Full Citation

Title: Market Ownership Structure and Service Provision Pattern Change over Time: Evidence from Medicare Home Health Care

Citation Type: Miscellaneous

Publication Year: 2012

ISBN:

ISSN:

DOI:

NSFID:

PMCID:

PMID:

Abstract: While many economic studies have addressed the static behavior of for-profit and non-profit health care providers competing with each other in markets, few have looked at how behavior changes over time. Building on the existing economic theory of for-profit and non-profit behavior in competition, I propose three mechanisms that explain how behavior changes over time. First, health care providers continue to enter the market if they perceive opportunities for high-profit margins, and those new entrants strategically pursue profit-maximizing service provision patterns more aggressively than incumbents. Second, aggressive profit-seeking behaviors among new entrants encourage neighboring incumbents to imitate new entrants behaviors. Third, existing, chain-affiliated health care providers learn profit-seeking behaviors from others in the chain. In particular, the second and third mechanisms suggest that health care providers learn profit-seeking behaviors from each other over time. I then test these three mechanisms using data on home health agencies that operated under the Medicare prospective payment system and find that the proposed mechanisms explain the changes in behaviors of for-profit and non-profit home health agencies over time.

User Submitted?: No

Authors: Kim, Hyunjee

Publisher: University of Michigan

Data Collections: IPUMS CPS

Topics: Health

Countries: