation with patient survival in the post-reform period. This gives us a first piece of evidence suggesting that patients were indeed allocated to relatively higher-quality hospitals after the reform (but not before).

 So, it worked in theory, and in practice (no pun intended);

In summary, we assess that the reform reduced cardiac bypass surgery mortality by 3% by re-allocating patients to better hospitals. This is clearly a lower bound on the beneficial effect one might expect from allowing choice, as we look only at the effect for one particular procedure. Secondly, we find evidence suggesting that hospitals responded to increased choice by improving their quality. If this is mirrored as a hospital-wide effect, there may be substantial additional positive benefits for patients. Finally, our findings add support to earlier evidence that indicate that the choice reforms led to falls in mortality in other treatments and shorter lengths of stay without increasing hospital total costs (Gaynor et al., 2012; Cooper et al., 2011) and also to work by Bloom et al. (2010) that indicates that more competitive environments have better management practices that are in turn associated with better hospital performance.