Hospital Market Structure and Access to Medical Care: The Long-Term Impact of the Hill-Burton Act

45 Pages Posted: 2 Aug 2014 Last revised: 1 Feb 2015

Date Written: January 31, 2015

Abstract

Much of the growth in hospital capacity in the United States between World War II and the mid 1970s can be attributed to the Hill-Burton Act of 1946, designed to strengthen the nation's hospital system. Studying the evolution of the hospital industry since, I document evidence of the long-term persistence of short-term general hospitals within the U.S. I further explore the impact of construction of new hospitals under the Hill-Burton Act, finding that Hill-Burton construction significantly altered market structure today, with limited crowd-out of existing hospitals. Using new hospitals constructed using Hill-Burton funds as an exogenous source of variation in present hospital market structure, I find significant increases in the number of hospitals adopting specialized services in markets with greater hospital density, leading to reductions in the distance patients must travel to reach a hospital offering each service. My results imply that government subsidization of firm start-up costs can have significant impact on the long-term competitiveness of industries with highly persistent market structure. I also explore the effect of hospital market structure on utilization of hospital services. My results suggest that the impact of Hill-Burton construction of new hospitals on utilization of hospital services was less than 3% across a broad range of utilization measures.

Keywords: Hospitals, Government subsidies, Market structure

JEL Classification: I11, H51, I18, H54

Suggested Citation

Zabinski, Zenon, Hospital Market Structure and Access to Medical Care: The Long-Term Impact of the Hill-Burton Act (January 31, 2015). Available at SSRN: https://ssrn.com/abstract=2475103 or http://dx.doi.org/10.2139/ssrn.2475103

Zenon Zabinski (Contact Author)

Bates White ( email )

1300 I Street NW
Washington, DC 20005
United States

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