Back to Annual Meeting Page		American Public Health Association 133rd Annual Meeting & Exposition December 10-14, 2005 Philadelphia, PA

Abstract #103408

Vivian Valdmanis, PhD, Health Policy Program, USIP, 600 S 43rd Street, Philadelphia, PA 19104, 215 596 7613, v.valdma@usip.edu and Gary David Ferrier, PhD, Department of Economics, University of Arkansas, 402 BADM, Fayetteville, AR 72701.

Microeconomic theory suggests that competition among firms forces each of them to operate efficiently if they hope to survive in the marketplace. Even in markets that are less than perfectly competitive firms are likely to adjust their performance in light of the performance of their peers. In particular, we examine the relationship among the performance of a sample of hospitals operating in large US urban markets over the period 1993-2002. As a first step, the productivity of the hospitals is calculated using a non-parametric Malmquist index based on DEA models. As a second step, the Malmquist index (and its components--technical change and changes in efficiency) of each hospital is regressed against the mean performance of its peers as well as other factors needed to control for confounding influences. To accomplish the second step, econometric models described in Brock and Durlauf (2001) and Moffitt (2001) will be used. “Peers” will defined in several ways—as those operating in the same urban area, those of similar ownership type, etc. The expectation is that there will be a strong positive relationship between a given hospital's performance and that of its peers.

In addition to the above analysis, a special examination of the effect of public hospitals on the performance of neighboring hospitals will be performed. Public hospitals serve as “safety nets” for the tens of millions of Americans without health insurance in that they operate with an “open door policy to serve all patients regardless of their ability to pay and provide substantial levels of care to Medicaid, the uninsured, and other vulnerable patients” (Institute of Medicine, 2000). In their role as safety net providers of health care, public hospitals relieve neighboring hospitals of part of the burden of providing care to the un- and under-insured. Therefore the presence of a public hospital is hypothesized to have positive spillover effects onto its geographic peers. We can directly assess whether this spillover exists since in some large urban areas (Philadelphia, Washington DC, Boston, and Detroit) no longer have a public hospital presence so we can gauge whether private hospitals in these markets are significantly different in terms of efficiency and technological change as their counterparts in the other hospital markets studied here.

Learning Objectives:

• Develop productivity and economic modeling over time
• Assess the role of the public hospitals in hospital markets across the US
• Evaluate changes in hospital productivity in markets with and without public hospitals

Keywords: Economic Analysis, Hospitals

Presenting author's disclosure statement:

I wish to disclose that I have NO financial interests or other relationship with the manufactures of commercial products, suppliers of commercial services or commercial supporters.