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Non-profit cost-adjusting with quality as a private good

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Author Info
Dan Friesner
Robert Rosenman
Abstract

Nonprofit firms that produce multiple outputs may lower service intensity for one patient group in response to lower reimbursements for another group. This is termed 'cost-adjusting' behaviour. Cost-adjusting implies a serious welfare transfer. The results of this analysis suggest that the potential for this welfare transfer exists; however, the ability of a firm to exploit this welfare transfer depends largely on the demand conditions present in the market. An empirical analysis finds evidence that nonprofit hospitals in Washington State do practise cost-adjusting.

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Publisher Info
Article provided by Taylor and Francis Journals in its journal Applied Economics.

Volume (Year): 36 (2004)
Issue (Month): 5 (March)
Pages: 511-523
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Handle: RePEc:taf:applec:v:36:y:2004:i:5:p:511-523

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Gertler, Paul J & Waldman, Donald M, 1992. "Quality-Adjusted Cost Functions and Policy Evaluation in the Nursing Home Industry," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1232-56, December. [Downloadable!] (restricted)
  2. Dor, Avi & Farley, Dean E., 1996. "Payment source and the cost of hospital care: Evidence from a multiproduct cost function with multiple payers," Journal of Health Economics, Elsevier, vol. 15(1), pages 1-21, February. [Downloadable!] (restricted)
  3. Martin Gaynor & Gerard F. Anderson, 1991. "Hospital Costs and the Cost of Empty Hospital Beds," NBER Working Papers 3872, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. A. Michael Spence, 1975. "Monopoly, Quality, and Regulation," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 417-429, Autumn. [Downloadable!] (restricted)
  5. Glazer, Jacob & McGuire, Thomas G, 1994. "Payer Competition and Cost Shifting in Health Care," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 3(1), pages 71-92, Spring.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Dan Friesner & Chris Stevens, 2007. "Ownership and rent-seeking behavior in specialty health care practices," Economics Bulletin, Economics Bulletin, vol. 9(10), pages 1-14. [Downloadable!]
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