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

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  • Nathan E. Wilson

    () (Federal Trade Commission)

Abstract

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.

Suggested Citation

  • Nathan E. Wilson, 2016. "For-profit status and industry evolution in health care markets: evidence from the dialysis industry," International Journal of Health Economics and Management, Springer, vol. 16(4), pages 297-319, December.
  • Handle: RePEc:kap:ijhcfe:v:16:y:2016:i:4:d:10.1007_s10754-016-9192-6
    DOI: 10.1007/s10754-016-9192-6
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    References listed on IDEAS

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    Cited by:

    1. Nathan E. Wilso, 2016. "Market Structure as a Determinant of Patient Care Quality," American Journal of Health Economics, MIT Press, vol. 2(2), pages 241-271, Spring.
    2. Paul J. Eliason & Paul L. E. Grieco & Ryan C. McDevitt & James W. Roberts, 2016. "Strategic Patient Discharge: The Case of Long-Term Care Hospitals," NBER Working Papers 22598, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Dialysis; Market dynamics; Organizational structure; For-profit status;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • I1 - Health, Education, and Welfare - - Health
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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