Working Paper: CEPR ID: DP15045
Authors: Johannes Kunz; Carol Propper; Kevin Staub; Rainer Winkelmann
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.
Keywords: Affordable Care Act; Hospital Quality; Competition
JEL Codes: H51; I1; I11; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| For-profit hospitals (L39) | Higher penalty likelihood (K49) |
| For-profit hospitals + Hospital referral regions (I11) | Higher penalty likelihood (K49) |
| Market competition (L13) | For-profit quality gap (L15) |
| For-profit quality gap (L15) | Driven by different trade-offs (F12) |