Lecture 6- Hospital Ownership and Public Medical Spending (Duggan,2000) Flashcards
Who wrote Hospital Ownership and Public Medical Spending and when?
Duggan in 2000
What are the 3 types of ownerships that a hospital can be under?
Private for profit
Private not for profit
Publicly owned and operated
What was the research question that Duggan asked in “ Hospital Ownership and Public Medical Spending”
He wanted to discover if the type of ownership that a hospital was under would influence their response to financial opportunities given by government policy.
What was the change in government policy
It was an exogenous change that increased incentives of hospitals to treat low-income individuals.
It also increased revenues of hospitals that had a disproportionately high share of the poor
This was to improve medical care received by low-income individuals
What were the expectations of how firms would react under the appropriation of profits theory ?
Theory: Firms will react to financial incentives based on the degree to which profits can be appropriated by decision-makers.
He expected that:
Private for profit would increase their share of the poor being treated at their hospital as they have much to gain in terms of profit
Private not for profit- no expect change
Publicly owned and operated- no expected change
What were the expectations of how firms would react under the personal characteristics theory ?
Another theory was that the people that choose to work in not for profit and pubic firms differ to those working in for profit firms and are more altruistic so will use the extra revenue to increase medical care for the poor..
Medical care for the poor increases in not for profit and public firms
What was the expectation of how publicly owned and operated firms would react under the soft budget constraint ?
That since public firms have a soft budget constraint its harder for them to change the amount of money allocated to each patient so they will be insensitive to new financial incentives that change the profitability of patients.
This emphasises the difference in legal rights of public and private firms.
If they receive extra revenue this will go to the local government.
What is DSH and when was it implemented ?
The Disproportionate Share Program
Created by the US government it largely increased revenues of hospitals that had more than 25% of its patients as low income
It increased financial incentives to treat low income individuals
It was implemented in 1990
Describe the data set
They had data on 397 hospitals in California concerning their medical spending on patients based on their income level
This data was from OSHPD
What was the main regression?
Medicaid t= aj+ λt +B4 Low>15+ B5 DSHLow>15+B6 DSHLow>15*own +e
Omitted category was private for profit
Medicaid shows the number of people on Medicaid being admitted to hospitals in year t
Low>15 is a dummy variable =1 if the amount of low income individuals in the hospital is larger than 15%
DSH is a dummy =1 if the year is after the DSH has been implemented (post 1990)
B5 tells us if the amount of low income people in a hospital changed in private for profit firms after the disproportionate share program was implemented
B6 tells us if the change in low income patients changed by a different amount in not for profit and public firms
What does it mean since the coefficient on not for profits was insignificant?
It means not for profits acted in a way that had no significant difference to for profits.
They both increased the amount of people of low income in their hospitals
WHat were the main results in changes of admittance to low income patients?
For Profits- Increased
Not for profits- No significant difference to for profits (so increased amount of poor by the same amount)
Public- no response?
Was the first (appropriation of profits) theory correct?
No as it said that not for profits would not increase their amount of poor patients, but this was incoorect
Was the second (altruistic) theory correct?
There was no significant change in costs in Not For Profit (NFP) firms s they didn’t increase their medical spending on the poor so we can reject the second theory too.
