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Hospital Ownership Mix Efficiency in the US: An Exploratory Study

Author

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  • Rexford E. Santerre
  • John A. Vernon

Abstract

This paper offers an empirical test of ownership mix efficiency in the U.S. hospital services industry. The test compares the benefits of quality assurance with the costs from the attenuation of property rights that result from an increased presence of nonprofit organizations. The empirical results suggest that too many not-for-profit and public hospitals may exist in the typical market area of the U.S. The policy implication is that more quality of care per dollar might be obtained by attracting a greater percentage of for-profit hospitals into some market areas. This conclusion, however, is tempered with several caveats. We discuss these and also make recommendations for further research.

Suggested Citation

  • Rexford E. Santerre & John A. Vernon, 2005. "Hospital Ownership Mix Efficiency in the US: An Exploratory Study," NBER Working Papers 11192, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:11192
    Note: HC
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    File URL: http://www.nber.org/papers/w11192.pdf
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    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. Dranove, David & White, William D, 1994. "Recent Theory and Evidence on Competition in Hospital Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 169-209, Spring.
    3. 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.
    4. Grabowski, David C. & Hirth, Richard A., 2003. "Competitive spillovers across non-profit and for-profit nursing homes," Journal of Health Economics, Elsevier, vol. 22(1), pages 1-22, January.
    5. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    6. Svorny, Shirley V, 1987. "Physician Licensure: A New Approach to Examining the Role of Professional Interests," Economic Inquiry, Western Economic Association International, vol. 25(3), pages 497-509, July.
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    Cited by:

    1. Powell, Philip T. & Laufer, Ron, 2010. "The promises and constraints of consumer-directed healthcare," Business Horizons, Elsevier, vol. 53(2), pages 171-182, March.
    2. Herr, Annika, 2009. "Product differentiation and welfare in a mixed duopoly with regulated prices: the case of a public and a private hospital," FAU Discussion Papers in Economics 08/2009, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    3. 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.
    4. Guillermo Baquero & Malika Hamadi & Andréas Heinen, 2012. "Competition, loan rates and information dispersion in microcredit markets," ESMT Research Working Papers ESMT-12-02, ESMT European School of Management and Technology.
    5. 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.

    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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