Is Hospital Market Power Associated With Longer E.R. Waiting Time? - Evidence from Hospital Compare Data-Panel

Competition in Health Care Markets and Insurer and Hospital Behaviors

The paper aims at investigating the impact of hospital market structure on their quality choices. Particularly, I look at how hospital competition levels affect a set of the clinical conducts measurements that measures timely and effective care. My principal data come from Medicare Hospital Compare - Timely and Effective Care, which records information for hospitals reporting 21 quality measurements in E.R. setting during 2016 and 2017.
Using this national representative dataset, I found that hospitals with larger market share are able to significantly reduce the waiting time in Emergency Department (i.e.,exert higher quality). For instance: for an average hospital with average market share, an incremental change in it's market share is associated with a decrease of time spent at E.R. (from arrival to departure) by 11 minutes. This result is contrary to the prediction of traditional IO theory, where competition increases quality. Methodology wise, I used Poisson regressions with a population-based instrumental variable to eliminate endogeneity problem of market share.
My empirical results could help anti-trust authorities to promote policies using the “rule of reason” in which potential patients welfare‐improving and welfare‐decreasing effects of hospitals mergers must be assessed and weighed against each other.