Association for Public Policy Analysis & Management

Allowing patients to choose where to receive hospital treatment is both potentially valuable to choice maker, and acts to drive competition between hospital providers.  However, not all patients are equally willing or able to make decisions about their hospital care. Policies that alter patient choice sets or the scope of choice may therefore affect how patients sort across hospitals, and the distributions of health care spending and health outcomes. This paper examines the impact on patient sorting of a set of reforms to the National Health Service (NHS) in England, which increased patient choice sets by allowing private hospitals to deliver publicly funded care. We estimate a model of demand for elective hip replacements where patients first choose between whether to choose a NHS or a privately owned hospital, and thereafter which hospital to choose. In keeping with existing descriptive evidence, our estimates show that those that are younger, live in less deprived areas, and have fewer underlying health conditions are more likely to choose the new privately owned hospitals. In addition, we also find that a strong positive relationship between the quality of a patient’s primary care doctor and the probability of choosing a new privately owned hospital. The model is then used to assess the role of GPs in driving the observed inequalities in how patients responded to the expanded hospital choice set.