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The consumer welfare implications of the hospital ownership mix in the US: an exploratory study

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  • Rexford E. Santerre
  • John A. Vernon

Abstract

This paper offers an empirical test concerning how hospital ownership mix affects consumer welfare in the US. The test compares the market benefits and costs resulting from an increased presence of nonprofit hospitals by observing empirically how the nonprofit market share impacts hospital care utilization at the margin. The empirical results suggest that too many not‐for‐profit and public hospitals exist in the inpatient care segment of the typical hospital services industry of the US. In contrast, the empirical findings indicate that too many for‐profit hospitals operate in the outpatient care portion of the hospital services industry. The policy implication is that more quality of care per dollar might be obtained by promoting increased for‐profit activity to inpatient care and more nonprofit activity to outpatient care in some market areas. This conclusion, however, is tempered with several caveats. We discuss these and also make recommendations for further research. Copyright © 2006 John Wiley & Sons, Ltd.

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  • Rexford E. Santerre & John A. Vernon, 2006. "The consumer welfare implications of the hospital ownership mix in the US: an exploratory study," Health Economics, John Wiley & Sons, Ltd., vol. 15(11), pages 1187-1199, November.
    • Handle: RePEc:wly:hlthec:v:15:y:2006:i:11:p:1187-1199
    DOI: 10.1002/hec.1127
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    Cited by:

    1. Karen Eggleston & Yu-Chu Shen & Joseph Lau & Christopher H. Schmid & Jia Chan, 2008. "Hospital ownership and quality of care: what explains the different results in the literature?," Health Economics, John Wiley & Sons, Ltd., vol. 17(12), pages 1345-1362.
    2. Laurie Bates & Rexford Santerre, 2008. "Do health insurers possess monopsony power in the hospital services industry?," International Journal of Health Economics and Management, Springer, vol. 8(1), pages 1-11, March.
    3. Karen Eggleston & Yu‐Chu Shen & Joseph Lau & Christopher H. Schmid & Jia Chan, 2008. "Hospital ownership and quality of care: what explains the different results in the literature?," Health Economics, John Wiley & Sons, Ltd., vol. 17(12), pages 1345-1362, December.
    4. Herr Annika, 2011. "Quality and Welfare in a Mixed Duopoly with Regulated Prices: The Case of a Public and a Private Hospital," German Economic Review, De Gruyter, vol. 12(4), pages 422-437, December.

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