Does the Impact of Managed Care on Substance Abuse Treatment Services Vary By Profit Status?

Jody Sindelar, Todd Olmstead

NBER Working Paper No. 10745
Issued in September 2004
NBER Program(s):Economics of Aging, Health Economics

We extend our previous research by determining whether, and how, the impact of managed care on substance abuse treatment (SAT) services differs by facility ownership.

We use the 2000 National Survey of Substance Abuse Treatment Services that contains data on service offerings and other characteristics of 10,513 SAT facilities. For each group of for-profit, not-for-profit, and public facilities, we estimate the impact of managed care (MC) on the number and types of SAT services offered (i.e., indicators of the quality of care). We use IVs to account for possible endogeneity between facilities' involvement in MC and service offerings.

We find substantial differences in the magnitude and direction of the impact of MC by facility ownership. On average, MC causes for-profits to offer approximately four (out of 26) additional services, causes publics to offer approximately four fewer services, and has no impact on the number of services offered by not-for-profits.

Our findings raise concerns that managed care may reduce the quality of care provided by public SAT facilities by limiting the range of services offered. On the other hand, for-profit clinics are found to increase their range of services; the societal impact of this is unclear for several reasons.

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Document Object Identifier (DOI): 10.3386/w10745

Published: Olmstead, T and JL Sindelar. "Does the impact of managed care on substance abuse treatment services vary by profit status?" Health Services Research 40(6 Pt 1) (December 2005): 1862–1882.

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