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Oxford Economic Papers 2003; 55:81-103
Copyright © 2003 Oxford Universty Press

Article

Performance signals in the public sector: the case of health care

Hugh Gravelle, Peter Smith and Ana Xavier

National Primary Care Research and Development Centre, Centre for Health Economics, University of York
Centre for Health Economics, University of York, Heslington, York, YO10 5DD; pcs1{at}york.ac.uk
LICOS-Centre for Transition Economics, Katholieke Universiteit, Leuven, Belgium

Abstract

Although there are no traditional markets and money prices in the public sector, consumers and providers may respond to signals of organisational performance. We present a simple dynamic model of the demand and supply for elective surgery in the UK National Health Service in which waiting time acts as the prime indicator of performance. The model is tested using a panel of quarterly data for 123 English health authorities over an eight-year period. We find that supply is increasing and demand is decreasing in measures of the previous period waiting time. The results imply that health care systems which are rationed by waiting do respond to indicators of waiting times. The paper adds to the small but consistent body of research which demonstrates that public sector systems respond to important aspects of reported performance.


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S. Martin and P. C Smith
Increase in resources should lead to reduced waiting times
BMJ, April 5, 2003; 326(7392): 763 - 763.
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