Some Hospital Background

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# Some Hospital Background
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.author[
### Ian McCarthy | Emory University
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.date[
### Econ 771, Fall 2022
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# Outline
1. [Admin Updates](#admin)

2. [Ownership Structure](#ownership)

3. [Payment and Coding](#payment)

4. [More Recent Interest](#recent)

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# Quick notes

- Data for assignment 1 on our shared OneDrive folder, link is on Canvas
- Revisit coefficient versus ATE from prior class

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# Hospital Ownership Structure

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# Ownership types

1. Private not-for-profit: About 60%

2. For-profit: About 20%

3. State and local gov't: About 20%

<br>
<div class="smalltext">Source: <a href="https://www.aha.org/statistics/fast-facts-us-hospitals">AHA Fast Facts</a></div>

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# What does NFP mean?
From an economics perspective:
- Hospital assumed to maximize some objective function, `\(u(q,z)\)`, subject to a production constraint

- `\(q\)` denotes quantity of care and `\(z\)` denotes quality of care

- Production is constrained by the break-even condition

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# What does NFP mean?
From a practical perspective:
- Profits must be re-invested into the hospital

- Must show "community benefit" (no consensus definition...includes uncompensated care, services to Medicaid, and certain specialized services that are generally unprofitable)

- No taxes! and tax-free bonds

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# NFP Production Constraint
<div class="figure" style="text-align: center">
<img src="01-1_files/figure-html/unnamed-chunk-1-1.png" alt="Demand and Cost Changes from Increase in Quality"  />
<p class="caption">Demand and Cost Changes from Increase in Quality</p>
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# NFP Proeuction Constraint
<div class="figure" style="text-align: center">
<img src="01-1_files/figure-html/unnamed-chunk-2-1.png" alt="PPC from Demand and Cost Intersection"  />
<p class="caption">PPC from Demand and Cost Intersection</p>
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# Non-profit hospitals and tax benefits
- <span>&#36;</span>24.6 billion in tax exemptions in 2011

- <span>&#36;</span>62.4 billion in "community benefits"<br>

- [Washington Post Article](https://www.washingtonpost.com/national/health-science/value-of-tax-breaks-for-nonprofit-hospitals-doubled-in-a-decade/2015/06/17/4162c640-1450-11e5-9ddc-e3353542100c_story.html?utm_term=.4f877a72a09f)<br>

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# What is a non-profit hospital?
The real question is...what is the hospital's objective function?

- For-profit in disguise
- Output maximizers
- Social welfare maximizers
- Something else?

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# Payments and Coding

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# Organizing a Claim
Inpatient:
- DRG codes (e.g., DRG 470, Major Hip and Knee without MCC)
- Procedure codes (ICD-9 / ICD-10-PCS)
- Diagnosis codes (ICD-9 / ICD-10-CM)

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# Organizing a Claim
Outpatient:
- APCs
- HCPCS codes
- Diagnosis codes (ICD-9 / ICD-10-CM)

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# Organizing a Claim
Office:
- CPT/HCPCS codes
- Diagnosis codes (ICD-9 / ICD-10-CM)

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# More Recent Interest

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# From today's NBER alerts

- [Private Provision of Public Services](https://www.nber.org/papers/w30390)
- [Governance of Non-Profits and their Social Impact](https://www.nber.org/papers/w30391)