Impact of competition on process of care and resource investments

Although competition is generally believed to improve quality, its impact on the Process of Care (PoC)—which measures the timeliness and effectiveness of care—is less clear. Moreover, hospital executives in more competitive hospital markets are faced with several competing priorities. Our study seeks to examine two factors within this context: (1) how competition directly impacts PoC, and (2) in a financially constrained environment, how competition affects investments in resources such as nurses and technology that can potentially improve PoC. We collect longitudinal data from all acute care hospitals in California over a 7-year period from 2007 to 2013, along with data from several other sources. Analysis using a mixed-methods approach reveals that both PoC and investments in nurses and technology are lower in more competitive markets. Because future reimbursements under the pay-for-performance system will depend on the value of care provided, our results suggest that hospitals should reconsider their short-term actions that seek to increase market share and instead adopt a long-term view in which investments are made to fundamentally improve the underlying processes and PoC. The findings presented here thus have major implications for managing hospitals in competitive environments.