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Hospital Financial Conditions and the Provision of Unprofitable Services

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  • Hsueh-Fen Chen
  • Gloria Bazzoli
  • Hui-Min Hsieh

Abstract

Increases in hospital financial pressure resulting from public and private payment policy may substantially reduce a hospital’s ability to provide certain services that are not well compensated or are frequently used by the uninsured. The objective of this study is to examine the impact of hospital financial condition on the provision of these unprofitable services for the insured and uninsured. Economic theory provides the conceptual underpinnings for the analysis, and a longitudinal empirical analysis is conducted for an eight-year study period. The results indicate that not-for-profit hospitals with strong financial performance provide more unprofitable services for the insured and uninsured than do not-for-profit hospitals with weaker condition. For-profit hospital provision of these services is not influenced by their financial condition and instead may reflect actions to meet community expectations or to offer a sufficiently broad service array to maintain the business of insured patients. Copyright International Atlantic Economic Society 2009

Suggested Citation

  • Hsueh-Fen Chen & Gloria Bazzoli & Hui-Min Hsieh, 2009. "Hospital Financial Conditions and the Provision of Unprofitable Services," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 37(3), pages 259-277, September.
    • Handle: RePEc:kap:atlecj:v:37:y:2009:i:3:p:259-277
    DOI: 10.1007/s11293-009-9183-9
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    References listed on IDEAS

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    1. Gloria J. Bazzoli & Hsueh‐Fen Chen & Mei Zhao & Richard C. Lindrooth, 2008. "Hospital financial condition and the quality of patient care," Health Economics, John Wiley & Sons, Ltd., vol. 17(8), pages 977-995, August.
    2. Hoerger, Thomas J., 1991. "'Profit' variability in for-profit and not-for-profit hospitals," Journal of Health Economics, Elsevier, vol. 10(3), pages 259-289, October.
    3. Barbara A. Mark & David W. Harless & Michael McCue, 2005. "The impact of HMO penetration on the relationship between nurse staffing and quality," Health Economics, John Wiley & Sons, Ltd., vol. 14(7), pages 737-753, July.
    4. Dranove, David & Shanley, Mark & White, William D, 1993. "Price and Concentration in Hospital Markets: The Switch from Patient-Driven to Payer-Driven Competition," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 179-204, April.
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    Cited by:

    1. David, Guy & Lindrooth, Richard C. & Helmchen, Lorens A. & Burns, Lawton R., 2014. "Do hospitals cross-subsidize?," Journal of Health Economics, Elsevier, vol. 37(C), pages 198-218.

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    More about this item

    Keywords

    Hospital financial condition; Unprofitable services; Insured patients; Uninsured patients; I00;
    All these keywords.

    JEL classification:

    • I00 - Health, Education, and Welfare - - General - - - General

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