Competition, ownership, and access to hospital services. Evidence from psychiatric hospitals

This article examines the impact of increasing competition among hospitals on access to inpatient services and preexisting differences in access between nonprofit and for-profit facilities. It tests theoretical propositions that suggest that nonprofit and for-profit hospitals will respond in different ways and to differing degrees to changing competitive pressures.

Drawing data from a 1987-88 national survey of psychiatric hospitals, the authors measured access in terms of the availability of different types of services and the provision of uncompensated care. The impact of hospital ownership, competition as well as the interaction of ownership and competition was assessed through a set of regression models, controlling for other characteristics of the hospital markets and local service system.

Nonprofit psychiatric hospitals provide greater access than their for-profit counterparts under conditions of limited competition. Increased competition reduces the ownership-related differences in uncompensated care, but increases the differences for marginally profitable services. The market share of for-profit hospitals had an independent negative effect on access, holding constant the intensity of competition.

The interaction of ownership and competition explains some seemingly inconsistent finding in the literature and points to the complexity of relying on ownership-based policies to protect access in an increasingly competitive health-care system.