Essays on charity care provision by hospitals

Luciana de Andrade Costa

doi:10.17918/etd-3837

The three essays of this dissertation investigate hospitals' incentives to provide uncompensated care under different perspectives. From a supply-side standpoint, the first essay tries to understand how hospital's market power, the nearby nonprofit hospital presence, and the available resources affect the amount of uncompensated care provided, controlling for region-specific characteristics. With patient- and hospital-level data from California in 2005, the results show that uncompensated care provision is positively related to market power and nonprofit nearby presence. The second essay questions whether uncompensated care provision is an attribute valued by patients in their hospital choice and if the insurance status plays a role in that decision. The results indicate that patients are less likely to go to a hospital the more uncompensated care that hospital provides. Patients could perceive this provision as a higher chance to face longer waiting times and not having hospital's resources readily available. Hospital's demand seems to be driven by location, ownership status, and quality. Counterfactual exercises showed that if nonprofit hospitals are obligated to provide a minimum amount of uncompensated care, this initiative could actually benefit nonprofit hospitals as it would tend to diminishes this type of negative externality caused by uncompensated care provision. The third essay investigates how hospitals' internal characteristics, assessed through board attributes, can affect uncompensated care provision. Given the role of boards on setting hospital policies and their involvement in the strategic decision-making process, hospitals' provision of uncompensated care, especially for-profits, could be a way to signal a higher quality or a greater commitment with their community. With panel data from 1997 until 2009 on California hospitals, the results showed that physician board membership relates positively with the provision of uncompensated care, as well as the CEO turnover. The results hold also for a sample of for-profit hospitals only. They indicate that in for-profit hospitals, physicians' presence on boards might mitigate a potential conflict of interest and benefits the community due to their closer assessment of patients' needs. This effect may reveal an important role of boards in establishing whether a for-profit hospital will devote or not resources into altruistic activities.

Essays on charity care provision by hospitals

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Essays on charity care provision by hospitals

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