Indigent Care As Quid Pro Quo In Hospital Regulation

Gary Fournier () and Ellen S. Campbell

The Review of Economics and Statistics, 1997, vol. 79, issue 4, 669-673

Abstract: Hospitals expend considerable resources each year to provide health care to the poor. Why do some hospitals voluntarily take on a disproportionate burden of this care? Our view is that the burdened hospitals are not simply altruistic. They are indirectly compensated for this expense with legal protections against competition under certificate-ofneed (CON) regulation. We test this hypothesis in a recursive model, explaining which hospitals are likely to win CON approval. The results indicate that, controlling for the endogeneity of indigent care, regulators in Florida systematically awarded licenses to hospitals providing greater amounts of care to the poor. © 1997 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Date: 1997
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