The impact of structural and strategic competition on hospital quality

Many health care systems aim to enhance hospital quality by encouraging competition. However, evidence on the relationship between quality and competition is inconclusive. My contribution to this literature is two-fold. Analyzing the relationship between competition and quality for the German hospital market can give valuable insights about the nature of the relationship in a market with regulated prices that is characterized by a high number of hospitals and a diverse ownership structure. While most studies look at competition as market structure, I distinguish effects of market structure from effects of strategic behavior. I find evidence for a significant, non-linear relationship between market structure and care quality. Additionally, I find evidence for strategic behavior.