IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-06i10001.html
   My bibliography  Save this article

Ownership and rent-seeking behavior in specialty health care practices

Author

Listed:
  • Dan Friesner

    (Gonzaga University)

  • Chris Stevens

    (Ohio University, Eastern Campus)

Abstract

Specialty health care practices are unique in that they exhibit a wide range of ownership types, from large corporations controlled by third parties to those directly owned by practitioners (physicians, therapists, etc.). Many of these practices also employ licensed assistants whose labor is partially substitutable with those of the practitioners. This paper presents a theoretical model that examines the impact that different levels of ownership have on rent-seeking behavior and efficiency within specialty practices. Our primary focus is on whether lower levels of ownership induce practitioners to extract larger economic rents by substituting their services for those of their assistants. We find that if the practitioners are not required to be technically efficient then they unambiguously respond to lower ownership with rent-seeking. However, requiring the firm to be technically (but not allocatively) efficient, may be sufficient to mitigate this incentive.

Suggested Citation

  • Dan Friesner & Chris Stevens, 2007. "Ownership and rent-seeking behavior in specialty health care practices," Economics Bulletin, AccessEcon, vol. 9(10), pages 1-14.
    • Handle: RePEc:ebl:ecbull:eb-06i10001
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/pubs/EB/2007/Volume9/EB-06I10001A.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kris Siddharthan & Melissa Ahern & Robert Rosenman, 2000. "Data Envelopment Analysis to determine efficiencies of health maintenance organizations," Health Care Management Science, Springer, vol. 3(1), pages 23-29, January.
    2. Robert Rosenman & Daniel Friesner & Christopher Stevens, 2005. "Do Health Care Providers Quality Discriminate? Empirical Evidence from Primary Care Outpatient Clinics," Eastern Economic Journal, Eastern Economic Association, vol. 31(4), pages 649-670, Fall.
    3. Robert Town & Douglas Wholey & Roger Feldman & Lawton R. Burns, 2006. "The Welfare Consequences of Hospital Mergers," NBER Working Papers 12244, National Bureau of Economic Research, Inc.
    4. Dor, Avi & Farley, Dean E., 1996. "Payment source and the cost of hospital care: Evidence from a multiproduct cost function with multiple payers," Journal of Health Economics, Elsevier, vol. 15(1), pages 1-21, February.
    5. Dan Friesner & Robert Rosenman, 2004. "Non-profit cost-adjusting with quality as a private good," Applied Economics, Taylor & Francis Journals, vol. 36(5), pages 511-523.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:ebl:ecbull:v:9:y:2007:i:10:p:1-14 is not listed on IDEAS
    2. Steffen Burchhardt & Christoph Starke, 2010. "Target-Group and Quality Decisions of Inequity-Averse Entrepreneurs," FEMM Working Papers 100011, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    3. Kutzin, Joseph, 2001. "A descriptive framework for country-level analysis of health care financing arrangements," Health Policy, Elsevier, vol. 56(3), pages 171-204, June.
    4. Desgranges, Gabriel & Gauthier, Stéphane, 2016. "Rationalizability and efficiency in an asymmetric Cournot oligopoly," International Journal of Industrial Organization, Elsevier, vol. 44(C), pages 163-176.
    5. Lakdawalla, Darius & Sood, Neeraj, 2013. "Health insurance as a two-part pricing contract," Journal of Public Economics, Elsevier, vol. 102(C), pages 1-12.
    6. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2013. "Hospital Mergers: A Spatial Competition Approach," NIPE Working Papers 04/2013, NIPE - Universidade do Minho.
    7. Gaynor, Martin & Laudicella, Mauro & Propper, Carol, 2012. "Can governments do it better? Merger mania and hospital outcomes in the English NHS," Journal of Health Economics, Elsevier, vol. 31(3), pages 528-543.
    8. Filipe Amado, Carla Alexandra & Dyson, Robert G., 2008. "On comparing the performance of primary care providers," European Journal of Operational Research, Elsevier, vol. 185(3), pages 915-932, March.
    9. Gao, Qiuming & Wang, Derek, 2021. "Hospital efficiency and equity in health care delivery: A study based in China," Socio-Economic Planning Sciences, Elsevier, vol. 76(C).
    10. Freedman, Seth & Lin, Haizhen & Simon, Kosali, 2015. "Public health insurance expansions and hospital technology adoption," Journal of Public Economics, Elsevier, vol. 121(C), pages 117-131.
    11. Avi Dor & Partha Deb & Michael Grossman & Gregory Cooper & Siran Koroukian & Fang Xu, 2013. "Impact of Mortality-Based Performance Measures on Hospital Pricing: the Case of Colon Cancer Surgeries," NBER Working Papers 19447, National Bureau of Economic Research, Inc.
    12. Dranove, David, 1998. "Economies of scale in non-revenue producing cost centers: Implications for hospital mergers," Journal of Health Economics, Elsevier, vol. 17(1), pages 69-83, January.
    13. O'Neill, Liam & Rauner, Marion & Heidenberger, Kurt & Kraus, Markus, 2008. "A cross-national comparison and taxonomy of DEA-based hospital efficiency studies," Socio-Economic Planning Sciences, Elsevier, vol. 42(3), pages 158-189, September.
    14. Rabbani, Maysam, 2021. "Mergers with Future Rivals Can Boost Prices, Intensify Market Concentration, and Bar Entry," MPRA Paper 112864, University Library of Munich, Germany, revised 26 Apr 2022.
    15. Brett Lissenden, 2017. "Three's a Crowd? The Effect of Insurer Participation on Premiums and Cost-Sharing Parameters in the Initial Years of the ACA Marketplaces," American Journal of Health Economics, MIT Press, vol. 3(4), pages 477-506, Fall.
    16. Calem, Paul S. & Dor, Avi & Rizzo, John A., 1999. "The welfare effects of mergers in the hospital industry," Journal of Economics and Business, Elsevier, vol. 51(3), pages 197-213, May.
    17. Frija, Aymen & Speelman, Stijn & Chebil, Ali & Buysse, Jeroen & Van Huylenbroeck, Guido, 2008. "Performances And Efficiencies Of The Irrigation Water Users’ Associations In Tunisia," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6460, European Association of Agricultural Economists.
    18. John Romley & Erin Trish & Dana Goldman & Melinda Beeuwkes Buntin & Yulei He & Paul Ginsburg, 2019. "Geographic variation in the delivery of high-value inpatient care," PLOS ONE, Public Library of Science, vol. 14(3), pages 1-11, March.
    19. Avi Dor & Sarah Duffy & Herbert Wong, 1997. "Expense Preference Behavior and Contract‐Management: Evidence from U.S. Hospitals," Southern Economic Journal, John Wiley & Sons, vol. 64(2), pages 542-554, October.
    20. Vanessa Cirulli & Giorgia Marini, 2023. "Do mergers really increase output? Evidence from English hospitals," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(1), pages 159-189, March.
    21. Jean-Philippe Boussemart & Hervé Leleu & Viviane Valdmanis, 2013. "Price of Medicaid and Uncompensated Care compared to Medicare and Private care: A translog shadow pricing approach for Floridian hospital outputs," Working Papers 2013-ECO-02, IESEG School of Management.

    More about this item

    Keywords

    efficiency;

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-06i10001. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.