Abstract
Market oriented reforms in hospital care have produced a variety of quasi markets that differ for the type of providers that are allowed to compete. Mixed markets, where public hospitals compete alongside private ones, are increasingly common, but the literature does not agree on their performances and their desirability. We review the contributions in this field by proposing a common framework which allows to account for the different approaches proposed to model public hospitals. In this paper we show under which conditions mixed markets perform better in terms of average quality, and we review the empirical literature to determine whether these conditions are met. In general, pure forms (private or public competition) are superior to mixed markets, unless patients interpret public hospitals as reference suppliers, and quality of care is important. The empirical evidence on these key questions shows that public hospitals behave differently from private organisations, but they are not necessarily less efficient. Research into patients choices seems to suggest that ownership is a value, but the empirical literature is still rather scant. From a policy point of view, our review suggests that there does not seem to be a clear answer to whether this market form should be used. Local conditions are going to play an important role.