Benchmark and performance progression: Examining the roles of market competition and focus

As the US healthcare system transitions from volume to value, various value-based programs tie medical reimbursements to hospital performance relative to national top performers (i.e., benchmarks). However, prior studies report very limited results on how such benchmarks affect care delivery and patient outcomes across multiple performance fronts. This study examines how general acute care hospitals progress toward benchmarks measured by performance frontiers in technical efficiency, clinical quality, and patient experience over time, subjecting to external market conditions and internal focuses. Based on a panel dataset comprising hospitals in California from 2012 and 2019, our results find support for competitive-distance-driven progression rates, suggesting that hospitals' competitive positions measured by their distances to benchmarks drive performance improvements. Yet, the effect diminishes as they move closer to performance frontiers. In addition, we find that market competition reduces the progression rate of technical efficiency. Finally, our results also suggest that focus improves performance progression rates, yet its effects are curvilinear.