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Ownership and exit behavior: evidence from the home health care market

Orsini, Chiara (2016) Ownership and exit behavior: evidence from the home health care market. The B.E. Journal of Economic Analysis and Policy, 16 (1). pp. 289-320. ISSN 1935-1682

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Identification Number: 10.1515/bejeap-2014-0044


In the US health care system a high fraction of suppliers are not-for-profit companies. Some argue that non-profits are “for-profits in disguise” and I test this proposition in a quasi-experimental way by examining the exit behavior of home health care firms after a legislative change considerably reduced reimbursed visits per patient. The change allows me to construct a cross provider measure of restriction in reimbursement and to use this measure and time-series variation due to the passage of the law in my estimates. I find that exits among for-profit firms are higher than those of not-for-profit firms, rejecting the null that these sectors responded to the legislation in similar ways. In addition, my results expand the view that “not-for-profit” firms are a form of “trapped capital.” There is little capital investment in the home health care market, so the higher exit rates of for-profit firms after the law change indicate the possible role of labor inputs in generating differences in exit behavior across sectors.

Item Type: Article
Official URL:
Additional Information: © 2015 Walter de Gruyter GmbH
Divisions: Social Policy
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
R Medicine > RA Public aspects of medicine > RA0421 Public health. Hygiene. Preventive Medicine
JEL classification: H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H32 - Firm
I - Health, Education, and Welfare > I1 - Health > I11 - Analysis of Health Care Markets
L - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise > L31 - Nonprofit Institutions; NGOs
Date Deposited: 09 Feb 2016 11:58
Last Modified: 19 Jun 2024 18:33

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