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Assessing the quality of public services: does hospital competition crowd out the for-profit quality gap?


Kunz, Johannes S; Propper, Carol; Staub, Kevin E; Winkelmann, Rainer (2020). Assessing the quality of public services: does hospital competition crowd out the for-profit quality gap? CEPR Discussion Papers 15045, Centre for Economic Policy Research.

Abstract

We examine variation in hospital quality across ownership, market concentration and membership of a hospital system. We use a measure of quality derived from the penalties imposed on hospitals under the flagship Hospital Readmissions Reduction Program. We employ a novel estimation approach that extracts latent hospital quality from panel data on penalties and addresses the problem of never- or always-penalized hospitals in short panels. Our quality measure correlates strongly across penalized conditions and with other non-incentivized quality metrics. We document a robust and sizable for-profit quality gap, which is largely crowded out by competition, particularly amongst high-quality and system-organized hospitals.

Abstract

We examine variation in hospital quality across ownership, market concentration and membership of a hospital system. We use a measure of quality derived from the penalties imposed on hospitals under the flagship Hospital Readmissions Reduction Program. We employ a novel estimation approach that extracts latent hospital quality from panel data on penalties and addresses the problem of never- or always-penalized hospitals in short panels. Our quality measure correlates strongly across penalized conditions and with other non-incentivized quality metrics. We document a robust and sizable for-profit quality gap, which is largely crowded out by competition, particularly amongst high-quality and system-organized hospitals.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:Hospital readmissions, Affordable Care Act, hospital quality, competition
Language:English
Date:16 July 2020
Deposited On:05 Feb 2021 10:55
Last Modified:05 Feb 2021 10:55
Series Name:CEPR Discussion Papers
Number of Pages:29
ISSN:0265-8003
OA Status:Green
Official URL:https://cepr.org/active/publications/discussion_papers/dp.php?dpno=15045#

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