A Study of the Effects of Certificate of Need Law on Inpatient Occupancy Rates

Jomon A. Paul (), Huan Ni () and Aniruddha Bagchi ()
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Jomon A. Paul: Department of Economics, Finance & Quantitative Analysis, Kennesaw State University, Kennesaw, Georgia 30144;
Huan Ni: Department of Economics, Finance & Quantitative Analysis, Kennesaw State University, Kennesaw, Georgia 30144;
Aniruddha Bagchi: Department of Economics, Finance & Quantitative Analysis, Kennesaw State University, Kennesaw, Georgia 30144;

Service Science, 2019, vol. 11, issue 1, 1-15

Abstract: Increasing healthcare costs and the deterioration of healthcare quality have always been major concerns to policy makers in the United States, and Certificate of Need (CON) law has been implemented as one way to curb wasteful healthcare resource use. From a theoretical standpoint, CON can lead to a reduction in the number of beds as well as in the number of inpatient days (possibly by shortening the length of patient stay). However, these two effects impact inpatient occupancy rate in opposite directions. We test empirically to find out which of these two effects dominate. In this study, we investigate the impact of CON and its stringency (which is different across states with CON laws) on the inpatient occupancy rate using panel data, and we find that, on average, CON legislation reduces occupancy rate in inpatient units. Our tests evaluating CON and its features for endogeneity fail to obtain statistical support.

Keywords: CON law; health policy; occupancy rate, inpatient care (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:inm:orserv:v:11:y:2019:i:1:p:1-15

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