Hospital Market Structure and the Behavior of Not-for-Profit Hospitals: Evidence from Responses to California's Disproportionate Share Program
AbstractI exploit a plausibly exogenous change in hospital financial incentives to examine whether the behavior of private not-for-profit hospitals varies with the share of nearby hospitals organized as for-profit firms. My results show that not-for-profit hospitals in for-profit intensive areas are significantly more responsive to an increased incentive to treat low-income patients insured by the Medicaid program than are other not-for-profit providers. The heterogeneity in behavior is not due to differences in financial constraints but is instead likely driven by different degrees of market competitiveness in areas with one or more for-profit hospitals. The observed variation in the governing boards of not-for-profit hospitals across market areas supports the hypothesis that increased for-profit penetration makes these facilities more profit-oriented.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7966.
Date of creation: Oct 2000
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