Does hospital competition improve health care delivery in China?

•To explore whether hospital competition is associated with improved health care delivery in China.•Structure-Conduct-Performance analytical framework with both provincial- and individual-level data is employed to estimate.•Results show that hospital competition is correlated with higher outpatient quality and lower outpatient medical costs.•Our study offers new evidence in support of competition-based reforms in China's health care sector.

This paper analyzes whether hospital competition is associated with improved health care delivery in China, particularly in the dimensions of health care quality and cost. We explore the differences in competition over time and across regions to examine the relationship in an environment wherein the hospital industry is largely state owned, the price of medical care is partially regulated, and hospitals can compete on both quality and cost. Using provincial- and individual-level data, along with a set of outcome indicators, we find that hospital competition is significantly correlated with lower observation room mortality, shorter outpatient waiting time, and fewer outpatient costs, while we do not find evidence that would suggest negative influences of competition on the other measures of hospital performance. Our results offer new evidence in support of competition-based reforms in China's health care sector and provide implications for other developing countries facing similar health care challenges.