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Hospital ownership, reimbursement systems and mortality rates

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  • Carine Milcent

Abstract

This paper analyses the effect of ownership and system of reimbursement on mortality rates. From the statistical results we could conclude that the incentive created by fee-for-service reimbursement yields a four-point reduction in the mortality rate. However, this ranking of hospital quality is completely dependent on the characteristics and illness severity of patients. To take this difficulty into account, we use an innovative duration model applied to panel data: a duration model with both patient and hospital unobserved heterogeneity. No distributional assumptions are made regarding the latter. By this way, we control the fact that patients admitted to the private sector can be different in terms of disease severity from patients admitted to the public sector. The capacity to perform innovative procedures has more effect on the mortality than the system of reimbursement and|or ownership. As such, private sector hospitals that perform more innovative procedures provide a better quality of care, measured by the probability of dying. Nevertheless, heterogeneity within hospitals is greater in for-profit hospitals than in other types of hospital. This suggests that, by choosing a for-profit hospital, patients have on average a lower instantaneous probability of dying but are less sure about the quality of the hospital. Copyright © 2005 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.1010
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 14 (2005)
Issue (Month): 11 ()
Pages: 1151-1168

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Handle: RePEc:wly:hlthec:v:14:y:2005:i:11:p:1151-1168

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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References

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  1. Sloan, Frank A. & Picone, Gabriel A. & TaylorJr., Donald H. & Chou, Shin-Yi, 2001. "Hospital ownership and cost and quality of care: is there a dime's worth of difference?," Journal of Health Economics, Elsevier, vol. 20(1), pages 1-21, January.
  2. Propper, Carol & Burgess, Simon & Green, Katherine, 2004. "Does competition between hospitals improve the quality of care?: Hospital death rates and the NHS internal market," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1247-1272, July.
  3. Mark McClellan & Douglas Staiger, 1999. "Comparing Hospital Quality at For-Profit and Not-for-Profit Hospitals," NBER Working Papers 7324, National Bureau of Economic Research, Inc.
  4. Mark McClellan & Douglas Staiger, 2000. "Comparing the Quality of Health Care Providers," NBER Chapters, in: Frontiers in Health Policy Research, Volume 3, pages 113-136 National Bureau of Economic Research, Inc.
  5. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
  6. Gowrisankaran, Gautam & Town, Robert J., 1999. "Estimating the quality of care in hospitals using instrumental variables," Journal of Health Economics, Elsevier, vol. 18(6), pages 747-767, December.
  7. Pauly, Mark V & Redisch, Michael, 1973. "The Not-For-Profit Hospital as a Physicians' Cooperative," American Economic Review, American Economic Association, vol. 63(1), pages 87-99, March.
  8. John Geweke & Gautam Gowrisankaran & Robert J. Town, 2002. "Bayesian inference for hospital quality in a selection model," Working Paper Series 2002-18, Federal Reserve Bank of San Francisco.
  9. Joel L. Horowitz, 1999. "Semiparametric Estimation of a Proportional Hazard Model with Unobserved Heterogeneity," Econometrica, Econometric Society, vol. 67(5), pages 1001-1028, September.
  10. Daniel P. Kessler & Mark B. McClellan, 2000. "Is Hospital Competition Socially Wasteful?," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 577-615, May.
  11. Ho, Vivian & Hamilton, Barton H., 2000. "Hospital mergers and acquisitions: does market consolidation harm patients?," Journal of Health Economics, Elsevier, vol. 19(5), pages 767-791, September.
  12. Barton H. Hamilton & Vivian H. Hamilton, 1997. "Estimating surgical volume-outcome relationships applying survival models: accounting for frailty and hospital fixed effects," Health Economics, John Wiley & Sons, Ltd., vol. 6(4), pages 383-395.
  13. Mark McClellan & Douglas Staiger, 1999. "The Quality of Health Care Providers," NBER Working Papers 7327, National Bureau of Economic Research, Inc.
  14. Gabriel Picone & Shin-Yi Chou & Frank Sloan, 2002. "Are For-Profit Hospital Conversions Harmful to Patients and to Medicare?," RAND Journal of Economics, The RAND Corporation, vol. 33(3), pages 507-523, Autumn.
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Citations

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Cited by:
  1. Corinna Hentschker & Roman Mennicken, 2012. "The Relationship between Quality and Hospital Case Volume – An Empirical Examination with German Data," Ruhr Economic Papers 0341, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  2. Brekke, Kurt R. & Siciliani, Luigi & Straume, Odd Rune, 2011. "Quality competition with profit constraints: Do non-profit firms provide higher quality than for-profit firms?," Discussion Paper Series in Economics 2/2011, Department of Economics, Norwegian School of Economics.
  3. Carine Milcent & Brigitte Dormont, 2012. "Comment évaluer la productivité et l'efficacité des hôpitaux publics et privés ? Les enjeux de la convergence tarifaire," Économie et Statistique, Programme National Persée, vol. 455(1), pages 143-173.
  4. Laurent Gobillon & Carine Milcent, 2013. "Spatial disparities in hospital performance," Journal of Economic Geography, Oxford University Press, vol. 13(6), pages 1013-1040, November.
  5. repec:hal:wpaper:halshs-00586837 is not listed on IDEAS
  6. Paul H. Jensen & Elizabeth Webster & Julia Witt, 2009. "Hospital type and patient outcomes: an empirical examination using AMI readmission and mortality records," Health Economics, John Wiley & Sons, Ltd., vol. 18(12), pages 1440-1460.
  7. Dormont, Brigitte & Milcent, Carine, 2013. "Comment évaluer la productivité et l’efficacité des hôpitaux publics et privés ? Les enjeux de la convergence tarifaire," Economics Papers from University Paris Dauphine 123456789/7738, Paris Dauphine University.
  8. Brekke, Kurt R. & Siciliani, Luigi & Straume, Odd Rune, 2012. "Quality competition with profit constraints," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 642-659.
  9. Laurent Gobillon & Carine Milcent, 2013. "Spatial disparities in hospital performance," Post-Print halshs-00879787, HAL.
  10. Martine Bellanger & Laurent Tardif, 2006. "Accounting and reimbursement schemes for inpatient care in France," Health Care Management Science, Springer, vol. 9(3), pages 295-305, August.

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