IDEAS home Printed from https://ideas.repec.org/a/oup/jcomle/v10y2014i4p909-931..html
   My bibliography  Save this article

The Effect Of Closure On Quality: The Case Of Rural Nursing Homes

Author

Listed:
  • John R. Bowblis
  • Andrew Vassallo

Abstract

Understanding the role of competition in determining prices and quality is important in evaluating various public policies, including any antitrust investigation of a proposed merger. This is especially true in health-care markets where consumers are less informed than providers and standard mechanisms such as warranties cannot protect consumers against inferior products. This article examines how market structure affects the quality of care provided in a health-care market by examining the nursing home industry. We empirically test if quality is affected by a change in market structure that arises when a competitor exits the market. Using a sample of rural nursing homes that have a competitor exit and also experience no entry from new competitors, the effect of market structure is identified using a difference-in-differences approach that compares facilities that are within the same geographic market as the exiting facility to a group of facilities outside that geographic market. We find that total staffing levels are lower after the closure after adjusting for transitory effects. All non-staffing quality measures show improvement after the closure, although not all are found to be statistically significant. This suggests supracompetitive markets with excess capacity may actually have lower levels of quality than more concentrated markets.

Suggested Citation

  • John R. Bowblis & Andrew Vassallo, 2014. "The Effect Of Closure On Quality: The Case Of Rural Nursing Homes," Journal of Competition Law and Economics, Oxford University Press, vol. 10(4), pages 909-931.
  • Handle: RePEc:oup:jcomle:v:10:y:2014:i:4:p:909-931.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/joclec/nhu017
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:jcomle:v:10:y:2014:i:4:p:909-931.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/jcle .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.