Assessing the Quality of Public Services: Does Hospital Competition Crowd Out the For-Profit Quality Gap?
32 Pages Posted: 28 Jul 2020 Last revised: 16 Aug 2020
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Assessing the Quality of Public Services: Does Hospital Competition Crowd Out the For-Profit Quality Gap?
Date Written: July 2020
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: A ordable Care Act, Competition, Hospital quality
JEL Classification: H51, I1, I11, I18
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