IDEAS home Printed from https://ideas.repec.org/a/spr/hecrev/v11y2021i1d10.1186_s13561-021-00305-3.html
   My bibliography  Save this article

What drives different treatment choices? Investigation of hospital ownership, system membership and competition

Author

Listed:
  • Esra Eren Bayindir

    (University of Hamburg)

  • Jonas Schreyögg

    (University of Hamburg)

Abstract

Background Differences in ownership types have attracted considerable interest because of policy implications. Moreover, competition in hospital markets is promoted to reduce health care spending. However, the effects of system membership and competition on treatment choices of hospitals have not been considered in studying hospital ownership types. We examine the treatment choices of hospitals considering ownership types (not-for-profit, for-profit, and government), system membership, patient insurance status (insured, and uninsured) and hospital competition in the United States. Methods We estimate the probability of according the procedure as the treatment employing logistic regression. We consider all procedures accorded at hospitals, controlling for procedure type and diagnosis as well as relevant patient and hospital characteristics. Competition faced by hospitals is measured using a distance-weighted approach separately for procedural groups. Patient records are obtained from State Inpatient Databases for 11 states and hospital characteristics come from American Hospital Association Annual Survey. Results Not-for-profit hospitals facing low for-profit competition that are nonmembers of hospital systems, act like government hospitals, whereas not-for-profits facing high for-profit competition and system member not-for-profits facing low for-profit competition are not statistically significantly different from their for-profit counterparts in terms of treatment choices. Uninsured patients are on average 7% less likely to be accorded the procedure as the treatment at system member not-for-profit hospitals facing high for-profit competition than insured patients. System member not-for-profit hospitals, which account for over half of the observations in the analysis, are on average 16% more likely to accord the procedure as the treatment when facing high for-profit competition than low-for-profit competition. Conclusions We show that treatment choices of hospitals differ by system membership and the level of for-profit competition faced by the hospitals in addition to hospital ownership type and health insurance status of patients. Our results support that hospital system member not-for-profits and not-for-profits facing high for-profit competition are for-profits in disguise. Therefore, system membership is an important characteristic to consider in addition to market competitiveness when tax exemption of not-for-profits are revisited. Moreover, higher competition may lead to increasing health care costs due to more aggressive treatment choices, which should be taken into account while regulating hospital markets.

Suggested Citation

  • Esra Eren Bayindir & Jonas Schreyögg, 2021. "What drives different treatment choices? Investigation of hospital ownership, system membership and competition," Health Economics Review, Springer, vol. 11(1), pages 1-14, December.
  • Handle: RePEc:spr:hecrev:v:11:y:2021:i:1:d:10.1186_s13561-021-00305-3
    DOI: 10.1186/s13561-021-00305-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s13561-021-00305-3
    File Function: Abstract
    Download Restriction: no

    File URL: https://libkey.io/10.1186/s13561-021-00305-3?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. Gruber, Jonathan, 1994. "The effect of competitive pressure on charity: Hospital responses to price shopping in California," Journal of Health Economics, Elsevier, vol. 13(2), pages 183-211, July.
    2. Hirth, Richard A., 1999. "Consumer information and competition between nonprofit and for-profit nursing homes," Journal of Health Economics, Elsevier, vol. 18(2), pages 219-240, April.
    3. Edward C. Norton & Douglas O. Staiger, 1994. "How Hospital Ownership Affects Access to Care for the Uninsured," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 171-185, Spring.
    4. Cory S. Capps & Dennis W. Carlton & Guy David, 2020. "Antitrust Treatment Of Nonprofits: Should Hospitals Receive Special Care?," Economic Inquiry, Western Economic Association International, vol. 58(3), pages 1183-1199, July.
    5. Sloan, Frank A., 2000. "Not-for-profit ownership and hospital behavior," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 21, pages 1141-1174, Elsevier.
    6. Hentschker, Corinna & Mennicken, Roman & Schmid, Andreas, 2014. "Defining Hospital Markets - An Application to the German Hospital Sector," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 1-17.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Chris Sampson’s journal round-up for 8th March 2021
      by Chris Sampson in The Academic Health Economists' Blog on 2021-03-08 12:00:01

