New Evidence on Hospital Profitability by Payer Group and the Effects of Payer Generosity

Bernard Friedman (), Neeraj Sood, Kelly Engstrom and Diane McKenzie

International Journal of Health Economics and Management, 2004, vol. 4, issue 3, 246 pages

Abstract: This study provides (a) new estimates of U.S. hospital profitability by payer group, controlling for hospital characteristics, and (b) evidence about the intensity of care for particular diseases associated with the generosity of the patient's payer and other payers at the same hospital. The conceptual framework is a variant of the well-known model of a local monopolist selling in a segmented market. Effects of two kinds of regulation are considered. The data are taken from hospital accounting reports in four states in FY2000, and detailed discharge summaries from the Healthcare Cost and Utilization Project of the Agency for Healthcare Research and Quality.

Date: 2004
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