Payer type and the returns to bypass surgery: Evidence from hospital entry behavior

Michael Chernew, Gautam Gowrisankaran, A. Mark Fendrick

Research output: Contribution to journalArticle

22 Scopus citations

Abstract

In this paper, we estimate the returns associated with the provision of coronary artery bypass graft (CABG) surgery, by payer type (Medicare, HMO, etc.). Because reliable measures of prices and treatment costs are often unobserved, we seek to infer returns from hospital entry behavior. We estimate a model of patient flows for CABG patients that provides inputs for an entry model. We find that FFS provides a high return throughout the study period. Medicare, which had been generous in the early 1980s, now provides a return that is close to zero. Medicaid appears to reimburse less than average variable costs. HMOs essentially pay at average variable costs, though the return varies inversely with competition.

Original languageEnglish (US)
Pages (from-to)451-474
Number of pages24
JournalJournal of Health Economics
Volume21
Issue number3
DOIs
StatePublished - Apr 15 2002
Externally publishedYes

Keywords

  • Entry models
  • Hospital margins
  • Managed care

ASJC Scopus subject areas

  • Health Policy
  • Public Health, Environmental and Occupational Health

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