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Comparing Hospital Quality at For-Profit and Not-for-Profit Hospitals

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  • Mark McClellan
  • Douglas Staiger

Abstract

Do not-for-profit hospitals provide better care than for-profit hospitals? We compare patient outcomes in for-profit and not-for-profit hospitals between 1984 and 1994 using a new method for estimating differences across hospitals that yields far more accurate estimates of hospital quality than previously available. We find that, on average, for-profit hospitals have higher mortality among elderly patients with heart disease, and that this difference has grown over the last decade. However, much of the difference appears to be associated with the location of for-profit hospitals. Within specific markets, for-profit ownership appears if anything to be associated with better quality care. Moreover, the small average difference in mortality between for-profit and not-for-profit hospitals masks an enormous amount of variation in mortality within each of these ownership types. Overall, these results suggest that factors other than for-profit status per se may be the main determinants of quality of care in hospitals.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7324.

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Date of creation: Aug 1999
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Publication status: published as The Changing Hospital Industry: Comparing Not-for-Profit and For-Profit Institutions, Cutler, David M., pp.93-112, (Chicago: The University of Chicago Press, 2000).
Handle: RePEc:nbr:nberwo:7324

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Cited by:
  1. Gautam Gowrisankaran & Robert J. Town, 2000. "Inferring Hospital Quality from Patient Discharge Records Using a Bayesian Selection Model," Econometric Society World Congress 2000 Contributed Papers, Econometric Society 1773, Econometric Society.
  2. Pierre Koning & Joëlle Noailly & Sabine Visser, 2007. "Do Not-For-Profits Make a Difference in Social Services? A Survey Study," De Economist, Springer, Springer, vol. 155(3), pages 251-270, September.
  3. Barbara A. Mark & David W. Harless & Michael McCue, 2005. "The impact of HMO penetration on the relationship between nurse staffing and quality," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 14(7), pages 737-753.
  4. John Geweke & Gautam Gowrisankaran & Robert J. Town, 2001. "Bayesian Inference for Hospital Quality in a Selection Model," NBER Working Papers 8497, National Bureau of Economic Research, Inc.
  5. Yu-Chu Shen & Karen Eggleston & Joseph Lau & Christopher Schmid, 2005. "Hospital Ownership and Financial Performance: A Quantitative Research Review," NBER Working Papers 11662, National Bureau of Economic Research, Inc.
  6. Mehdi Farsi & Geert Ridder, 2006. "Estimating the out-of-hospital mortality rate using patient discharge data," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 15(9), pages 983-995.
  7. Gillian Currie & Cam Donaldson & Mingshan Lu, 2003. "What Does Canada Profit from the For-Profit Debate on Health Care?," Canadian Public Policy, University of Toronto Press, University of Toronto Press, vol. 29(2), pages 227-251, June.
  8. Marco Castaneda & Dino Falaschetti, 2008. "Does a Hospital’s Profit Status Affect its Operational Scope?," Review of Industrial Organization, Springer, Springer, vol. 33(2), pages 129-159, September.
  9. Carine Milcent, 2005. "Hospital ownership, reimbursement systems and mortality rates," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 14(11), pages 1151-1168.
  10. Yu-Chu Shen & Karen Eggleston, 2008. "The Effect of Soft Budget Constraints on Access and Quality in Hospital Care," NBER Working Papers 14256, National Bureau of Economic Research, Inc.
  11. Lang, Kevin & Weinstein, Russell, 2013. "The wage effects of not-for-profit and for-profit certifications: Better data, somewhat different results," Labour Economics, Elsevier, Elsevier, vol. 24(C), pages 230-243.
  12. Kathleen A. Carroll & Jane E. Ruseski, 2011. "Modeling Internal Decision Making Process: An Explanation Of Conflicting Empirical Results On Behavior Of Non‐Profit And For‐Profit Hospitals," Contemporary Economic Policy, Western Economic Association International, Western Economic Association International, vol. 29(4), pages 510-523, October.
  13. Pierre Koning & Joëlle Noailly & Sabine Visser, 2007. "Do non-profits make a difference? Evaluating non-profit vis-à -vis for-profit organisations in social services," CPB Document, CPB Netherlands Bureau for Economic Policy Analysis 142, CPB Netherlands Bureau for Economic Policy Analysis.
  14. Mark Duggan, 2000. "Hospital Market Structure and the Behavior of Not-for-Profit Hospitals: Evidence from Responses to California's Disproportionate Share Program," NBER Working Papers 7966, National Bureau of Economic Research, Inc.
  15. 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., John Wiley & Sons, Ltd., vol. 18(12), pages 1440-1460.
  16. Avi Dor & Siran M. Koroukian & Michael Grossman, 2004. "Managed Care Discounting: Evidence from the MarketScan Database," NBER Working Papers 10437, National Bureau of Economic Research, Inc.
  17. 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., John Wiley & Sons, Ltd., vol. 17(12), pages 1345-1362.

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