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Behavioural differences among hospitals: it is ownership, or location?

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  • Lee Mobley
  • W. David Bradford

Abstract

By about 1988, the consensus among leading health economists was that no meaningful differences existed among hospitals of differences owernership form, and this position was embraced by the Antitrust Division of the US Department of Justice. But behavioural differences among hospitals of different among hospitals of different owernership has continued to be a matter of both academic and judicial interest. Recent empirical studies have concluded that real differences do exist, while many earlier studies reached the opposite conclusion. This contradiction in finding over time, as competition intensified, is exactly opposite to what expense-preference theory would predict. We examine this apparent paradox, using a very general test of behavioural differences by hospital ownership. We find that the omission of location-specific variables can lead to biased estimates of ownership effects, and that no significant behavioural differences exist among private California hospitals in 1986-90, when this source of ownership endogeneity is eliminated.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 29 (1997)
Issue (Month): 9 ()
Pages: 1125-1138

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Handle: RePEc:taf:applec:v:29:y:1997:i:9:p:1125-1138

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  1. Zwanziger, Jack, 1990. "Antitrust considerations and hospital markets," Journal of Health Economics, Elsevier, vol. 8(4), pages 457-464, February.
  2. Frech, H E, III, 1976. "The Property Rights Theory of the Firm: Empirical Results from a Natural Experiment," Journal of Political Economy, University of Chicago Press, vol. 84(1), pages 143-52, February.
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  5. Grannemann, Thomas W. & Brown, Randall S. & Pauly, Mark V., 1986. "Estimating hospital costs : A multiple-output analysis," Journal of Health Economics, Elsevier, vol. 5(2), pages 107-127, June.
  6. Hsiao,Cheng, 2003. "Analysis of Panel Data," Cambridge Books, Cambridge University Press, number 9780521818551.
  7. Lee Rivers Mobley & H. E. Frech, 1994. "Firm Growth and Failure in Increasingly Competitive Markets Theory and Application to Hospital Markets," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 1(1), pages 77-93.
  8. Register, Charles A. & Sharp, Ansel M., 1989. "For-profit hospital performance: The impact of time," Journal of Behavioral Economics, Elsevier, vol. 18(4), pages 307-316.
  9. Becker, Edmund R & Sloan, Frank A, 1985. "Hospital Ownership and Performance," Economic Inquiry, Western Economic Association International, vol. 23(1), pages 21-36, January.
  10. Zuckerman, Stephen & Hadley, Jack & Iezzoni, Lisa, 1994. "Measuring hospital efficiency with frontier cost functions," Journal of Health Economics, Elsevier, vol. 13(3), pages 255-280, October.
  11. Noether, Monica, 1986. "The Growing Supply of Physicians: Has the Market Become More Competitive?," Journal of Labor Economics, University of Chicago Press, vol. 4(4), pages 503-37, October.
  12. Feldman, Roger & Dowd, Bryan, 1986. "Is there a competitive market for hospital services?," Journal of Health Economics, Elsevier, vol. 5(3), pages 277-292, September.
  13. Breyer, Friedrich, 1987. "The specification of a hospital cost function : A comment on the recent literature," Journal of Health Economics, Elsevier, vol. 6(2), pages 147-157, June.
  14. 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.
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Cited by:
  1. Massimo Filippini, 2001. "Economies of scale in the Swiss nursing home industry," Applied Economics Letters, Taylor & Francis Journals, vol. 8(1), pages 43-46.

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