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The consumer welfare implications of the hospital ownership mix in the US: an exploratory study

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Author Info
Rexford E. Santerre (Center for Healthcare & Insurance Studies and Department of Finance, University of Connecticut, School of Business, CT, USA)
John A. Vernon (Center for Healthcare & Insurance Studies and Department of Finance, University of Connecticut, School of Business, CT, USA)

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Abstract

This paper offers an empirical test concerning how hospital ownership mix affects consumer welfare in the US. The test compares the market benefits and costs resulting from an increased presence of nonprofit hospitals by observing empirically how the nonprofit market share impacts hospital care utilization at the margin. The empirical results suggest that too many not-for-profit and public hospitals exist in the inpatient care segment of the typical hospital services industry of the US. In contrast, the empirical findings indicate that too many for-profit hospitals operate in the outpatient care portion of the hospital services industry. The policy implication is that more quality of care per dollar might be obtained by promoting increased for-profit activity to inpatient care and more nonprofit activity to outpatient care in some market areas. This conclusion, however, is tempered with several caveats. We discuss these and also make recommendations for further research. Copyright © 2006 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.1127
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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 15 (2006)
Issue (Month): 11 ()
Pages: 1187-1199
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:wly:hlthec:v:15:y:2006:i:11:p:1187-1199

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

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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. Keeler, Theodore E & Ying, John S, 1996. "Hospital Costs and Excess Bed Capacity: A Statistical Analysis," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 470-81, August. [Downloadable!] (restricted)
  2. 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. [Downloadable!] (restricted)
  3. Dranove, David & Ludwick, Richard, 1999. "Competition and pricing by nonprofit hospitals: a reassessment of Lynk's analysis," Journal of Health Economics, Elsevier, vol. 18(1), pages 87-98, January. [Downloadable!] (restricted)
  4. Keeler, Emmett B. & Melnick, Glenn & Zwanziger, Jack, 1999. "The changing effects of competition on non-profit and for-profit hospital pricing behavior," Journal of Health Economics, Elsevier, vol. 18(1), pages 69-86, January. [Downloadable!] (restricted)
  5. Dranove, David & White, William D, 1994. "Recent Theory and Evidence on Competition in Hospital Markets," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 3(1), pages 169-209, Spring.
  6. Sloan, Frank A., 2000. "Not-for-profit ownership and hospital behavior," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 21, pages 1141-1174 Elsevier. [Downloadable!] (restricted)
  7. Svorny, Shirley V, 1987. "Physician Licensure: A New Approach to Examining the Role of Professional Interests," Economic Inquiry, Oxford University Press, vol. 25(3), pages 497-509, July.
  8. Manheim, Larry M & Bazzoli, Gloria J & Sohn, Min-Woong, 1994. "Local Hospital Competition in Large Metropolitan Areas," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 3(1), pages 143-67, Spring.
  9. Jean M. Abraham & Martin S. Gaynor & William B. Vogt, 2005. "Entry and Competition in Local Hospital Markets," NBER Working Papers 11649, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Daniel P. Kessler & Mark B. McClellan, 2002. "The Effects of Hospital Ownership on Medical Productivity," RAND Journal of Economics, The RAND Corporation, vol. 33(3), pages 488-506, Autumn.
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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. Karen Eggleston & Yu-Chu Shen & Joseph Lau & Christopher H. Schmid & Jia Chan, 2008. "Hospital ownership and quality of care: what explains the different results in the literature?," Health Economics, John Wiley & Sons, Ltd., vol. 17(12), pages 1345-1362. [Downloadable!]
  2. Laurie Bates & Rexford Santerre, 2008. "Do health insurers possess monopsony power in the hospital services industry?," International Journal of Health Care Finance and Economics, Springer, vol. 8(1), pages 1-11, March. [Downloadable!] (restricted)
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