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Does the Impact of Managed Care on Substance Abuse Treatment Services Vary By Profit Status?

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  • Jody Sindelar
  • Todd Olmstead

Abstract

We extend our previous research by determining whether, and how, the impact of managed care on substance abuse treatment (SAT) services differs by facility ownership. We use the 2000 National Survey of Substance Abuse Treatment Services that contains data on service offerings and other characteristics of 10,513 SAT facilities. For each group of for-profit, not-for-profit, and public facilities, we estimate the impact of managed care (MC) on the number and types of SAT services offered (i.e., indicators of the quality of care). We use IVs to account for possible endogeneity between facilities' involvement in MC and service offerings. We find substantial differences in the magnitude and direction of the impact of MC by facility ownership. On average, MC causes for-profits to offer approximately four (out of 26) additional services, causes publics to offer approximately four fewer services, and has no impact on the number of services offered by not-for-profits. Our findings raise concerns that managed care may reduce the quality of care provided by public SAT facilities by limiting the range of services offered. On the other hand, for-profit clinics are found to increase their range of services; the societal impact of this is unclear for several reasons.

Suggested Citation

  • Jody Sindelar & Todd Olmstead, 2004. "Does the Impact of Managed Care on Substance Abuse Treatment Services Vary By Profit Status?," NBER Working Papers 10745, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:10745
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    1. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
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    4. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    5. Pauline Vaillancourt Rosenau & Stephen H. Linder, 2003. "Two Decades of Research Comparing For-Profit and Nonprofit Health Provider Performance in the United States," Social Science Quarterly, Southwestern Social Science Association, vol. 84(2), pages 219-241.
    6. Dranove, David & Satterthwaite, Mark A., 2000. "The industrial organization of health care markets," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 20, pages 1093-1139 Elsevier.
    7. Ballou, Jeffrey P. & Weisbrod, Burton A., 2003. "Managerial rewards and the behavior of for-profit, governmental, and nonprofit organizations: evidence from the hospital industry," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 1895-1920, September.
    8. Kanika Kapur & Burton A. Weisbrod, 2000. "The Roles of Government and Nonprofit Suppliers in Mixed Industries," Public Finance Review, , vol. 28(4), pages 275-308, July.
    9. Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x, January.
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    Cited by:

    1. Samuel Bondurant & jason lindo & Isaac Swensen, 2016. "Substance Abuse Treatment Centers and Local Crime," Working Papers id:11302, eSocialSciences.
    2. repec:eee:juecon:v:104:y:2018:i:c:p:124-133 is not listed on IDEAS
    3. Swensen, Isaac D., 2015. "Substance-abuse treatment and mortality," Journal of Public Economics, Elsevier, vol. 122(C), pages 13-30.

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    JEL classification:

    • I1 - Health, Education, and Welfare - - Health

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