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Exit from the Hospital Industry

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  • Ciliberto, Federico
  • Lindrooth, Richard

Abstract

We study the exit of hospitals from the market for inpatient services. More generous hospital reimbursement significantly reduces the probability of exit throughout the 1990s. Conditional on reimbursement levels, hospital efficiency was not a significant determinant in the early 1990s but in the mid- to late 1990s, less efficient hospitals were significantly more likely to exit. Throughout the period, high-tech services increased the probability of survival, and for-profit hospitals were more likely to exit. The role of Medicare as a determinant of exit became less important in the latter half of the 1990s.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 24917.

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Date of creation: 01 Jan 2007
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Publication status: Published in Economic Inquiry 1.45(2007): pp. 71-81
Handle: RePEc:pra:mprapa:24917

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Keywords: Hospital Industry; Managed Care; Exit; Inpatient Services; Technology.;

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References

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  1. Gibson,J.K. & Harris,R.I.D., 1996. "Trade Liberalisation and Plant Exit in New Zealand Manufacturing," Papers, Portsmouth University - Department of Economics 66, Portsmouth University - Department of Economics.
  2. Skinner, Jonathan, 1994. "What do stochastic frontier cost functions tell us about inefficiency?," Journal of Health Economics, Elsevier, Elsevier, vol. 13(3), pages 323-328, October.
  3. Wedig, Gerard J & Hassan, Mahmud & Sloan, Frank A, 1989. "Hospital Investment Decisions and the Cost of Capital," The Journal of Business, University of Chicago Press, University of Chicago Press, vol. 62(4), pages 517-37, October.
  4. Capps, Cory & Dranove, David & Satterthwaite, Mark, 2003. " Competition and Market Power in Option Demand Markets," RAND Journal of Economics, The RAND Corporation, vol. 34(4), pages 737-63, Winter.
  5. Mary E. Deily & Niccie L. McKay & Fred H. Dorner, 2000. "Exit and Inefficiency: The Effects of Ownership Type," Journal of Human Resources, University of Wisconsin Press, vol. 35(4), pages 734-747.
  6. Tay, Abigail, 2003. " Assessing Competition in Hospital Care Markets: The Importance of Accounting for Quality Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 34(4), pages 786-814, Winter.
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Cited by:
  1. Martin Gaynor & Robert J Town, 2012. "Competition in Health Care Markets," The Centre for Market and Public Organisation, Department of Economics, University of Bristol, UK 12/282, Department of Economics, University of Bristol, UK.
  2. Capps, Cory & Dranove, David & Lindrooth, Richard C., 2010. "Hospital closure and economic efficiency," Journal of Health Economics, Elsevier, Elsevier, vol. 29(1), pages 87-109, January.

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