Abstract
We investigate the effect on the quality of three high-volume non-emergency treatments of a reform that relaxed restrictions on patient choice of hospital. We employ a quasi difference-indifference strategy and use control functions to allow for time-varying patient selection into providers correlated with unobserved morbidity. After the reform, public hospitals facing more rivals reduced quality, increased waiting times, and reduced length of stay for hip and knee replacements. This is likely due to regulated prices implying larger losses on these treatments compared to coronary artery bypass grafts where no effects were found. Our findings are robust to estimation methods, competition measures, and allowing for entry of private providers. JEL Nos: C26, I11, I18, L22, L33.