Hospital Ownership and Public Medical Spending

Mark Duggan

NBER Working Paper No. 7789
Issued in July 2000
NBER Program(s):Health Care

The hospital market is served by firms that are private for-profit, private not-for-profit, and government-owned and operated. I use a plausibly exogenous change in hospital financing that was intended to improve medical care for the poor to test three theories of organizational behavior. My results reveal that the critical difference between the three types of hospitals owes to the soft budget constraint of government-owned institutions. The decision-makers in private not-for-profit hospitals are just as responsive to financial incentives and are no more altruistic than their counterparts in profit-maximizing facilities. My final set of results suggests that the significant increase in public medical spending examined in this paper did not improve health outcomes for the indigent.

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Document Object Identifier (DOI): 10.3386/w7789

Published: Duggan, Mark G. "Hospital Ownership And Public Medical Spending," Quarterly Journal of Economics, 2000, v115(4,Nov), 1343-1373. citation courtesy of

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