Inter-hospital competition drives down healthcare costs and improves consumer surplus.
The article explores how hospitals competing with each other can lead to better healthcare processes and lower costs for patients. When hospitals focus on improving how they deliver care, it can benefit consumers. However, in certain types of healthcare settings, the incentive to innovate processes may be limited, and competition between hospitals may not lead to better outcomes for patients. In these cases, hospitals may choose not to provide certain types of care.