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J Health Econ. 2001 Jan;20(1):23-49.

The role of profit status under imperfect information: evidence from the treatment patterns of elderly medicare beneficiaries hospitalized for psychiatric diagnoses.

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UCLA Department of Medicine, Division of General Internal Medicine and Health Services Research, 911 Broxton Plaza, Box 951736, Los Angeles, CA 90095, USA.


Medicare claims for elderly admitted for psychiatric care were used to estimate the impact of hospital profit status on costs, length of stay (LOS), and rehospitalizations. No evidence was found that not-for-profits (NFPs) treated sicker patients or had fewer rehospitalizations. For-profits (FPs) actually treated poorer patients. Longer LOS and lower daily costs of NFPs were attributable to their other characteristics, e.g. medical school affiliation. Instrumental variables (IV) estimates suggested that NFP general hospitals actually have lower adjusted costs. These findings fail to support concerns that FP growth leads to declining access and quality or contentions that NFPs are less efficient.

[Indexed for MEDLINE]

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