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New Evidence on the Performance Advantages of Multihospital Systems
GARY M. FOURNIER and JEAN M. MITCHELL
Review of Industrial Organization
Vol. 12, No. 5/6 (December 1997), pp. 703-718
Published by: Springer
Stable URL: http://www.jstor.org/stable/41798775
Page Count: 16
You can always find the topics here!Topics: Nonprofit hospitals, Hospital costs, Cost estimates, Cost efficiency, Hospital administration, Chain of title, Cost functions, Economic capital, Psychiatric hospitals, Economic systems
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This study analyzes the performance effects of proprietary, multihospital systems. It is shown that the organizational structure of these systems may affect the operating costs of member hospitals. Estimating a cost function for Florida hospitals and controlling for other factors, the average costs of HUMANA hospitals are empirically about 17 percent lower, while the costs of other leading chains are about 12 percent lower than not-for-profit institutions. These results contrast with earlier studies that found no such differences. Furthermore, the cost differential that exists between system and non-system hospitals can be largely attributed to technical efficiencies arising from chain ownership.
Review of Industrial Organization © 1997 Springer