IDEAS home Printed from https://ideas.repec.org/a/ucp/amjhec/v2y2016i2p241-271.html
   My bibliography  Save this article

Market Structure as a Determinant of Patient Care Quality

Author

Listed:
  • Nathan E. Wilso

    (Federal Trade Commission)

Abstract

Understanding how market structure affects health outcomes is difficult because of the nonrandom nature of where patients receive care. I develop a control function approach that is robust not just to selection on unobservable differences in patients’ condition severity, but also to selection on unobservable variation in how patients respond to different treatments. I apply the approach to data from 2004 to 2008 for all hemodialysis patients in Atlanta, Georgia. The results indicate that a one-facility acquisition by the average provider in the average market would lead the average patient to spend 28 percent more days in the ICU/CCU. Estimates that do not control for the role of idiosyncratic matching would predict smaller, though still economically and statistically significant, effects on the affected patients. I interpret the results as indicating the importance of idiosyncratic matching in this market, which multifacility firms address by differentiating their operations.

Suggested Citation

  • Nathan E. Wilso, 2016. "Market Structure as a Determinant of Patient Care Quality," American Journal of Health Economics, University of Chicago Press, vol. 2(2), pages 241-271, Spring.
    • Handle: RePEc:ucp:amjhec:v:2:y:2016:i:2:p:241-271
    as

