Increasing Competition: Measuring the Impact of Policy Prescription in Hospice Provision

• Author: Robert J. Eger,Maximiliano G. Mendieta
• DOI: 10.1177/0275074016682868
• Published date: 01 July 2018
• Date: 01 July 2018
• Subject Matter: Articles

https://doi.org/

American Review of Public Administration

2018, Vol. 48(5) 413 –427

© The Author(s) 2016

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DOI: 10.1177/0275074016682868

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Article

Introduction

This article’s objective is to explore the impact on nonprofit

and government hospice care organizations resulting from

for-profit hospice care organizations entering the market and

providing hospice care services. The question driving this

article is how does federal budgetary policy billed as a tool to

control costs and increase competition impact the market

share of hospice care organizations? Of particular interest is

the Balanced Budget Act (BBA) of 1997, which was passed

during the Clinton Administration. We contend that the BBA

of 1997 was an example of the Clinton Administration’s pol-

icy prescription to the principles of New Public Management

(NPM) under the auspices of “Reinventing Government” as

offered in the 1992 work of Osborne and Gaebler. Framing

the article in the NPM era and the BBA of 1997 provides

context in which to assess the policy consequences of NPM

in hospice care and offers a glimpse into what the future

holds for hospice care post the reforms of the Affordable

Care Act (ACA) of 2010.

The answers to these questions are important to policy

makers, provider organizations, current and future Medicare

beneficiaries, and more important for hospice patients and

their families. The answers offer a look at the future implica-

tion of policy in the provision of health care services. This is

particularly poignant at a time when the Medicare Hospice

Program is to see a surge of beneficiaries as approximately

80 million baby boomers transition to retirement and subse-

quently to end-of-life care in the next 30 years. The empirical

outcomes provide support for the idea that competition will

change the market composition of service provision. What

the results indicate is a substitution view: For-profits are sub-

stitutes for both nonprofit and government providers. Neither

of the alternatives, supplementary or a complementary view,

is indicated in the analysis. What this points toward for health

care provision in the future could be construed as follows:

When government policy enhances competition in the mar-

ketplace, the result is that for-profit firms will enter this mar-

ketplace as substitutes for other organizational types.

The article begins with a look at hospice care policy over

time, linking NPM, the BBA of 1997, and Hospice Care. The

article then assesses the changing market share of hospice

provision in a regression analysis based on the for-profit–

government–nonprofit provider relationship. The article

continues with a discussion of the public policy implications,

and ends with the conclusion. Immediately below, in the

“Hospice Policy Background” section, evidence regarding

the underlying mechanisms in Medicare legislation that has

advanced hospice care policy is explored.

1Naval Postgraduate School, Monterey, CA, USA

2University of Michigan–Flint, MI, USA

Corresponding Author:

Robert J. Eger III, Associate Professor of Accounting and Public Policy,

Graduate School of Business and Public Policy, Naval Postgraduate School,

555 Dyer Road, Ingersoll 214, Monterey, CA 93943, USA.

Email: rjeger@nps.edu

Increasing Competition:

Measuring the Impact of Policy Prescription

in Hospice Provision

Robert J. Eger III1 and Maximiliano G. Mendieta2

Abstract

This study sheds light on the effects of policies that introduce competition into the marketplace of the provision of government

services. The outcomes indicate that both nonprofit and government market share in a state are negatively affected by for-

profit entry, a substitution relationship. The framing of the article in the New Public Management era and the Balanced

Budget Act (BBA) of 1997 provides context in which to assess the policy consequences in hospice care. Given the budgetary

challenges and growing cost of health care, this analysis begins a discussion of the effects of for-profit entry into the provision

of government services, providing a glimpse into what the future holds for hospice care in the reforms of the Affordable

Care Act (ACA) of 2010.

Keywords

hospice care, organizational substitution, policy implications