The effects of hospital competition on nonprofit and for-profit hospital medicaid share

Abstract

This paper empirically tests whether the nonprofit hospital is influenced by the community benefit standard by analyzing differences in nonprofit and for-profit hospital inpatient Medicaid share, while controlling for the effects of hospital market competition. Hospital specific data for this study are from the 1991 American Hospital Association Annual Survey of Hospitals and the 1991 Medicare Minimum Cost Report by the Health Care Financing Administration. The sample includes 192 for-profit, 899 nonprofit and 221 government-owned general acute care hospitals. Key variables in the multivariate analysis include hospital inpatient Medicaid share as the dependent variable and Medicaid demand, market competition and input quality as independent variables. The principal findings are that nonprofit hospitals serve a larger share of Medicaid inpatients than for-profit hospitals although the greater the presence of for-profit hospitals in the market (one measure of market competition) the smaller the nonprofit hospital Medicaid share. It is concluded that nonprofit hospitals reduce their level of community benefit, where community benefit is measured as a hospital's percent Medicaid share, in markets with a greater presence of for-profit hospitals.

Citation

Eisert, S.L. (2000), "The effects of hospital competition on nonprofit and for-profit hospital medicaid share", Research in Law and Economics (Research in Law and Economics, Vol. 19), Emerald Group Publishing Limited, Leeds, pp. 275-294. https://doi.org/10.1016/S0193-5895(00)19008-6