Our proposed study is a continuation of R01 HS10730-01, """"""""The Cause and Effect of Hospital distress and Closure"""""""" (PI: Lindrooth). This proposed project focuses on the determinants of decisions about hospital service offerings and the effect of such decisions on patients, competing hospital's financial performance and social welfare. When a service is closed, the patient's choice set becomes limited, which in turn will lower welfare, especially for those patients who lose access to their preferred choice. The extent to which patient welfare is affected depends upon the other options in the market and they offer in terms of substitutability, cost and quality. If equally convenient, efficient, high quality substitutes remain in the market, the effect on welfare will be negligible. On the other hand, if substitutes do not exist, or if they require substantial travel in order to gain access, then the welfare effects may be substantial. We also measure the effect of entry or closure on competing hospitals. Specifically we analyze whether costs and outcomes are affected. Combined with the above effect on patient welfare these measures represent the total welfare effect of closure and entry. Entry into new services will similarly affect patient welfare. If a new entrant does not offer higher quality, lower costs, or a gain in convenience, there will not be any welfare gains, and it is likely the welfare will decline. We propose to use a combination of data in this study, including: HCUP-SID data from 9 states, Medicare Cost report data, and the American Hospital Association's annual survey. The data enables us to use a unified framework to analyze the dual effects of service closure and entry on both hospitals and patients. The results will inform policymakers and practitioners about the dynamics of the healthcare marketplace and implications for access to services. At the same time, we will measure the effects of entry, which can lead to more competition and specialization in the delivery of medical care, possibly to the detriment of the traditional general hospital.
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| Lindrooth, Richard C; Konetzka, R Tamara; Navathe, Amol S et al. (2013) The impact of profitability of hospital admissions on mortality. Health Serv Res 48:792-809 |
| Jung, Kyoungrae; Feldman, Roger; Scanlon, Dennis (2011) Where would you go for your next hospitalization? J Health Econ 30:832-41 |
| Capps, Cory; Dranove, David; Lindrooth, Richard C (2010) Hospital closure and economic efficiency. J Health Econ 29:87-109 |
| Scanlon, Dennis P; Lindrooth, Richard C; Christianson, Jon B (2008) Steering patients to safer hospitals? The effect of a tiered hospital network on hospital admissions. Health Serv Res 43:1849-68 |
| Lindrooth, Richard C (2008) Research on the hospital market: recent advances and continuing data needs. Inquiry 45:19-29 |
