Poster Paper: Hospital Investments In High Technology and Community Services: The Role of Local Market Uninsurance

Friday, November 9, 2012
Liberty A & B (Sheraton Baltimore City Center Hotel)

*Names in bold indicate Presenter

Lakshmi Balasubramanian, University of North Texas Health Science Center

The passage of the Patient Protection and Affordable Care Act will affect the health care industry, especially hospitals, in ways that are yet to be completely obvious. The proposed reduction in the number of people without health insurance will have an impact not only on how hospitals run their operations, but also have far-reaching policy implications regarding the decisions hospitals make about their business and investments.

This study investigates the influence that community uninsurance may have on investment decisions in hospitals, most of which operate as non-profit ventures. Unlike other types of non-profit organizations, hospitals do not focus on a target consumer base to generate revenues. Instead, every resident in the community potentially uses its services. For hospitals to break even on large investments, they need to operate in a market with a higher propensity to reimburse them for providing these services. The key dependent variables used will be a collection of high-technology investments and investments in community service projects. Extant research shows that the uninsured exhibit reduced demand for high-priced hospital services. Hospitals that operate in areas that have a high uninsured population are less likely to make significant investments in technology or community projects, thus directly affecting access for the insured population in these areas. The passage of the PPACA changes this situation. There are significant implications for access to care that are directly affected by management and policy decisions made at the hospital level as well as the county or state level due to changes in community health insurance. 

Using a two-step binomial and multinomial logistic regression with county-level clustered standard errors, this study analyzes the impact of the percent uninsured population in the respective county – our key independent variable – on each of our dependent variables. Other variables that will be considered in the analysis include hospital size, ownership, expenditures at the county level, average per capital income in the county, hospital beds per thousand population, and some adjustment for income inequality among others.

This paper primarily analyzes the influence of the degree of uninsurance in local health care markets on the availability of essential and high-cost technology and community service investments in hospitals. Preliminary analysis utilizing data from the American Hospital Association’s 2003 database provides results that suggest that uninsurance in a community significantly and negatively influences the availability of these investments. Moreover, in areas with high uninsurance, there exists a statistically significant probability of hospitals choosing not to provide the investment through any of five channels of availability that were analyzed. Once these results are clearly established, the next step of research will include analyzing changes in the make-up of the population with respect to insurance, and the resulting changes in management decisions undertaken by hospitals.