    Download full text from publisher

    File URL: https://www.journals.uchicago.edu/doi/pdf/10.1162/AJHE_a_00043
    File Function: link to full text PDF
    Download Restriction: Access to PDF is restricted to subscribers
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Katherine Ho, 2006. "The welfare effects of restricted hospital choice in the US medical care market," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(7), pages 1039-1079.
    2. James Heckman & Edward Vytlacil, 1998. "Instrumental Variables Methods for the Correlated Random Coefficient Model: Estimating the Average Rate of Return to Schooling When the Return is Correlated with Schooling," Journal of Human Resources, University of Wisconsin Press, vol. 33(4), pages 974-987.
    3. Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, vol. 52(2), pages 345-362, March.
    4. McFadden, Daniel L., 1984. "Econometric analysis of qualitative response models," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 24, pages 1395-1457, Elsevier.
    5. Xuepeng Liu & Mary E. Lovely & Jan Ondrich, 2017. "The Location Decisions Of Foreign Investors In China: Untangling The Effect Of Wages Using A Control Function Approach," World Scientific Book Chapters, in: Mary E Lovely (ed.), International Economic Integration and Domestic Performance, chapter 11, pages 191-197, World Scientific Publishing Co. Pte. Ltd..
    6. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, January.
    7. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-365, June.
    8. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-512, March.
    9. Katherine R. Jones, 1992. "Variations in the Hemodialysis Treatment Process," Clinical Nursing Research, , vol. 1(1), pages 50-66, February.
    10. François Bourguignon & Martin Fournier & Marc Gurgand, 2007. "Selection Bias Corrections Based On The Multinomial Logit Model: Monte Carlo Comparisons," Journal of Economic Surveys, Wiley Blackwell, vol. 21(1), pages 174-205, February.
    11. Terza, Joseph V. & Basu, Anirban & Rathouz, Paul J., 2008. "Two-stage residual inclusion estimation: Addressing endogeneity in health econometric modeling," Journal of Health Economics, Elsevier, vol. 27(3), pages 531-543, May.
    12. Gowrisankaran, Gautam & Town, Robert J., 1999. "Estimating the quality of care in hospitals using instrumental variables," Journal of Health Economics, Elsevier, vol. 18(6), pages 747-767, December.
    13. Gordon B. Dahl, 2002. "Mobility and the Return to Education: Testing a Roy Model with Multiple Markets," Econometrica, Econometric Society, vol. 70(6), pages 2367-2420, November.
    14. Held, Philip J. & Pauly, Mark V., 1983. "Competition and efficiency in the end stage renal disease program," Journal of Health Economics, Elsevier, vol. 2(2), pages 95-118, August.
    15. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    16. Paul L. E. Grieco & Ryan C. McDevitt, 2017. "Productivity and Quality in Health Care: Evidence from the Dialysis Industry," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(3), pages 1071-1105.
    17. Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(1), pages 3-13.
    18. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, vol. 69(5), pages 1127-1160, September.
    19. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
    20. Jeffrey M. Wooldridge, 2015. "Control Function Methods in Applied Econometrics," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 420-445.
    21. Andrea Shepard, 1993. "Contractual Form, Retail Price, and Asset Characteristics in Gasoline Retailing," RAND Journal of Economics, The RAND Corporation, vol. 24(1), pages 58-77, Spring.
    22. Hosken, Daniel S. & McMillan, Robert S. & Taylor, Christopher T., 2008. "Retail gasoline pricing: What do we know?," International Journal of Industrial Organization, Elsevier, vol. 26(6), pages 1425-1436, November.
    23. Lee, Lung-Fei, 1978. "Unionism and Wage Rates: A Simultaneous Equations Model with Qualitative and Limited Dependent Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(2), pages 415-433, June.
    24. Paul Beaudry & Mark Doms & Ethan Lewis, 2010. "Should the Personal Computer Be Considered a Technological Revolution? Evidence from U.S. Metropolitan Areas," Journal of Political Economy, University of Chicago Press, vol. 118(5), pages 988-1036.
    25. Ford, Jon M. & Kaserman, David L., 2000. "Ownership structure and the quality of medical care: evidence from the dialysis industry," Journal of Economic Behavior & Organization, Elsevier, vol. 43(3), pages 279-293, November.
    26. Nathan E. Wilson, 2016. "For-profit status and industry evolution in health care markets: evidence from the dialysis industry," International Journal of Health Economics and Management, Springer, vol. 16(4), pages 297-319, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Saghafian, Soroush & Hopp, Wallace J., 2017. "Can Public Reporting Cure Healthcare? The Role of Quality Transparency in Improving Patient-Provider Alignment," Working Paper Series rwp17-044, Harvard University, John F. Kennedy School of Government.
    2. Giuseppe Moscelli & Hugh Gravelle & Luigi Siciliani, 2016. "Market structure, patient choice and hospital quality for elective patients," Working Papers 139cherp, Centre for Health Economics, University of York.
    3. Soroush Saghafian & Wallace J. Hopp, 2020. "Can Public Reporting Cure Healthcare? The Role of Quality Transparency in Improving Patient–Provider Alignment," Operations Research, INFORMS, vol. 68(1), pages 71-92, January.
    4. Nathan E. Wilson, 2016. "For-profit status and industry evolution in health care markets: evidence from the dialysis industry," International Journal of Health Economics and Management, Springer, vol. 16(4), pages 297-319, December.
    5. Giuseppe Moscelli & Hugh Gravelle & Luigi Siciliani, 2021. "Hospital competition and quality for non‐emergency patients in the English NHS," RAND Journal of Economics, RAND Corporation, vol. 52(2), pages 382-414, June.
    6. Giuseppe Moscelli & Hugh Gravelle & Luigi Siciliani, 2018. "Effects of Market Structure and Patient Choice on Hospital Quality for Planned Patients," School of Economics Discussion Papers 1118, School of Economics, University of Surrey.
    7. Nathan E. Wilson, 2021. "The Impact of Competition on Investment: Evidence From California Hospitals," Journal of Industrial Economics, Wiley Blackwell, vol. 69(1), pages 1-32, March.

