Payer Type and the Returns to Bypass Surgery: Evidence from Hospital Entry Behavior

Michael Chernew, Gautam Gowrisankaran and A. Mark Fendrick

No 8632, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper we estimate the returns associated with the provision of coronary artery bypass graft (CABG) surgery, by payer type (Medicare, HMO, etc.). Because reliable measures of prices and treatment costs are often unobserved, we seek to infer returns from hospital entry behavior. We estimate a model of patient flows for CABG patients that provides inputs for an entry model. We find that FFS provides a high return throughout the study period. Medicare, which had been generous in the early 1980s, now provides a return that is close to zero. Medicaid appears to reimburse less than average variable costs. HMOs essentially pay at average variable costs, though the return varies inversely with competition.

JEL-codes: D43 I11 (search for similar items in EconPapers)
Date: 2001-12
New Economics Papers: this item is included in nep-hea, nep-ias and nep-mic
Note: EH
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Published as Chernew, Michael, Gautam Gowrisankaran and A. Mark Fendrick. "Payer Type And The Returns To Bypass Surgery: Evidence From Hospital Entry Behavior," Journal of Health Economics, 2002, v21(3,May), 451-474.

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