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For-profit status and industry evolution in health care markets: evidence from the dialysis industry

Listed author(s):
  • Nathan E. Wilson

    ()

    (Federal Trade Commission)

Abstract This paper examines why for-profit dialysis providers have displaced non-profit providers over the last 25 years. Using detailed data on individual markets’ evolutions, I find that for-profit facilities were quicker to enter growing markets and slower to exit declining ones than non-profit facilities. Moreover, for-profit providers’ presence in a market had a larger impact on the exit and entry behavior of competitors. These results suggest that for-profit dialysis providers have an advantage in static competition relative to non-profit providers, and that this—rather than lower entry costs—explains their increasing prominence. Additional empirical analyses indicate that for-profits’ advantage cannot solely be attributed to efficiencies related to membership in a large, multi-facility chain. This further suggests that managerial incentives have had an economically significant impact on long-run market structure in this industry.

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File URL: http://link.springer.com/10.1007/s10754-016-9192-6
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Article provided by Springer in its journal International Journal of Health Economics and Management.

Volume (Year): 16 (2016)
Issue (Month): 4 (December)
Pages: 297-319

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Handle: RePEc:kap:ijhcfe:v:16:y:2016:i:4:d:10.1007_s10754-016-9192-6
DOI: 10.1007/s10754-016-9192-6
Contact details of provider: Web page: http://www.springer.com

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