NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Hospital Market Structure and the Behavior of Not-for-Profit Hospitals: Evidence from Responses to California's Disproportionate Share Program

Mark Duggan

NBER Working Paper No. 7966
Issued in October 2000
NBER Program(s):   HC   PE

I exploit a plausibly exogenous change in hospital financial incentives to examine whether the behavior of private not-for-profit hospitals varies with the share of nearby hospitals organized as for-profit firms. My results show that not-for-profit hospitals in for-profit intensive areas are significantly more responsive to an increased incentive to treat low-income patients insured by the Medicaid program than are other not-for-profit providers. The heterogeneity in behavior is not due to differences in financial constraints but is instead likely driven by different degrees of market competitiveness in areas with one or more for-profit hospitals. The observed variation in the governing boards of not-for-profit hospitals across market areas supports the hypothesis that increased for-profit penetration makes these facilities more profit-oriented.

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Document Object Identifier (DOI): 10.3386/w7966

Published: Duggan, Mark. "Hospital Market Structure And The Behavior Of Not-For-Profit Hospitals," Rand Journal of Economics, 2002, v33(3,Autumn), 433-446.

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