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Hospitals are complex organisations accounting for most of total health expenditure. They play a critical role in providing care to patients with high levels of need. A key policy concern is that patients receive high quality care. Policymakers have attempted to influence hospital quality in different ways. This chapter focuses on three key policy levers: the extent to which hospital competition and higher hospital tariffs (of the DRG type) can stimulate quality, and whether non-profit hospitals provide higher or lower quality than for-profit ones. The chapter outlines key methodological challenges and selectively reviews the main findings from the literature. While several studies suggest that hospital competition reduces mortality rates for heart attack cases when hospital tariffs are fixed (under a DRG system), at this stage is unclear whether the effect holds across a range of quality indicators. Moreover, the limited literature on hospital mergers tends to suggest that hospital quality does not change following a merger. Finally, whether non-profit hospitals provide higher or lower quality varies across regions and institutional arrangements. The economic theory suggests several mechanisms with opposite effects on quality. To guide policy, future work needs to further unpack the various mechanisms through which these three key policy issues affect hospitals incentives.

Purpose: In this chapter, we examine the National Health Service (NHS) and Adult Social Care (ASC) in England, focussing on policies that have been introduced since 2000 and considering the challenges that providers face in their quest to provide a high standard and affordable health service in the near future.

Methodology/Approach: We discuss recent policy developments and published analysis covering innovations within major aspects of health care (primary, secondary and tertiary) and ASC, before considering future challenges faced by providers in England, highlighted by a 2017 UK Parliament Select Committee.

Findings: The NHS and ASC system have experienced tightening budgets and serious financial pressure, with historically low real-terms growth in health funding from central government and local authorities. Policymakers have tried to overcome these challenges with several policy innovations, but many still remain. With large-scale investment and reform, there is potential for the health and social care system to evolve into a modern service capable of dealing with the needs of an ageing population. However, if these challenges are not met, then it is set to continue struggling with a lack of appropriate facilities, an overstretched staff and a system not entirely appropriate for its patients.

Ensuring adequate access to healthcare services is a priority across European countries. The EU has developed performance indicators to compare access using self-reported unmet need. Cross-country comparisons require adjustment for factors outside the health systems' control. We address two research questions to improve the comparability of unmet need for medical and dental care across the EU and the comparability of socio-economic inequalities in unmet need across the EU. First, we explore the role of risk adjustment for demographic and socio-economic factors, which are outside health systems' control, for both overall unmet need and unmet need due to affordability, waiting lists and distance. Second, we compare differences in unmet need by socio-economic status, and investigate whether different forms of risk adjustment affect such comparison. We show that adjusting for age, gender and chronic conditions reduces dispersion of unmet need for medical care across the EU. Controlling for income further reduces the dispersion, mostly due to affordability. When comparing socio-economic inequalities across countries, risk adjustment for age, gender and chronic conditions play a limited role. Socio-economic inequalities by income and education vary by reason of unmet need: the income gradient, even controlling for education, is mostly due to affordability rather than waiting list or distance. For dental care, the main reason for unmet need is affordability. Risk adjustment for age, gender, chronic conditions and education plays a limited role. The income and education gradients are more pronounced for dental than medical care.

We estimate the parental investment response to the child endowment at birth, by analysing the effect of child birth weight on the hours worked by the mother two years after birth. Mother’s working hours soon after child birth are a measure of investments in their children as a decrease (increase) in hours raises (lowers) her time investment in the child. The child birth endowment is endogenously determined in part by unobserved traits of parents, such as investments during pregnancy. We adopt an instrumental variables estimation. Our instrumental variables are measures of the father’s health endowment at birth, which drive child birth weight through genetic transmission but does not affect directly the mother’s postnatal investments, conditional on maternal and paternal human capital and prenatal investments. We find an inverted U-shape relationship between mothers worked hours and birth weight, suggesting that both low and extremely high child birth weight are associated with child health issues for which mothers compensate by reducing their labour supply. The mother’s compensating response to child birth weight seems slightly attenuated for second and later born children. Our study contributes to the literature on the response of parental investments to child’s health at birth by proposing new and more credible instrumental variables for the child health endowment at birth and allowing for a heterogeneous response of the mother’s investment for first born and later born children.