Hospital Competition and Charity Care

Abstract

This paper explores the relationship between competition and hospital charity care by analyzing changes in charity care associated with changes in a hospital's competitive environment (due to mergers and divestitures), using hospital financial and discharge data from Florida and Texas. Despite the pervasive belief that competition impedes a hospital's ability to offer services to the uninsured and under-insured, I find no statistically significant evidence that increased competition leads to reductions in charity care. In fact, I find some evidence that reduced competition leads to higher prices for uninsured patients.

Keywords: Charity care, mergers, divestitures, uninsured, hospital competition

JEL Classification: I11, L10, L44