1. Competition, Subsidy and Requirement Regulations -Effects of State Policies and their Interactions on Hospital Uncompensated Care Provision L EI Z HANG Andrew Young School of Policy Studies Georgia State University June 10, 2008

2. -2 - ARM Presentation By Lei Zhang Motivation Increasing demand for hospital uncompensated care Decreasing hospital ability to supply State policies –Community benefit requirement laws (requirement) –Uncompensated care pools (subsidy) –Certificate-of-Need (competition) Focus: –Policy interactions –New IRS rulings

3. -3 - ARM Presentation By Lei Zhang Research Questions Do regulatory interactions among states affect hospital uncompensated care provision?

4. -4 - ARM Presentation By Lei Zhang Empirical Model and Estimation An instrumental variable approach: Hausman- Taylor –More efficient than fixed effects –Allows to estimate time invariant variables Random Effects GLS –Adjusts for cluster correlated errors Test for endogeneity: Hausman test UC it = β 0 + β 1 Hospital it + β 2 Market it + β 3 Regulation it +β 4 Year + β 5 State + ε it

5. -5 - ARM Presentation By Lei Zhang Data Data Sources: –American Hospital Association (AHA) Annual Survey of Hospitals –Area Resource File (ARF) –State Inpatient Database (SID) from Healthcare Cost and Utilization Project (HCUP) Sample: –2,235 nonprofit and 295 for-profit observations –2002-2004 –17 states

6. -6 - ARM Presentation By Lei Zhang Study States and Regulatory Variations Among the 17 study (Green) states: –5 states have community benefit requirement laws –8 states have uncompensated care pools –12 states have CON laws

7. -7 - ARM Presentation By Lei Zhang Key Variables Dependent Variable –Number of admissions for self-pay/charity patients –Percent of admissions for self-pay/charity patients Regulatory Variables –CON, Pool, Community Benefit Requirement, and their interactions Control Variables –Hospital: teaching status, public hospitals, hospital size, network/system members, ER, technology intensity –Market: Hirschman-Herfindahl Index (HHI), HMO market penetration, the percentage of population aged 65+, per capita income, insurance coverage, and rural/urban

8. -8 - ARM Presentation By Lei Zhang Comparing Results With and Without Policy Interactions Table I: Nonprofit Hospital Uncompensated Care Provision

9. -9 - ARM Presentation By Lei Zhang Comparing Results With and Without Policy Interactions (cont.) Table II: For-profit Hospital Uncompensated Care Provision

10. -10 - ARM Presentation By Lei Zhang Results Uncompensated care pools and CON laws are compliments Nonprofit and for-profit hospitals respond to community benefit requirement laws differently –For-profit hospitals respond to requirement regulations by increasing their uncompensated care provision –Nonprofit hospitals may already be providing higher levels of uncompensated care than what the requirement regulations require

11. -11 - ARM Presentation By Lei Zhang Summary The combined effects of a regulation bundle are sometimes different from those of a single regulation Community benefit requirement laws may limit the need for hospitals to seek support from the uncompensated care pools or cross-subsidization of services

12. -12 - ARM Presentation By Lei Zhang Policy Implications Regulation bundle such as providing public subsidies and CON may improve access to care for the uninsured Requirement regulations may be an effective policy option to improve health of the uninsured

13. -13 - ARM Presentation By Lei Zhang Acknowledgement The author thanks the following institutions for providing data for the analysis: –Georgia Health Policy Center, Andrew Young School of Policy Studies, Georgia State University –Department of Health Administration, Robinson School of Business, Georgia State University –William Miller And the following individuals for their comments: –Paul Farnham, Patricia Ketsche, William Custer, Shiferaw Gurmu, Karen Minyard, Doug Noonan –Richard Lindrooth, Myles Maxfield