    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. Damette, Olivier & Delacote, Philippe & Lo, Gaye Del, 2018. "Households energy consumption and transition toward cleaner energy sources," Energy Policy, Elsevier, vol. 113(C), pages 751-764.
    2. Bertoli, S. & Fernández-Huertas Moraga, J. & Ortega, F., 2013. "Crossing the border: Self-selection, earnings and individual migration decisions," Journal of Development Economics, Elsevier, vol. 101(C), pages 75-91.
    3. Isabelle Chort & Jean-Noël Senne, 2012. "Intra-household Selection into Migration : Evidence from a Matched Sample of Migrants and Origin Households in Senegal," Post-Print hal-01516775, HAL.
    4. Isabelle Chort & Jean-Noël Senne, 2017. "Intra-household Selection into Migration: Evidence from a Matched Sample of Migrants and Origin Households in Senegal," PSE Working Papers hal-01516104, HAL.
    5. Ismaël Mourifié & Marc Henry & Romuald Méango, 2020. "Sharp Bounds and Testability of a Roy Model of STEM Major Choices," Journal of Political Economy, University of Chicago Press, vol. 128(8), pages 3220-3283.
    6. Breustedt, Gunnar & Schulz, Norbert & Latacz-Lohmann, Uwe, 2013. "Kalibrierung von Vertragsnaturschutzprogrammen mittels eines zweistufigen Discrete-Choice-Experimentes," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 62(04), pages 1-17, November.
    7. Mathias Kuepié & Christophe J. Nordman, 2016. "Where Does Education Pay Off in Sub-Saharan Africa? Evidence from Two Cities of the Republic of Congo," Oxford Development Studies, Taylor & Francis Journals, vol. 44(1), pages 1-27, January.
    8. Guaracyane Lima Campelo & João Mário Santos De França & Emerson Luís Lemos Marinho, 2016. "Impacts Of Malnutrition On Labor Productivity: Empirical Evidences In Rural Brazil," Anais do XLII Encontro Nacional de Economia [Proceedings of the 42nd Brazilian Economics Meeting] 236, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    9. Sergi Jiménez-Martín & Cristina Prieto, 2012. "The trade-off between formal and informal care in Spain," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 13(4), pages 461-490, August.
    10. Aleksandra Anić & Gorana Krstić, 2019. "What Lies Behind The Gender Wage Gap In Serbia?," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 64(223), pages 137-170, October –.
    11. Stéphane Couture & Serge Garcia & Arnaud Reynaud, 2009. "Household Energy Choices and Fuelwood Consumption: An Econometric Approach to the French Data," LERNA Working Papers 09.08.284, LERNA, University of Toulouse.
    12. C. Duvivier & S. Li & M.-F. Renard, 2013. "Are workers close to cities paid higher nonagricultural wages in rural China?," Applied Economics, Taylor & Francis Journals, vol. 45(30), pages 4308-4322, October.
    13. Espenlaub, Susanne & Khurshed, Arif & Mohamed, Abdulkadir, 2014. "Does cross-border syndication affect venture capital risk and return?," International Review of Financial Analysis, Elsevier, vol. 31(C), pages 13-24.
    14. Miguel Santolino & Magnus Söderberg, 2014. "Modelling appellate courts’ responses in motor injury disputes," European Journal of Law and Economics, Springer, vol. 38(3), pages 393-407, December.
    15. Ewa Cukrowska-Torzewska & Anna Lovasz, 2017. "The Impact of Parenthood on the Gender Wage Gap – a Comparative Analysis of 26 European Countries," Working Papers 2017-25, Faculty of Economic Sciences, University of Warsaw.
    16. Gilpin, Gregory A., 2011. "Reevaluating the effect of non-teaching wages on teacher attrition," Economics of Education Review, Elsevier, vol. 30(4), pages 598-616, August.
    17. Raquel Carrasco & J Ignacio García-Pérez & Juan F Jimeno, 2024. "Worker flows and wage dynamics: estimating wage growth without composition effects," Oxford Economic Papers, Oxford University Press, vol. 76(1), pages 94-114.
    18. Zhao, Shangwei & Xie, Tian & Ai, Xin & Yang, Guangren & Zhang, Xinyu, 2023. "Correcting sample selection bias with model averaging for consumer demand forecasting," Economic Modelling, Elsevier, vol. 123(C).
    19. By Barbara Mueller & Jürg Schweri, 2015. "How specific is apprenticeship training? Evidence from inter-firm and occupational mobility after graduation," Oxford Economic Papers, Oxford University Press, vol. 67(4), pages 1057-1077.
    20. Awal Abdul‐Rahaman & Awudu Abdulai, 2020. "Vertical coordination mechanisms and farm performance amongst smallholder rice farmers in northern Ghana," Agribusiness, John Wiley & Sons, Ltd., vol. 36(2), pages 259-280, April.

    More about this item

    Keywords

    dialysis; competition; quality; control function; selection bias; random coefficients;
    All these keywords.

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

    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:ucp:amjhec:v:2:y:2016:i:2:p:241-271. 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: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/AJHE .

    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.