    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. Jill R. Horwitz & Austin Nichols, 2007. "What Do Nonprofits Maximize? Nonprofit Hospital Service Provision and Market Ownership Mix," NBER Working Papers 13246, National Bureau of Economic Research, Inc.
    2. Horwitz, Jill R. & Nichols, Austin, 2009. "Hospital ownership and medical services: Market mix, spillover effects, and nonprofit objectives," Journal of Health Economics, Elsevier, vol. 28(5), pages 924-937, September.
    3. Karen Eggleston & Richard Zeckhauser, 2002. "Government Contracting for Health Care," Discussion Papers Series, Department of Economics, Tufts University 0202, Department of Economics, Tufts University.
    4. Chou, Shin-Yi, 2002. "Asymmetric information, ownership and quality of care: an empirical analysis of nursing homes," Journal of Health Economics, Elsevier, vol. 21(2), pages 293-311, March.
    5. Grabowski, David C. & Feng, Zhanlian & Hirth, Richard & Rahman, Momotazur & Mor, Vincent, 2013. "Effect of nursing home ownership on the quality of post-acute care: An instrumental variables approach," Journal of Health Economics, Elsevier, vol. 32(1), pages 12-21.
    6. Daniel Kessler & Mark McClellan, 2001. "The Effects of Hospital Ownership on Medical Productivity," NBER Working Papers 8537, National Bureau of Economic Research, Inc.
    7. Jeffrey P. Ballou, 2008. "Do Nonprofit And Government Nursing Homes Enter Unprofitable Markets?," Economic Inquiry, Western Economic Association International, vol. 46(2), pages 241-260, April.
    8. Frank A. Sloan, 2002. "Hospital Ownership Conversions: Defining the Appropriate Public Oversight Role," NBER Chapters, in: Frontiers in Health Policy Research, Volume 5, pages 123-166, National Bureau of Economic Research, Inc.
    9. Jill R. Horwitz, 2005. "Does Corporate Ownership Matter? Service Provision in the Hospital Industry," NBER Working Papers 11376, National Bureau of Economic Research, Inc.
    10. Guy David, 2009. "The convergence between for-profit and nonprofit hospitals in the United States," International Journal of Health Economics and Management, Springer, vol. 9(4), pages 403-428, December.
    11. Shen, Yu-Chu, 2002. "The effect of hospital ownership choice on patient outcomes after treatment for acute myocardial infarction," Journal of Health Economics, Elsevier, vol. 21(5), pages 901-922, September.
    12. Jomon A. Paul & Benedikt Quosigk & Leo MacDonald, 2019. "Factors Impacting Market Concentration of Not-for-Profit Hospitals," Journal of Business Ethics, Springer, vol. 154(2), pages 517-535, January.
    13. Rexford E. Santerre & John A. Vernon, 2006. "The consumer welfare implications of the hospital ownership mix in the US: an exploratory study," Health Economics, John Wiley & Sons, Ltd., vol. 15(11), pages 1187-1199, November.
    14. Ettner, Susan L. & Hermann, Richard C., 2001. "The role of profit status under imperfect information: evidence from the treatment patterns of elderly Medicare beneficiaries hospitalized for psychiatric diagnoses," Journal of Health Economics, Elsevier, vol. 20(1), pages 23-49, January.
    15. Sujoy Chakravarty & Martin Gaynor & Steven Klepper & William B. Vogt, 2006. "Does the profit motive make Jack nimble? Ownership form and the evolution of the US hospital industry," Health Economics, John Wiley & Sons, Ltd., vol. 15(4), pages 345-361, April.
    16. Ge Bai, 2013. "How Do Board Size and Occupational Background of Directors Influence Social Performance in For-profit and Non-profit Organizations? Evidence from California Hospitals," Journal of Business Ethics, Springer, vol. 118(1), pages 171-187, November.
    17. Mark Duggan, 2000. "Hospital Market Structure and the Behavior of Not-for-Profit Hospitals: Evidence from Responses to California's Disproportionate Share Program," NBER Working Papers 7966, National Bureau of Economic Research, Inc.
    18. Silverman, Elaine & Skinner, Jonathan, 2004. "Medicare upcoding and hospital ownership," Journal of Health Economics, Elsevier, vol. 23(2), pages 369-389, March.
    19. Lieber, Ethan M.J., 2018. "Does health insurance coverage fall when nonprofit insurers become for-profits?," Journal of Health Economics, Elsevier, vol. 57(C), pages 75-88.
    20. Anup Malani & Tomas Philipson & Guy David, 2003. "Theories of Firm Behavior in the Nonprofit Sector. A Synthesis and Empirical Evaluation," NBER Chapters, in: The Governance of Not-for-Profit Organizations, pages 181-216, National Bureau of Economic Research, Inc.

    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:spr:hecrev:v:11:y:2021:i:1:d:10.1186_s13561-021-00305-3. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.springer.com/economics/journal/13561 .

    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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com/economics/journal/13561 .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.