Competition And The Provision Of Hospital Community Benefits

Abstract

In the first chapter, I investigate whether nonprofit hospitals increase(decrease) with more(less) market power using the 2010-2016 IRS Form 990 Schedule H, American Hospital Association Annual Survey, and Healthcare Cost Report Information (HCRIS) database at the national level. The results show that higher levels of hospital concentration lead to a higher provision of community benefits when total market fixed-effects are controlled for. When hospital fixed-effects are controlled, the association between hospital concentration and community benefits provision becomes negative. This suggests that hospital-specific and market-level characteristics might explain the provision of community benefits better than a hospitals’ market power. In the second chapter, I add insurer market concentration to the analysis by adding Decision Resource Groups (DRG) dataset. Using Healthcare Cost and Utilization Project (HCUP) State Inpatient Databases (SID), I also estimate hospital choice model of patients to calculate hospital competition to address endogeneity issues of traditional competition measure. As a trade-off, I investigate the same hypothesis for only the following states from 2012 to 2016: Florida, New York, Vermont, Massachusetts, Arizona, and Utah. The results show that, considering the insurer competition, nonprofit hospitals do have increased community benefit provisions with more market power; however, there is no statistically significant evidence of the effect of hospital and insurer competition on the community benefit provision of nonprofit hospitals. In the third and final chapter, I argue that the IRS and the hospitals do not observe whether community benefit activities actually promote the communities’ health. I investigate this issue by examining how hospital market power affects the prevention quality indicators of uninsured patients — as an indication of community health. I use the data from IRS Form 990, HCRIS, and HCUP State Inpatient Database for six states from 2012 to 2016. The results show no significant evidence that nonprofit hospitals improve their communities through community benefit provisions in more concentrated markets. Unlike the hospital competition, there are supporting evidence that prevention quality indicators improve in more concentrated insurer markets.