Endogenous Quality Investments in the U.S. Hospital Market

Craig Garthwaite, Christopher Ody and Amanda Starc

No 27440, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: High and increasing hospital prices have led to calls for price regulation. If prices are high because of consolidation, regulating prices could enhance welfare. However, high prices could also reflect increased willingness to pay by privately insured consumers for clinical and non-clinical quality. If so, regulating prices could reduce quality. We present a model of strategic quality choice where hospitals make quality investments to increase private revenue. We confirm the model's predictions across numerous quality measures including patient satisfaction, hospital processes, risk adjusted mortality, the revealed preferences of current Medicare patients, technology adoption, physician quality, and ED wait times.

JEL-codes: I11 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-com, nep-hea and nep-reg
Note: EH IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as Craig Garthwaite & Christopher Ody & Amanda Starc, 2022. "Endogenous Quality Investments in the U.S. Hospital Market," Journal of Health Economics, .

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