The effect of physician board membership on uncompensated care provision

Luciana De Andrade Costa

Applied Economics, 2014, vol. 46, issue 19, 2290-2300

Abstract: Previous studies indicate that nonprofit and for-profit hospitals provide comparable levels of uncompensated care, when taking into account their sizes. This evidence suggests that for-profit hospitals extract some indirect benefit when providing uncompensated care. Our article investigates how physician board membership affects uncompensated care provision. With data for hospitals in California from 1997 to 2010, we estimate a fixed-effect model where uncompensated care is a function of physician board membership, other board attributes, as well as hospital characteristics. Our results indicate that physician board membership in for-profit hospitals relates positively with uncompensated care provision. Prior evidence, such as Goldstein and Ward (2004) and Molinari et al. (1995), has shown that involving physicians in strategic decisions improves hospitals' financial performance. Our results reinforce the notion that having physicians in leadership or strategic positions benefits for-profit hospitals. In these hospitals, physicians seem to understand the strategic component of providing uncompensated care, possibly due to their closer assessment of patients' needs.

Date: 2014
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DOI: 10.1080/00036846.2014.899671

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