Does Competition from Ambulatory Surgical Centers Affect Hospital Surgical Output and Hospital Profit?

Michael Plotzke () and Charles Courtemanche

No 09-6, UNCG Economics Working Papers from University of North Carolina at Greensboro, Department of Economics

Abstract: Hospital administrators have expressed concern that ambulatory surgical centers (ASCs) lower the profitability of hospitals' outpatient departments by reducing their volume and cherry picking their most profitable patients. This could lead to welfare losses by causing hospitals to reduce their provision of less profitable services such as uncompensated care. This paper estimates the effects of ASC prevalence on hospital surgical volume and profit margins using hospital and year fixed effects models with a variety of robustness checks. We show that ASC entry only appears to influence a hospital's outpatient volume if the facilities are within a few miles of each other. Even then, the average reduction in hospital volume is a modest 2-4%, although the effect is stronger for large ASCs and the first ASCs to enter the market. We find no evidence that entering ASCs reduce a hospital's outpatient profit margins, inpatient surgical volume, or inpatient profit margins. In most cases, our results suggest that competition from ASCs does not cause serious financial harm to hospitals.

Keywords: Ambulatory Surgical Center; Hospital Competition; Physician Ownership; Hospital Profit (search for similar items in EconPapers)
JEL-codes: I11 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2009-06-03
New Economics Papers: this item is included in nep-com and nep-hea
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Citations: View citations in EconPapers (4)

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