TY - JOUR
T1 - Endogenous quality investments in the U.S. hospital market
AU - Garthwaite, Craig
AU - Ody, Christopher J
AU - Starc, Amanda
N1 - Funding Information:
The main “non-patient costs are: (i) “miscellaneous”, (ii) private physician offices, and (iii) research. According to the Cost Reports, research costs at hospitals are small. Medical schools, rather than hospitals, incur most of the costs of research, and receive a supermajority of research grant funding. A small number of hospitals in Massachusetts account for over one third of research costs and research revenues that are received by hospitals. By contrast, seven universities (University of Pennsylvania, Stanford, Johns Hopkins, University of Michigan, UPMC, and Yale) that collectively obtain over four times as much in NIH funding own hospitals that collectively account for under ten percent of research costs that are received by hospitals.
Publisher Copyright:
© 2022 Elsevier B.V.
PY - 2022/7
Y1 - 2022/7
N2 - High and increasing hospital prices could reflect market imperfections, including provider concentration. Yet high prices could also reflect increased willingness to pay by privately insured consumers for clinical and non-clinical quality. In this paper, we explore strategic quality choices where hospitals make quality investments to increase private revenue. We then measure the relationship between potential prices and numerous quality measures including patient satisfaction, hospital processes, risk-adjusted mortality, the revealed preferences of current Medicare patients, technology adoption, physician quality, and ED wait times. We show that across a range of measures quality is correlated with the profitability of the payer mix: hospitals with more potential privately insured patients are of higher quality.
AB - High and increasing hospital prices could reflect market imperfections, including provider concentration. Yet high prices could also reflect increased willingness to pay by privately insured consumers for clinical and non-clinical quality. In this paper, we explore strategic quality choices where hospitals make quality investments to increase private revenue. We then measure the relationship between potential prices and numerous quality measures including patient satisfaction, hospital processes, risk-adjusted mortality, the revealed preferences of current Medicare patients, technology adoption, physician quality, and ED wait times. We show that across a range of measures quality is correlated with the profitability of the payer mix: hospitals with more potential privately insured patients are of higher quality.
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U2 - 10.1016/j.jhealeco.2022.102636
DO - 10.1016/j.jhealeco.2022.102636
M3 - Article
C2 - 35605497
AN - SCOPUS:85133958612
SN - 0167-6296
VL - 84
JO - Journal of Health Economics
JF - Journal of Health Economics
M1 - 102636
ER -
