Mark Duggan (Stanford University)
7 December 2022 @ 12:00 - 13:15
The Impact of Privatization: Evidence from the Hospital Sector
joint with Bocconi University
Abstract.Privatization has been shown to improve the efficiency and growth of public firms. However, the effects for consumers and workers are understudied. We study potential trade-offsin the hospital sector where private operators could deliver much-needed efficiency gains, but profit maximization could adversely affect some patients. Hospitals in the US have experienced significant privatization: public control of hospital capacity declined by 42% over 1983–2019. Across 257 transitions, we find that privatized hospitals downsize capacity and patient care, with low-income Medicaid patients experiencing the greatest decline of 14%. While other patients appear to be absorbed by neighboring hospitals, Medicaid patients experience an aggregate decline in utilization at the market-level, which we interpret as a decline in access to care. The decline in aggregate Medicaid utilization is greater in markets with greater poverty and hospital concentration levels, implying spillover responses by competing hospitals in these markets. Private owners lower operating costs by reducing labor intensity at the hospital, potentially improving efficiency.
Atul Gupta, University of Pennsylvania
Emilie Jackson, Michigan State University
Zachary Templeton, University of Pennsylvania