NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Competition, Payer, and Hospital Quality

Gautam Gowrisankaran, Robert Town

NBER Working Paper No. 9206
Issued in September 2002
NBER Program(s):   HC   PR

The objective of this study is to estimate the effects of competition for both Medicare and HMO patients on the quality decisions of hospitals in Southern California. We use discharge data from the State of California for the period 1989-1993. The outcome variables are the risk-adjusted hospital mortality rates for pneumonia (estimated by the authors) and acute myocardial infarction (reported by the state of California). Measures of competition are constructed for each hospital and payer type. The competition measures are formulated to mitigate the possibility of endogeneity bias. The study finds that increases in the degree of competition for HMO patients decrease risk-adjusted hospital mortality rates. Conversely, increases in competition for Medicare enrollees are associated with increases in risk-adjusted mortality rates for hospitals. In conjunction with previous research, the estimates indicate that increasing competition for HMO patients appears to reduce prices and save lives and hence appears to improve welfare. However, increases in competition for Medicare appear to reduce quality and may reduce welfare. Increasing competition has little net effect on hospital quality for our sample.

download in pdf format
   (222 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 (222 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w9206

Published: Gowrisankaran, Gautam and Robert J. Town. “Competition, Payers and Hospital Quality.” Health Services Research 38 (2003): 1403 – 22.

Users who downloaded this paper also downloaded these:
Kessler and McClellan w7266 Is Hospital Competition Socially Wasteful?
Gaynor w12301 What Do We Know About Competition and Quality in Health Care Markets?
Gaynor, Moreno-Serra, and Propper w16164 Death by Market Power: Reform, Competition and Patient Outcomes in the National Health Service
Romley and Goldman w13730 How Costly Is Hospital Quality? A Revealed-Preference Approach
Gaynor and Vogt w9471 Competition Among Hospitals
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

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

Contact Us