Hospital competition, spillovers and provision of uncompensated care

Luciana D. Costa and Teresa Harrison

Applied Economics, 2019, vol. 51, issue 31, 3401-3412

Abstract: Using data for California from 2005 until 2010, we investigate to what extent market competition and the presence of non-profits in the area may play a role in equilibrium uncompensated care (UC) levels, allowing those effects to differ according to the hospital’s ownership type. Previous studies have not explored the potential spillover effects from non-profit hospitals into the hospital decision of UC provision. We find evidence that regions with more non-profits experienced larger increases in UC levels, and even more in less concentrated markets. Our results also indicate that UC provision by for-profit hospitals decreases the larger the presence of non-profits in the region, and this effect is magnified when competition is more intense. We, therefore, find no positive spillover effects of non-profits into the hospital decision of UC provision, which may help us to understand the recent trends in UC levels.

Date: 2019
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DOI: 10.1080/00036846.2019.1581905

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