For Profit or Non-Profit Hospitals?
Recently there was an article in Slate and an article in the Washington Monthly that declared victory for socialized medicine over private medicine. The two articles note the turn around in the quality of care at the Veterans Administration hospitals and declares that socialized medicine is the obvious solution. While, there do appear to be some positive changes at VA hospitals it isn’t clear that medical care should in general be socialized (see my post on this here and Victor’s here). At the National Bureau of Economic Research there is some new research that casts doubt on the claim that socialized medicine is the way to go for the provision of all medical care.
—- Abstract —–
This paper offers an empirical test of ownership mix efficiency in the U.S. hospital services industry. The test compares the benefits of quality assurance with the costs from the attenuation of property rights that result from an increased presence of nonprofit organizations. The empirical results suggest that too many not-for-profit and public hospitals may exist in the typical market area of the U.S. The policy implication is that more quality of care per dollar might be obtained by attracting a greater percentage of for-profit hospitals into some market areas. This conclusion, however, is tempered with several caveats. We discuss these and also make recommendations for further research.