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Hospital Ownership Mix Efficiency in the US: An Exploratory Study

  • Rexford E. Santerre
  • John A. Vernon

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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11192.

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Date of creation: Mar 2005
Date of revision:
Handle: RePEc:nbr:nberwo:11192
Note: HC
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  1. Keeler, Theodore E. & Ying, John S., 1993. "Hospital Costs and Excess Bed Capacity: A Statistical Analysis," Department of Economics, Working Paper Series qt7cb0d9zc, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  2. 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.
  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. 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.
  5. 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.
  6. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
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