NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Ownership Form and Trapped Capital in the Hospital Industry

Henry Hansmann, Daniel Kessler, Mark McClellan

NBER Working Paper No. 8989
Issued in June 2002
NBER Program(s):   CF   HC   LE

Over the past 20 years, demand for acute care hospital services has declined more rapidly than has hospital capacity. This paper investigates the extent to which the preponderance of the nonprofit form in this industry might account for this phenomenon. We test whether rates of exit from the hospital industry differ significantly across the different forms of ownership, and especially whether secular nonprofit hospitals reduce capacity more slowly than do other types of hospitals. We estimate the effect of population changes (a proxy for changes in demand) at the zip-code level between 1985 and 1994 on changes in the capacity of for-profit, secular nonprofit, religious nonprofit, and public hospitals over the same period, holding constant metropolitan statistical area (MSA) fixed effects and other 1985 baseline characteristics of residential zip codes. We find that for-profit hospitals are the most responsive to reductions in demand, followed in turn by public and religiously affiliated nonprofit hospitals, while secular nonprofits are distinctly the least responsive of the four ownership types.

download in pdf format
   (276 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (276 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Published:

Users who downloaded this paper also downloaded these:
Hansmann, Kessler, and McClellan Ownership Form and Trapped Capital in the Hospital Industry
Hansmann The Changing Roles of Public, Private, and Nonprofit Enterprise in Education, Health Care, and Other Human Services
Huckman w11379 Hospital Integration and Vertical Consolidation: An Analysis of Acquisitions in New York State
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us