"Does Competition Kill? Hospital Quality and Competition"
BY: GAUTAM GOWRISANKARAN
University of Minnesota
ROBERT J. TOWN
University of California-Irvine
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=216508
Date: March 2000
Contact: ROBERT J. TOWN
Email: Mailto:[EMAIL PROTECTED]
Postal: University of California-Irvine
Graduate School of Management
Irvine, CA 92717 USA
Phone: (949)824-1279
Co-Auth: GAUTAM GOWRISANKARAN
Email: Mailto:[EMAIL PROTECTED]
Postal: University of Minnesota
1035 Management and Economics
271 19th Avenue South
Minneapolis, MN 55455 USA
ABSTRACT:
We seek to estimate the effects of competition for both Medicare
and HMO patients on the quality decisions of hospitals in
Southern California. We find that increases in the degree of
competition for HMO patients decrease risk-adjusted hospital
mortality rates. Conversely, increases in competition for
Medicare enrollees are associated with increases in
risk-adjusted mortality rates for hospitals. In conjunction with
previous research, our estimates indicate that increasing
competition for HMO patients appears to reduce price and save
lives and hence appears to be welfare improving. However,
increases in competition for Medicare appears to reduce quality,
and perhaps reduces welfare. The net effect of a given merger on
hospital quality will depend on the geographic distribution of
different payer groups.
--
Michael Perelman
Economics Department
California State University
[EMAIL PROTECTED]
Chico, CA 95929
530-898-5321
fax 530-898-5901
