The Effects of Hospital Ownership on Medical Productivity

Posted: 23 Sep 2002

See all articles by Daniel P. Kessler

Daniel P. Kessler

Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

Mark B. McClellan

Brookings Institution; Council of Economic Advisors; National Bureau of Economic Research (NBER)

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Abstract

To develop new evidence on how hospital ownership and other aspects of hospital market composition affect health care productivity, we analyze longitudinal data on the medical expenditures and health outcomes of the vast majority of nonrural elderly Medicare beneficiaries hospitalized for new heart attacks over the period 1985-1996. We find that the effects of ownership status are quantitatively important. Areas with a presence of for-profit hospitals have approximately 2.4% lower levels of hospital expenditures, but virtually the same patient health outcomes. We conclude that for-profit hospitals have important spillover benefits for medical productivity.

Suggested Citation

Kessler, Daniel Philip and McClellan, Mark B., The Effects of Hospital Ownership on Medical Productivity. RAND Journal of Economics, Vol. 33, Autumn 2002. Available at SSRN: https://ssrn.com/abstract=324979

Daniel Philip Kessler (Contact Author)

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Mark B. McClellan

Brookings Institution ( email )

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