Market structure, patient choice and hospital quality for elective patients

We examine the change in the effect of market structure on hospital quality for elective procedures (hip and knee replacements, and coronary artery bypass grafts) following the 2006 loosening of restrictions on patient choice of hospital in England. We allow for time-varying endogeneity due to the effect of  unobserved patient characteristics on patient choice of hospital using Two Stage Residual Inclusion. We find that the change in the effect of market structure due to the 2006 choice reforms was to reduce quality by increasing the probability of a post-operative emergency readmission for hip and knee replacement patients. There was no effect of the choice reform on hospital quality for coronary bypass patients. We find no evidence of self-selection of patients into hospitals, suggesting that a rich set of patient-level covariates controls for differences in casemix.