IDEAS home Printed from https://ideas.repec.org/a/inm/orserv/v11y2019i1p1-15.html
   My bibliography  Save this article

A Study of the Effects of Certificate of Need Law on Inpatient Occupancy Rates

Author

Listed:
  • Jomon A. Paul

    (Department of Economics, Finance & Quantitative Analysis, Kennesaw State University, Kennesaw, Georgia 30144;)

  • Huan Ni

    (Department of Economics, Finance & Quantitative Analysis, Kennesaw State University, Kennesaw, Georgia 30144;)

  • Aniruddha Bagchi

    (Department of Economics, Finance & Quantitative Analysis, Kennesaw State University, Kennesaw, Georgia 30144;)

Abstract

Increasing healthcare costs and the deterioration of healthcare quality have always been major concerns to policy makers in the United States, and Certificate of Need (CON) law has been implemented as one way to curb wasteful healthcare resource use. From a theoretical standpoint, CON can lead to a reduction in the number of beds as well as in the number of inpatient days (possibly by shortening the length of patient stay). However, these two effects impact inpatient occupancy rate in opposite directions. We test empirically to find out which of these two effects dominate. In this study, we investigate the impact of CON and its stringency (which is different across states with CON laws) on the inpatient occupancy rate using panel data, and we find that, on average, CON legislation reduces occupancy rate in inpatient units. Our tests evaluating CON and its features for endogeneity fail to obtain statistical support.

Suggested Citation

  • Jomon A. Paul & Huan Ni & Aniruddha Bagchi, 2019. "A Study of the Effects of Certificate of Need Law on Inpatient Occupancy Rates," Service Science, INFORMS, vol. 11(1), pages 1-15, March.
    • Handle: RePEc:inm:orserv:v:11:y:2019:i:1:p:1-15
    DOI: 10.1287/serv.2018.0228
    as

    Download full text from publisher

    File URL: https://doi.org/10.1287/serv.2018.0228
    Download Restriction: no
    File URL: https://libkey.io/10.1287/serv.2018.0228?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
    ---><---

    References listed on IDEAS

    as
    1. Keeler, Theodore E & Ying, John S, 1996. "Hospital Costs and Excess Bed Capacity: A Statistical Analysis," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 470-481, August.
    2. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    3. Gary Ferrier & Hervé Leleu & Vivian Valdmanis, 2010. "The impact of CON regulation on hospital efficiency," Health Care Management Science, Springer, vol. 13(1), pages 84-100, March.
    4. Gaynor, Martin & Anderson, Gerard F., 1995. "Uncertain demand, the structure of hospital costs, and the cost of empty hospital beds," Journal of Health Economics, Elsevier, vol. 14(3), pages 291-317, August.
    Full references (including those not matched with items on IDEAS)

    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. Moura, Ana, 2022. "Do subsidized nursing homes and home care teams reduce hospital bed-blocking? Evidence from Portugal," Journal of Health Economics, Elsevier, vol. 84(C).
    2. Siciliani, Luigi & Stanciole, Anderson & Jacobs, Rowena, 2009. "Do waiting times reduce hospital costs?," Journal of Health Economics, Elsevier, vol. 28(4), pages 771-780, July.
    3. Song, Lina & Saghafian, Soroush, 2019. "Do Hospital Closures Improve the Efficiency and Quality of Other Hospitals?," Working Paper Series rwp19-006, Harvard University, John F. Kennedy School of Government.
    4. Sean Ennis & Michael Schoenbaum & Theodore Keeler, 2000. "Optimal prices and costs for hospitals with excess bed capacity," Applied Economics, Taylor & Francis Journals, vol. 32(9), pages 1201-1212.
    5. Capps, Cory & Dranove, David & Lindrooth, Richard C., 2010. "Hospital closure and economic efficiency," Journal of Health Economics, Elsevier, vol. 29(1), pages 87-109, January.
    6. Hughes, David & McGuire, Alistair, 2003. "Stochastic demand, production responses and hospital costs," Journal of Health Economics, Elsevier, vol. 22(6), pages 999-1010, November.
    7. Jon Magnussen & Lee Rivers Mobley, 1999. "The Impact of Market Environment on Excess Capacity and the Cost of an Empty Hospital Bed," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(3), pages 383-398.
    8. Lindrooth, Richard C. & Lo Sasso, Anthony T. & Bazzoli, Gloria J., 2003. "The effect of urban hospital closure on markets," Journal of Health Economics, Elsevier, vol. 22(5), pages 691-712, September.
    9. André Madeira & Victor Moutinho & José Alberto Fuinhas, 2021. "Does waiting times decrease or increase operational costs in short and long-term? Evidence from Portuguese public hospitals," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(8), pages 1195-1216, November.
    10. Rajiv Sharma & Miron Stano & Renu Gehring, 2008. "Short‐term fluctuations in hospital demand: implications for admission, discharge, and discriminatory behavior," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 586-606, June.
    11. Mike Smet, 2007. "Measuring performance in the presence of stochastic demand for hospital services: an analysis of Belgian general care hospitals," Journal of Productivity Analysis, Springer, vol. 27(1), pages 13-29, February.
    12. Baker, Laurence C. & Phibbs, Ciaran S. & Guarino, Cassandra & Supina, Dylan & Reynolds, James L., 2004. "Within-year variation in hospital utilization and its implications for hospital costs," Journal of Health Economics, Elsevier, vol. 23(1), pages 191-211, January.
    13. Kathleen Carey, 2000. "Hospital Cost Containment and Length of Stay: An Econometric Analysis," Southern Economic Journal, John Wiley & Sons, vol. 67(2), pages 363-380, October.
    14. Ludwig Kuntz & Stefan Scholtes & Antonio Vera, 2007. "Incorporating efficiency in hospital-capacity planning in Germany," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 8(3), pages 213-223, September.
    15. Moura, Ana, 2021. "Essays in health economics," Other publications TiSEM c93abd22-fa4a-42a5-b172-d, Tilburg University, School of Economics and Management.
    16. Averi Chakrabarti & Karen A Grépin & Stéphane Helleringer, 2019. "The impact of supplementary immunization activities on routine vaccination coverage: An instrumental variable analysis in five low-income countries," PLOS ONE, Public Library of Science, vol. 14(2), pages 1-11, February.
    17. Harold Alderman & John Hoddinott & Bill Kinsey, 2006. "Long term consequences of early childhood malnutrition," Oxford Economic Papers, Oxford University Press, vol. 58(3), pages 450-474, July.
    18. Huh, Yesol & Kim, You Suk, 2023. "Cheapest-to-deliver pricing, optimal MBS securitization, and welfare implications," Journal of Financial Economics, Elsevier, vol. 150(1), pages 68-93.
    19. Fan Li & Prashant Loyalka & Hongmei Yi & Yaojiang Shi & Natalie Johnson & Scott Rozelle, 2016. "Ability tracking and social capital in China's rural secondary school system," Working Papers of LICOS - Centre for Institutions and Economic Performance 544339, KU Leuven, Faculty of Economics and Business (FEB), LICOS - Centre for Institutions and Economic Performance.
    20. Ji Yan & Sally Brocksen, 2013. "Adolescent risk perception, substance use, and educational attainment," Journal of Risk Research, Taylor & Francis Journals, vol. 16(8), pages 1037-1055, September.

    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:inm:orserv:v:11:y:2019:i:1:p:1-15. 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: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    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.