The Corporatization of Independent Hospitals

Elena Andreyeva, Atul Gupta, Catherine E. Ishitani, Malgorzata Sylwestrzak and Benjamin Ukert

No 31776, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Between 2000 and 2020, the share of US hospital bed capacity under multi-unit firms (systems) increased from 58% to 81% – a rapid corporatization of a sector with $1.3 trillion in annual spend. However, little is known about how system ownership affects hospital profitability and quality. We combine novel, patient-level transaction price data from a large commercial insurer, Medicare claims, and New York hospital discharges between 2012 and 2018 to study changes at over 100 independent hospitals that transition to system ownership. The targets obtain differentially higher prices than a matched comparison group, but the operating cost reductions, primarily obtained by reducing employees in support functions, capital, and financing costs, are far greater and exhibit significant economies of scale with acquirer firm size. In contrast, we detect small and statistically insignificant effects on operating costs at 135 system-owned hospitals acquired by other systems, suggesting that the switch to system ownership is the key to achieving these savings. However, corporatization may worsen quality of care on some dimensions.

JEL-codes: I11 L4 (search for similar items in EconPapers)
Date: 2023-10
Note: EH IO
References: Add references at CitEc
Citations:

Published as Elena Andreyeva & Atul Gupta & Catherine Ishitani & Malgorzata Sylwestrzak & Benjamin Ukert, 2024. "The Corporatization of Independent Hospitals," Journal of Political Economy Microeconomics, vol 2(3), pages 602-663.

Downloads: (external link)
http://www.nber.org/papers/w31776.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:31776

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w31776
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().