Equilibrium Model of Waiting Times for Non-Emergency Procedures in the NSW Public Hospitals∗

This paper studies the determinants of waiting times for elective non-emergency procedures in the NSW public hospitals by estimating a model in which waiting times serve as a mechanism which equilibrates demand for and supply of hospital treat-ments. The model is estimated on the level of postal code areas using data on all New South Wales (NSW) public hospital admissions in 2004-05, selected postal code area characteristics and area-level provisions of public and private hospital beds. Spatial interactions methods are used to estimate the levels of provision of hospital beds to each geographical area. We find that, consistent with the predictions of the theoret-ical model, demand for elective hospital procedures is affected negatively and supply of treatments is affected positively by the expected waiting times. Compared to the estimates from other countries, the demand for elective procedures is highly responsive to waiting times.