IDEAS home Printed from https://ideas.repec.org/a/bla/jemstr/v16y2007i4p995-1030.html
   My bibliography  Save this article

Patient Admission Patterns and Acquisitions of “Feeder” Hospitals

Author

Listed:
  • Sayaka Nakamura
  • Cory Capps
  • David Dranove

Abstract

Acquiring outlying community hospitals is one approach commonly used by large tertiary care hospitals to increase referrals. Sophisticated acquirers may also seek to selectively increase referrals of more profitable patients. To explore these issues, we study vertical hospital acquisitions. Using a treatment and control framework, we find that roughly 30% of vertical acquisitions lead to a significant increase in referrals. Very few result in decreases. We find that increases are concentrated among patients undergoing more profitable procedures and with more generous insurance. However, we find no evidence that hospitals shun patients with higher expected costs of care.

Suggested Citation

  • Sayaka Nakamura & Cory Capps & David Dranove, 2007. "Patient Admission Patterns and Acquisitions of “Feeder” Hospitals," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(4), pages 995-1030, December.
    • Handle: RePEc:bla:jemstr:v:16:y:2007:i:4:p:995-1030
    DOI: 10.1111/j.1530-9134.2007.00165.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1530-9134.2007.00165.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1530-9134.2007.00165.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. David Meltzer & Jeanette Chung & Anirban Basu, 2002. "Does Competition under Medicare Prospective Payment Selectively Reduce Expenditures on High-Cost Patients?," RAND Journal of Economics, The RAND Corporation, vol. 33(3), pages 447-468, Autumn.
    2. Mark G. Duggan, 2000. "Hospital Ownership and Public Medical Spending," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(4), pages 1343-1373.
    3. David Dranove & Mark Shanley, 1995. "Cost reductions or reputation enhancement as motives for mergers: The logic of multihospital systems," Strategic Management Journal, Wiley Blackwell, vol. 16(1), pages 55-74.
    4. Nazmi Sari, 2002. "Do competition and managed care improve quality?," Health Economics, John Wiley & Sons, Ltd., vol. 11(7), pages 571-584, October.
    5. Huckman, Robert S., 2006. "Hospital integration and vertical consolidation: An analysis of acquisitions in New York State," Journal of Health Economics, Elsevier, vol. 25(1), pages 58-80, January.
    6. Hyman, David A, 2001. "Health Care Fraud and Abuse: Market Change, Social Norms, and the Trust "Reposed in the Workmen."," The Journal of Legal Studies, University of Chicago Press, vol. 30(2), pages 531-567, June.
    7. Zwanziger, Jack & Melnick, Glenn A., 1988. "The effects of hospital competition and the Medicare PPS program on hospital cost behavior in California," Journal of Health Economics, Elsevier, vol. 7(4), pages 301-320, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Richards, Michael R. & Seward, Jonathan A. & Whaley, Christopher M., 2022. "Treatment consolidation after vertical integration: Evidence from outpatient procedure markets," Journal of Health Economics, Elsevier, vol. 81(C).
    2. Christopher Afendulis & Daniel Kessler, 2011. "Vertical Integration and Optimal Reimbursement Policy," NBER Working Papers 17316, National Bureau of Economic Research, Inc.
    3. Andrew Sfekas, 2019. "Quality Competition and Intra-System Substitution in the Hospital Industry," American Journal of Health Economics, MIT Press, vol. 5(1), pages 65-96, Winter.
    4. Jeremy A. Verlinda, 2007. "Price-Response Asymmetry and Spatial Differentiation in Local Retail Gasoline Markets," EAG Discussions Papers 200704, Department of Justice, Antitrust Division.
    5. Christopher Afendulis & Daniel Kessler, 2011. "Vertical integration and optimal reimbursement policy," International Journal of Health Economics and Management, Springer, vol. 11(3), pages 165-179, September.
    6. Swanson, Ashley, 2021. "Physician investment in hospitals: Specialization, selection, and quality in cardiac care," Journal of Health Economics, Elsevier, vol. 80(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chen, Chi-Chen & Cheng, Shou-Hsia, 2010. "Hospital competition and patient-perceived quality of care: Evidence from a single-payer system in Taiwan," Health Policy, Elsevier, vol. 98(1), pages 65-73, November.
