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Is Hospital Competition Socially Wasteful?

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  • Daniel P. Kessler
  • Mark B. McClellan
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    Abstract

    We study the consequences of hospital competition for Medicare beneficiaries' heart attack care from 1985 to 1994. We examine how relatively exogenous determinants of hospital choice such as travel distances influence the competitiveness of hospital markets, and how hospital competition interacts with the influence of managed care organizations to affect the key determinants of social welfare expenditures on treatment and patient health outcomes. In the 1980s, the welfare effects of competition were ambiguous; but in the 1990s, competition unambiguously improves social welfare. Increasing HMO enrollment over the sample period partially explains the dramatic change in the impact of hospital competition.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7266.

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    Date of creation: Jul 1999
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    Publication status: published as Kessler, Daniel P. and Mark B. McClellan. "Is Hospital Competition Socially Wasteful?," Quarterly Journal of Economics, 2000, v115(2,May), 577-615.
    Handle: RePEc:nbr:nberwo:7266

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    Cited by:
    1. Tomas J. Philipson & Richard A. Posner, 2006. "Antitrust in the Not-For-Profit Sector," NBER Working Papers 12132, National Bureau of Economic Research, Inc.
    2. Mark G. Duggan, 2000. "Hospital Ownership And Public Medical Spending," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 115(4), pages 1343-1373, November.
    3. Victor R. Fuchs & Mark McClellan & Jonathan Skinner, 2001. "Area Differences in Utilization of Medical Care and Mortality Among U.S. Elderly," NBER Working Papers 8628, National Bureau of Economic Research, Inc.
    4. Shen, Yu-Chu, 2003. "The effect of financial pressure on the quality of care in hospitals," Journal of Health Economics, Elsevier, Elsevier, vol. 22(2), pages 243-269, March.
    5. Francisco Marcos & Juan Santalo, 2007. "Tomb price discrimination in cemeteries: competition in the market for corpses?," Working Papers Economia, Instituto de Empresa, Area of Economic Environment wp07-09, Instituto de Empresa, Area of Economic Environment.
    6. Daniel P. Kessler & Mark B. McClellan, 2000. "Medical Liability, Managed Care, and Defensive Medicine," NBER Working Papers 7537, National Bureau of Economic Research, Inc.

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