DP15045 Assessing the Quality of Public Services: Does Hospital Competition Crowd Out the For-Profit Quality Gap?
|Author(s):||Johannes Kunz, Carol Propper, Kevin Staub, Rainer Winkelmann|
|Publication Date:||July 2020|
|Keyword(s):||Aordable Care Act, Competition, Hospital quality|
|JEL(s):||H51, I1, I11, I18|
|Programme Areas:||Public Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=15045|
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.