Abstract
This study estimates the effects of a prospective payment system on the growth of for-profit hospitals. The empirical results show that the proportion of patient care paid for by Medicare managed care has a positive, statistically significant relationship with the market share of for-profit hospitals. Medicare managed care reimburses health care providers prospectively, and a larger portion of prospective reimbursements is received by for-profit hospitals, whose market share consequently increases. In addition, the proportion of patients with Medi-Cal and third party managed care has a positive, statistically significant relationship with the market share of for-profit hospitals.
Highlights
The significant growth of for-profit hospitals is the most important change in the predominantly nonprofit hospital market in the last two decades.1 The growth in the market share of for-profit hospitals among U.S community hospitals in the last two decades is an example of this trend (from to 2007, for-profit hospital growth was 5.3%, which is comparatively faster than the 2.7% growth of nonprofit hospitals and the −7.8% growth of government hospitals (Lee and Rosenman 2013).There are two traditional views on why this change has occurred
This study investigates the determinants of market share of for-profit hospitals
It focuses on the effect of a prospective payment system on for-profit hospital growth
Summary
The significant growth of for-profit hospitals is the most important change in the predominantly nonprofit hospital market in the last two decades. The growth in the market share of for-profit hospitals among U.S community hospitals in the last two decades is an example of this trend (from to 2007, for-profit hospital growth was 5.3%, which is comparatively faster than the 2.7% growth of nonprofit hospitals and the −7.8% growth of government hospitals (Lee and Rosenman 2013).There are two traditional views on why this change has occurred. The significant growth of for-profit hospitals is the most important change in the predominantly nonprofit hospital market in the last two decades.. The growth in the market share of for-profit hospitals among U.S community hospitals in the last two decades is an example of this trend (from to 2007, for-profit hospital growth was 5.3%, which is comparatively faster than the 2.7% growth of nonprofit hospitals and the −7.8% growth of government hospitals (Lee and Rosenman 2013). For-profit hospitals are organized and operated by physicians who are unable to obtain admitting privileges at existing nonprofit hospitals. This distinction plays an important role in providing a financial advantage to for-profit hospitals, since for-profit hospitals are able to make a direct profit from the patients in their hospitals. Woolhandler and Himmelstein (2004), Gawande (2009), and
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