The impacts of hospital alliance membership, alliance size, and repealing certificate of need regulation, on the cost efficiency of non-profit hospitals

Abstract

This paper investigates how alliance membership, size of the alliance, membership in multiple organizations, repealing certificate of need (CON) regulation for acute care facilities, and other factors, impacts hospital cost efficiency. Using a 1996–1999 panel of 144 urban US Midwestern hospitals, empirical results show that repealing state CON programs, signing more HMO and PPO contracts, and membership in only an alliance, helped to enhance cost efficiency. Membership in an additional organization (network, system) did not help enhance hospital cost efficiency. Membership in a larger size alliance (more hospitals in the alliance) contributed to an improvement in cost efficiency. Copyright © 2010 John Wiley & Sons, Ltd.