Hospitals

Introduction History of Hospitals Hospitals vs. Hospice

Hospital Ownership Public vs Private Profit or Non-Profit Type of care (primary, secondary, tertiary,…) Type of services (ASC…)

Number of Public Community Hospitals, Notes: Includes nonfederal (i.e., state and local government), short-term general and specialty hospitals whose facilities are available to the public. Public community hospitals represent 23% of all community hospitals, and community hospitals represent about 85% of all hospitals. Federal hospitals, long term care hospitals, psychiatric hospitals, institutions for the mentally retarded, and alcoholism and other chemical dependency hospitals are not included. Source: American Hospital Association Annual Surveys: data from Hospital Statistics, 2002, Table 1; data from AHA Annual Surveys, Copyright 2009 by Health Forum LLC, an affiliate of the American Hospital Association, at

Principle Agent Problems Owners versus Managers

Market Structure Monopolies Monopolistically Competitive Market Concentration – Herfindahl-Hirschman Index (sum of squared market shares measured in percentages) Monopoly = 10,000 ie. 100^2 >1,400 subject to antitrust. 5,000 two equal market shares.

Effect of Competition on Prices Until late 80s more competition meant higher prices. Competing on quality? Medical Arms Race Payer Driven Competition? HMOs lower prices

Role of Government Capital Assistance – Stimulus funds electronic records Provision of Public Hospitals Medicare and Medicaid

Government Regulations of Hospitals Certificate of Need (CON) – Wisconsin (ended 2011) Effects of CON Effects of CON on Nursing Homes

2004 Per Capita Hospital Expenses Hospital Expense Per Capita Massachusetts $2,357 North Dakota $2,229 New York $2,202 Missouri $2,009 Maine $1,936 Ohio $1,932 West Virginia $1,930 Rhode Island $1,929 Pennsylvania $1,925 Delaware $1,908 South Dakota $1,867 Nebraska $1,862 Minnesota $1,804 Vermont $1,775 Indiana $1,750 Connecticut $1,745 Michigan $1,731 Iowa $1,720 Wisconsin $1,710 Illinois $1,709 Con states in bold

Hospitals and Medicare PPS Prospective Payment System cPmtGen/ cPmtGen/

Price Discrimination Forms of Price Discrimination Cost Shifting

Role of Charity in Modern Hospitals Hospital Altruism – Model of Pure vs Impure – Evidence

Declining Demand for Inpatient Care

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Capacity We analyze admission and discharge decisions when hospitals become capacity constrained on high-demand days, and develop a test for discrimination that, under certain circumstances, does not require controls for differences across patient groups. On high-demand days, patients are discharged earlier than expected compared to those discharged on low-demand days. High demand creates no statistically significant differences in hospitals' admission behavior. Thus, hospitals appear to ration capacity by hastening discharges rather than by restricting admissions. We could not reject a null hypothesis of no discrimination against Medicaid patients in discharges. Copyright (c) 2008, RAND.

Hospitals’ Probability Of Offering Psychiatric Emergency Services, By Ownership Type, 1988– Horwitz J R Health Aff 2005;24: ©2005 by Project HOPE - The People-to-People Health Foundation, Inc.

Hospitals’ Probability Of Offering Open-Heart Surgery, By Ownership Type, 1988–2000. Horwitz J R Health Aff 2005;24: ©2005 by Project HOPE - The People-to-People Health Foundation, Inc.