Hospital Ownership Mix Efficiency in the US: An Exploratory Study

Rexford E. Santerre, John A. Vernon

NBER Working Paper No. 11192
Issued in March 2005
NBER Program(s):   HC

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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