Volume 35, Number 4 (Fall) 2000
Deily, Mary E., Niccie L. McKay, and Fred H. Dorner. 2000. "Exit and Inefficiency: The Effects of Ownership Type." Journal of Human Resources 35(4):734-747.
This study uses data on hospital closures to examine the relation between exit and inefficiency in an industry where for-profit, not-for-profit, and government firms coexist. The likelihood of hospital exit over the period 1986-91 is estimated as a function of hospital relative inefficiency, ownership type, and other factors, where hospital relative inefficiency is measured using residuals from estimation of a stochastic frontier cost function. We find that less efficient hospitals were more likely to exit when ownership was for-profit or not-for-profit, but that relative inefficiency did not have a significant effect on the probability of exit for government hospitals.
Mary E. Deily is an associate professor of economics at Lehigh University and a former program director with the National Science Foundation. Niccie L. McKay is an associate professor of health services administration at the University of Florida. Fred H. Dorner is an associate professor of business administration at Trinity University. This research was supported by a Lehigh University Faculty Grant. The authors would like to acknowledge the valuable comments and suggestions made by Larry W. Taylor, James Thornton, two anonymous referees, and most particularly the late S. Charles Maurice. The views expressed in this article do not necessarily represent the views of the National Science Foundation or the United States.
© 2002 by the Board of Regents of the University of Wisconsin System
US ISSN 0022-166X