    2. Sood, Neeraj & Alpert, Abby & Barnes, Kayleigh & Huckfeldt, Peter & Escarce, José J., 2017. "Effects of payment reform in more versus less competitive markets," Journal of Health Economics, Elsevier, vol. 51(C), pages 66-83.
    3. Pan, Jay & Qin, Xuezheng & Li, Qian & Messina, Joseph P. & Delamater, Paul L., 2015. "Does hospital competition improve health care delivery in China?," China Economic Review, Elsevier, vol. 33(C), pages 179-199.
    4. Kui Du, 2015. "Research Note—Parenting New Acquisitions: Acquirers’ Digital Resource Redeployment and Targets’ Performance Improvement in the U.S. Hospital Industry," Information Systems Research, INFORMS, vol. 26(4), pages 829-844, December.
    5. José J. Escarce & Arvind K. Jain & Jeannette Rogowski, 2006. "Hospital Competition, Managed Care and Mortality After Hospitalization for Medical Conditions: Evidence From Three States," NBER Working Papers 12335, National Bureau of Economic Research, Inc.
    6. Alfons Palangkaraya & Jongsay Yong, 2013. "Effects of competition on hospital quality: an examination using hospital administrative data," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(3), pages 415-429, June.
    7. Chiara Canta, 2021. "Efficiency, access, and the mixed delivery of health care services," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(3), pages 510-533, June.
    8. Hyunjee Kim & Edward C. Norton, 2015. "Practice Patterns among Entrants and Incumbents in the Home Health Market after the Prospective Payment System was Implemented," Health Economics, John Wiley & Sons, Ltd., vol. 24(S1), pages 118-131, March.
    9. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, in: Mark V. Pauly & Thomas G. Mcguire & Pedro P. Barros (ed.), Handbook of Health Economics, volume 2, chapter 0, pages 499-637, Elsevier.
    10. Sriubaite, Ieva, 2021. "Who will be the mediator? Local politics and hospital closures in Germany," Ruhr Economic Papers 897, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    11. Desai, Sunita M. & Padmanabhan, Prianca & Chen, Alan Z. & Lewis, Ashley & Glied, Sherry A., 2023. "Hospital concentration and low-income populations: Evidence from New York State Medicaid," Journal of Health Economics, Elsevier, vol. 90(C).
    12. Ian McCarthy & Sean Shenghsiu Huang, 2018. "Vertical Alignment Between Hospitals and Physicians as a Bargaining Response to Commercial Insurance Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 53(1), pages 7-29, August.
    13. Baltagi, Badi H. & Yen, Yin-Fang, 2014. "Hospital treatment rates and spillover effects: Does ownership matter?," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 193-202.
    14. Erwan Quéinnec, 2012. "Les organisations sans but lucratif repondent- elles à une demande de biens de confiance ? Le cas des services de prise en charge," Revue d'économie politique, Dalloz, vol. 122(1), pages 67-87.
    15. R. R. Croes & Y. J. F. M. Krabbe-Alkemade & M. C. Mikkers, 2018. "Competition and quality indicators in the health care sector: empirical evidence from the Dutch hospital sector," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(1), pages 5-19, January.
    16. Clark, Andrew E. & Milcent, Carine, 2011. "Public employment and political pressure: The case of French hospitals," Journal of Health Economics, Elsevier, vol. 30(5), pages 1103-1112.
    17. Xufeng Qian & Louise Russell & Elmira Valiyeva & Jane Miller, 2005. "New Evidence on Medicare's Prospective Payment System: A Survival Analysis based on the NHANES I Epidemiologic Followup Study," Departmental Working Papers 200506, Rutgers University, Department of Economics.
    18. Anne-Fleur Roos & Eddy van Doorslaer & Owen O'Donnell & Erik Schut & Marco Varkevisser, 2018. "Does price competition damage healthcare quality?," Tinbergen Institute Discussion Papers 18-040/V, Tinbergen Institute.
    19. Martin Gaynor, "undated". "What Do We Know About Competition and Quality in Health Care Markets?," GSIA Working Papers 2006-E62, Carnegie Mellon University, Tepper School of Business.
    20. Joon Mahn Lee & Rahul Kapoor, 2017. "Complementarities and Coordination: Implications for Governance Mode and Performance of Multiproduct Firms," Organization Science, INFORMS, vol. 28(5), pages 931-946, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jemstr:v:16:y:2007:i:4:p:995-1030. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.kellogg.northwestern.edu/research/journals/JEMS/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.