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Discussion Paper Details

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Title: Assessing the Quality of Public Services: Does Hospital Competition Crowd Out the For-Profit Quality Gap?

Author(s): Johannes Kunz, Carol Propper, Kevin Staub and Rainer Winkelmann

Publication Date: July 2020

Keyword(s): A ordable Care Act, Competition and Hospital quality

Programme Area(s): Public Economics

Abstract: We examine variation in hospital quality across ownership, market concentration and membership of a hospital system. We use a measure of quality derived from the penalties imposed on hospitals under the flagship Hospital Readmissions Reduction Program. We employ a novel estimation approach that extracts latent hospital quality from panel data on penalties and addresses the problem of never- or always-penalized hospitals in short panels. Our quality measure correlates strongly across penalized conditions and with other non-incentivized quality metrics. We document a robust and sizable for-profit quality gap, which is largely crowded out by competition, particularly amongst high-quality and system-organized hospitals.

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Bibliographic Reference

Kunz, J, Propper, C, Staub, K and Winkelmann, R. 2020. 'Assessing the Quality of Public Services: Does Hospital Competition Crowd Out the For-Profit Quality Gap?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=15045