Does competition kill?

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

"Does Competition Kill? Hospital Quality and Competition"

       BY:  GAUTAM GOWRISANKARAN
               University of Minnesota
            ROBERT J. TOWN
               University of California-Irvine

Document:  Available from the SSRN Electronic Paper Collection:
            http://papers.ssrn.com/paper.taf?abstract_id=216508

     Date:  March 2000

  Contact:  ROBERT J. TOWN
    Email:  Mailto:rjtown@xxxxxxx
   Postal:  University of California-Irvine
            Graduate School of Management
            Irvine, CA 92717  USA
    Phone:  (949)824-1279
  Co-Auth:  GAUTAM GOWRISANKARAN
    Email:  Mailto:gautam@xxxxxxxxxxxx
   Postal:  University of Minnesota
            1035 Management and Economics
            271 19th Avenue South
            Minneapolis, MN 55455  USA

ABSTRACT:
  We seek to estimate the effects of competition for both Medicare
  and HMO patients on the quality decisions of hospitals in
  Southern California. We find that increases in the degree of
  competition for HMO patients decrease risk-adjusted hospital
  mortality rates. Conversely, increases in competition for
  Medicare enrollees are associated with increases in
  risk-adjusted mortality rates for hospitals. In conjunction with
  previous research, our estimates indicate that increasing
  competition for HMO patients appears to reduce price and save
  lives and hence appears to be welfare improving. However,
  increases in competition for Medicare appears to reduce quality,
  and perhaps reduces welfare. The net effect of a given merger on
  hospital quality will depend on the geographic distribution of
  different payer groups.



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Michael Perelman
Economics Department
California State University
michael@xxxxxxxxxxxxxxxxx
Chico, CA 95929
530-898-5321
fax 530-898-5901