Hospital competition and inpatient services efficiency in Taiwan: a longitudinal study

There is no consistent evidence of the relationship between market competition and hospital efficiency. Some studies indicated that more competition led to a faster patient turnover rate, higher hospital costs, and lower hospital efficiency. Since the 1980s some studies found market competition could increase the efficiency of inpatient services. However, there were few studies testing the market competition during a hospital's earlier stages on its efficiency during later stages, or the dynamic of efficiency. In this study, we examined the effect of early-stage market competition on later-stage hospital efficiency in Taiwan, and we determine the efficiency change using longitudinal study design. The data for the analysis came from the annual national hospital survey of 1996 and 2001 provided by the Department of Health. There were 102 teaching hospital be analysed. The results show that no evidence supports the proposition that higher market competition would improve the efficiency of hospitals in delivering inpatient services in Taiwan. Importantly, neither was the inefficiency score nor the Malmquist productivity index of inpatient services associated with the level of hospital market competition, regardless of the adjustment for hospital characteristics. However, the results may be related with the hospital increasing beds investment behavior.