A new study says competition in the health service in England improves hospital efficiency and could save the NHS significant amounts of money. Researchers at the London School of Economics have found that hospitals in areas where patients have a great deal of choice improve their efficiency more quickly than hospitals in less competitive markets.

The study also revealed that hospitals in competitive areas could improve their efficiency and save money without there being any negative impact on patients. The researchers say the findings suggest competition can be a powerful tool to save money at a time when the NHS is facing significant pressure to slow spending.

One of the study’s authors, Zack Cooper, said competition produced clear incentives for hospitals to become more efficient and added: “As George Osborne prepares the country for a period of financial austerity, this research helps illustrate how policy-makers get more value for money from the health service instead of having to ration care for cancer, increase waiting times or cut hospital staff.”

In the study published today by the Centre for Economic Performance at LSE, Mr. Cooper and colleagues Stephen Gibbons, Simon Jones and Alistair McGuire have analysed NHS data from 2001 to 2008 to measure efficiency. They found hospitals facing heavier competition reduced the length of a patient’s stay in hospital prior to elective surgery without shortening post-surgery stays or having higher readmission rates or higher mortality. The findings support the researchers’ previous work, which showed competition prompted hospitals to improve their quality