Chapter 4. The Competition Effect of a French Reform on Hospital Quality

Gobillon L., and Milcent C.
Pages 161-197

We study the effect on hospital quality of a pro-competition reform gradually introduced in France over the 2004-2008 period. Whereas before the reform public and non-profit hospitals were subject to a global budget system and private hospitals to a fee-for-service system, they are all subject to a Diagnostic Related Group (DRG) based payment system after the reform. We evaluate to what extent the incentives for hospital competition created by the reform affect mortality for the different types of hospitals using a difference-in-­differences approach. Estimates are based on an exhaustive dataset of heart attack patients over the 1999-2011 period. We provide suggestive evidence that patients admitted in non-profit hospitals are less likely to die in less concentrated markets after the reform. For patients admitted in a public or a for-profit hospital, we do not find clear-cut results on the competition effect of the reform on mortality.